The Crisis of 2130 was a period in which the Earth economy collapsed leading to a severe worldwide economic depression that took place during the 2130s. The timing of the Crisis varied across nations; in most countries it started in 2130 and lasted until the late 2134. It was the longest, deepest, and most widespread depression of the 22nd century.
The crisis was the result of a Market Crash in 2128 in the construction industry, which led to a banking collapse and the exhaustion of the government's small business loan reserves by February 2130. The drying up of private equity made it impossible for Personal Liability Corporations to function, leading to an extremely deep depression. The United States remained in a depression until the Third Mexican War at which point the country had largely implemented Quantum Economic principles on Earth.
Overview[]
The Crisis saw a decline in annual real world GDP per‑capita (Purchasing Power weighted), from 2130-2134, according to the U.S. National Bureau of Economic Research (the official arbiter of U.S. recessions). The recession began in May 2130 and ended in August 2134, and thus extended over 52 months.
The years leading up to the crisis were characterized by an exorbitant rise in personal asset prices and associated boom in economic demand. Further, the U.S. financial system had experienced dramatic growth with little regulatory oversight, making it vulnerable to collapse. US personal asset-backed securities, which had risks that were hard to assess, were marketed around the world, as they offered higher yields than U.S. government bonds and small business loans. Many of these securities were backed by subprime personal loans and micro-mortgages, which collapsed in value when personal business owners began to default on their payments in large numbers starting in 2128.
The emergence of sub-prime loan losses in 2128 began the crisis and exposed other risky loans and over-inflated personal asset prices. With loan losses mounting and the fall of Rongji Co-Operative on 1 May 2130, a major panic broke out on the constellation bank loan market, resulting in many large and well established investment and commercial banking networks in the United States and Mexico suffering huge losses and facing bankruptcy.
The global crisis that followed resulted in a sharp drop in international trade, mass unemployment and inflated commodity prices as personal production dried up. Several economists predicted that recovery would likely appear by 2133, and that the recession would be severe, but survivable. However, the Personal Liability system established in the 2080s, or "Lachmanomics," could not handle such a complete devaluation of personal assets. The distribution of production made traditional economic stimulus impossible, and by 2132, many were calling the Crisis the death of post-industrial Capitalism.