18. Later twentieth century economic downturns
Since the end of the Second World War and the rebuilding of the modern economies of Europe and Asia, periodic economic downturns have been referred to as recessions, reserving the term depression for the great financial crisis of the 1930s. Most have been caused by manipulation of either interest rates or oil prices. Oil prices themselves have been manipulated via geopolitical means (such as the Suez Crisis or the Iranian Revolution) or via simply the recognition by the suppliers that greater profits were there to he had. For example, in 1973 the cartel known as OPED took steps which eventually quadrupled the price of oil, a deliberate act of retaliation against the nations which had either overtly or covertly supported Israel during that year’s Yom Kippur War. It was the first instance of oil being used as an economic weapon against the west by Mideast nations, an arrangement formalized by Egypt’s Anwar Sadat and Saudi Arabia’s King Faisal.
The American stock market was already in free-fall when the oil crisis began, and the collapse continued throughout 1974. At the same time, rampant inflation ravaged the American economy, as well as those of western allies. The OPEC nations, as a result of the global financial crisis they instigated, discovered that they were the source of vast wealth. Much of that wealth went to the purchase of weapons in deals with the western nations held hostage by their dependence on oil, and the weapons went far in supporting the spread of radical Islamic theology, particularly in the case of Saudi Arabia and Wahhabism. During the crisis – the first so-called oil crisis – the price of gasoline increased 43% in the United States, the possibility of gasoline rationing was openly and seriously discussed in Congress, and the American people were exhorted to conserve fuel for the first time since the end of the Second World War.