French Economy Minister Bruno Le Maire had warned that spike in energy prices caused by Russia’s war in Ukraine will produce effects comparable to the 1973 oil shock.
The current energy crisis was "comparable in intensity, in brutality, to the oil shock of 1973," Le Maire said.
Oil and gas prices have risen significantly since the start of the crisis in Ukraine on February 24 and the subsequent announcement by the USA to ban Russian oil and gas imports.
The Russian-Ukrainian conflict also comes in conjunction with the spike in the energy prices, happening due to insufficient supply and the strong recovery of demand in the world caused by the lifting of many countries to the "health restrictions imposed to combat the coronavirus epidemic.
The Russian gas file, which supplies Europe with 40 percent of its energy needs, has become among the files on the bloc's table to punish Moscow, but great obstacles make the European Union unable to replace the Russian market of energy.
In the short term ... several Arab countries, that depend on importing wheat from Russia and Ukraine, will face a great challenge to ensure their supply of this vital material, in light of the Ukrainian crisis and the extensive Western sanctions imposed on Moscow.
The repercussions also differ according to each one. In the short term, Lebanon and Yemen, badly affected by this crisis. As for the medium term, there are countries like Egypt that will be in great need of wheat.
It is true that this is not the first time that humanity will suffer from crises, whether economic or commercial.
Rather, since capitalism gained power, the crisis seemed to be a normal state. However, the world is experiencing strong shocks, major turmoil and important changes that lead to a change in the international trade, economic and financial mechanisms.
In this article, I will focus on what happened at the beginning of 2006 winter, when many of the poorest American families, who were offered mortgage loans, found themselves unable to pay their debts.
Banks began to confiscate their properties, and debt-burdened owners began selling their properties before being confiscated by the banks, which led to an imbalance between supply and demand in the real estate market, leading the fall of prices.
Thus, the banks and their "suicidal" speculators found themselves owing confiscated and unsellable homes, in addition to worthless investments, and liquidity problems.
The speculative portfolios that used to bring significant profits to American and European banks turned into a financial "nightmare."
In fact, starting from mid-2007, all the securitized assets began to raise doubts, and American, then Swiss, English, German and French banks discovered that they had something of this in their statements, meaning that they were stuffed with non-repayable mortgage loans pided into the four corners of the globe in advanced financial products, and everyone wanted to get rid of of this debt.
Banks in all developed countries became worried about what could be "toxins" in their accounts, and they rushed to cut off loans on many sound businesses.
At the beginning of September 2008, the mortgage crisis turned into a banking crisis, and the famous American bank Lehman Brothers collapsed.
The reason for this failure is of course due to the strong depreciation of the assets in the mortgage portfolios.
The loss amounted to nearly 4 billion dollars. For 150 years, Lehman Brothers was the global investment bank that offered persified financial services, and made $4 billion in 2006.
The result was a general panic in the banking sector, as banks stopped giving loans, and the economy was on the verge of suffocation.
With the collapse of this giant bank and the domino effect, the business of other banks fell, leading to a sharp decline in the main international financial centers.
In the end, the crisis ended slowly, but it affected several countries as USA, Atlantic Ocean and the major European banks.
As a result of the abovementioned, confidence began to gradually disappear, as unemployment rose and the recession affected the general budget of countries with a decline in expenditures.
The loan crisis, the sovereign debt crisis, the global economic crisis stemming from the Russia-Ukraine conflict, and others are chapters of the same story.
It is the exceptional phase of today's world, which has become out of control, portending months and lean years for many countries and the entire global system.
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