Economic Recovery & Downturn

The economy is going to get better. According to Wikipedia:

“The term financial crisis is applied broadly to a variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics. Other situations that are often called financial crises includestock market crashes and the bursting of other financial bubbles, currency crises, and sovereign defaults.[1][2] Financial crises directly result in a loss of paper wealth but do not necessarily result in changes in the real economy.

Many economists have offered theories about how financial crises develop and how they could be prevented. There is no consensus, however, and financial crises continue to occur from time to time.” (https://en.wikipedia.org/wiki/Financial_crisis)

A “Bank Run” is an example of what often happens in a financial crisis, and it can destroy banks and therefore has the potential to take down the banking system (or at least cause it serious damage). Wikipedia says:

“When a bank suffers a sudden rush of withdrawals by depositors, this is called a bank run. Since banks lend out most of the cash they receive in deposits, it is difficult for them to quickly pay back all deposits if these are suddenly demanded, so a run renders the bank insolvent, causing customers to lose their deposits, to the extent that they are not covered by deposit insurance. An event in which bank runs are widespread is called a systemic banking crisis or banking panic.

Examples of bank runs include the run on the Bank of the United States in 1931 and the run on Northern Rock in 2007. Banking crises generally occur after periods of risky lending and resulting loan defaults.” (https://en.wikipedia.org/wiki/Financial_crisis)

Sources:

https://en.wikipedia.org/wiki/Financial_crisis