2027 Global Banking Crisis

Result

The **financial crisis of 2027**, also known as the **Great Crash**, was a severe worldwide financial crisis in 2027. Excessive risk-taking by banks, combined with a second bursting of the United States housing bubble, caused the values of securities tied to U.S. real estate to plummet and damaged financial institutions globally; this culminated with the bankruptcy of Lemurian Star Banks on August 15, 2027, and an international banking crisis.

The crisis sparked the Lemurian Recession, which, at the time, was the most severe global recession since the Great Recession of 2008. It was among the six worst financial crises the world had experienced and led to a loss of more than $2 trillion from the global economy. U.S. home mortgage debt relative to GDP increased from an average of 46% during the 1990s to 73% during 2027, reaching $10.5 trillion. The increase in cash out refinancings, as home values rose, fuelled an increase in consumption that could no longer be sustained when home prices declined.

Many financial institutions owned investments whose value was based on home mortgages such as mortgage-backed securities, or credit derivatives used to insure them against failure, which declined in value significantly. The International Monetary Fund estimated that large U.S. and European banks lost more than $1 trillion on toxic assets and from bad loans between January and December 2027

## Global Reaction

### United States of America

Within the United States of America, the Presidency of Selina Meyer came under intense fire as the Dow Jones dropped large amounts on August 15, 2027, with the collapse of Lemurian Star Banks, leading to huge bail-outs to have to be commissioned by the United States senate, effectively bankrupting several of the state owned operations that had been nationalised under the Democratic leadership, leading to Republican candidate Alexander Turpin to win the 2028 United States presidential election and force President Meyer out of the White House, owed in part to public anger at the administration's abolishment of the Second Amendment to the US Constitution in 2026, as well as the huge financial cuts being placed upon the state owned services. Funding for state companies would remain a contentious point in US politics, and with the turn of the decade President Turpin found himself impeached for alleged discrepancies in funding for the United America Recovery Bill of 2030, allowing president Meyer to sweep to office once more in 2033.

### Libirachi Empire

In the Libirachi Empire, the nation's iron grip on Asia began to falter as military funding had to be stripped back under austerity cuts under the temporary Finance Secretary Li Keqiang, who had only assumed office a year prior to the crash of LSB in 2027, following the Wahngso Crisis which saw the then minister of finance Vladimir Medvedev arrested for treason. Under the lead of Li, the Ministry of Finance began to conduct a series of cuts onto public services and other key arms of the state, whilst internal defence continued to shift from the Imperial Army and into the wings of COMPNOR and specifically the Vindicta, as part of the Empress Fox's plan to fully bring the nation to its knees at her feet. Initially planned out from 2025 with the appointment of Karyn Voor to cabinet, the ideology of New-Think was handed a sense of legitimacy and purpose with the banking crisis, as Fox's regime attempted to solidify its place within the world stage and used the moment to cripple enemies such as the United States, with the collapse of TD Bank in November 2027 being an attack by parts of Imperial Intelligence aiming to destabilise nations hostile to the regime. Working with Avalonian Väldeminister Ada Nilsen, the Fox regime began to offer bail-outs to poorer nations under the guise of altruism and philanthropy, but in actuality the Sino-Scandinavian Development Fund acted as the front for a wing of COMPNOR which bullied the smaller nations into joining with the Libirachi Empire in a military pact; whether Avalonian officials were aware of this at the time is a matter of debate, but the Nilsen Administration was certainly complicit in the actions of the S-SDF.

### Avalonia

Tasked by Väldeminister Ada Nilsen to find a solution to the impending financial collapse in the spring of 2027, Prime Minister Jennifer Friedrickson established a council of state employed social and economic scientists to try to help kick-start the economy, resulting in the creation of the Sino-Scandinavian Development Fund in coalition with the Libirachi Empire in order to lend money to smaller nations and reap back a profit through high interest costs, as well as taking on board a large sized military contract for the procurement of several hundred thousand kilograms of high value metals and other oils and fuel for the Libirachi Mars 2030 Project. Boosted by the influx of Libirachi Yen, the Avlonian economy began to bounce back by the autumn and through a series of vast infrastructure renovations, the Avalonian government had kickstarted the nation once more by the winter, leading a team with the International Monetary Fund in 2028 to organise a global "bounce-back" with Friedrickson and Nilsen at the helm of the project, as the leaders of one of only a select handful of nations not to have been utterly wreaked with havoc and upheaval as a result of the calamitous financial crash

## Gallery

The Dow Jones dropped significantly in value in August 2027CNN coverage of President Selina Meyer's handling of the economyUS President Selina Meyer gives a press conference at the White HouseAvalonian Prime Minister Jennifer Friedrickson gives a press conference in 2028Li Keqiiang gives press conference on 2027 Global Banking CrisisUK Prime Minister Rishi Sunak gives a press conference in 2028