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causes of 2008 stock market crash
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The world grew up with an economical system. Money was around for many years, and even before people would trade things with a price. Economics is a major part in history, as it is the foundation for many great countries. Places like France and Britain have their own economical system, and so do places like America. However, there are times when the economy fails miserably. Such a time was during the Great Depression at the time of the Wall Street Crash of 1929 and even nowadays due to the Financial Crisis of 2007-08. These crashes show how America's economy once failed itself, and how it eventually regained its footing on higher ground. Although there is much struggle in today's economic structure, during the Great Depression, it was much worse.
To begin with, the Great Depression began, amongst other reasons, due to the Wall Street Crash of 1929. The Wall Street Crash began in the late October of 1929. It was the most destructive stock market crash in the United States. It began with a time called the 'Roaring Twenties', the years that came after World War I and pretty much caused the crash. It was a time where many Americans migrated into cities with hopes of fulfilling the 'American Dream' of starting anew and becoming wealthy (A&E Television Networks). As American cities prospered, people neglected the US agriculture industry, the countryside. With the constant migration from more rustic areas to cities, a financial depression loomed over farmers. Despite these struggles, however, people though that the stock market will continue as it is, and simply rise forever. On the time of March 25, 1929, a small crash occurred. It happened because investors began to sell their stock at a very quick rate (Philips). At this point, mor...
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Farmer, Roger E.A. "The Stock Market Crash of 2008 Caused the Great Recession: Theory and Evidence." Journal of Economic Dynamics & Control (2011): n. pag. Web. 17 Feb. 2014.
Frank, Robert H.; Bernanke, Ben S. (2007). Principles of Macroeconomics (3rd ed.). Boston: McGraw-Hill/Irwin. print. 1998.
Johnson, Josephine Winslow. Now in November. New York: Simon and Schuster, 1934. Print.
Moore, Brendan. "U.S. Economic Indicators Improve in 2013." U.S. Economic Indicators Improve in 2013. Gallup, Inc., 9 Jan. 2014. Web. 11 Feb. 2014.
Nishi, Dennis. The Great Depression. San Diego, CA: Greenhaven, 2001. Print.
Passos, John Dos. The Big Money. New York: Harcourt, Brace and, 1936. Print.
Philips, Matthew. "Is the U.S. Economy Slowing Down or Speeding Up?" Bloomberg Business Week. Bloomberg, 3 Dec. 2013. Web. 11 Feb. 2014.
The fundamental weakness and contradictions of the world economy was the actual cause of the Great Depression. The international economy was in shambles because of the cost of war and the American economy was indirectly damaged by this; however, October 29, 1929 is the official beginning of the Great Depression because of the stock market crash of 1929. Paper fortunes had vanished but money was the foundation of American life. People usually took loans from banks so they could start businesses but because of the Depression, they took out loans so they would have e...
The Great Depression was a period of first-time decline in economic movement. It occurred between the years 1929 and 1939. It was the worst and longest economic breakdown in history. The Wall Street stock market crash started the Great Depression; it had terrible effects on the country (United States of America). When the stock market started failing many factories closed production of all types of good. Businesses and banks started closing down and farmers fell into bankruptcy. Many people lost everything, their jobs, their savings, and homes. More than thirteen million people were unemployed.
There were many causes for the Great Depression. The first and one of the largest was the stock market crash. Before 1929 the stock market was flourishing and everyone wanted to buy stocks. People were so confident in the stock market that they were buying “on margin”, which meant that brokers would lend them 10% of the money they invested (D1). The problems began when stocks were being over speculated. When people began to realize this, they began selling there shares. On October 29, 1929, 16 million shares were sold (D9). This day became known as “Black Thursday”, the day the stock market crashed (D12). The second reason was the overproduction of goods. Factories had already produced too many goods and now there was no demand for them. The government began to raise tariffs to protect Canadian industries but things only led downhill from there.
The Great Depression began in 1929 when the stock market crashed. As a result of the market crashed, people’s savings were wiped. Over 100,000 businesses failed, leaving many
The Great Depression was a period in United States history when business was poor and many people were out of work. The beginning of the Great Depression in the United States was associated with the stock market crash on October 29, 1929, known as Black Tuesday. Thousands of investors lost large amounts of money and many were wiped out, lost everything. Banks, stores, and factories were closed and left millions of Americans jobless and homeless (Baughman 82).
n the history of the United States The Great Depression was the most detrimental economic depression to ever happen. It lasted from 1929 to 1939. There were many things that caused the Great Depression. Historians and Economist believe the stock market crash was one of the first causes that lead to the Great Depression. The stock market had just reached record highs the summer of 1929, but had started to decline in September. On October 24th, the stock market plunged and five days later it crashed. Many people were in a panic. The value was lost by 12 percent and wiping out $14 billion of investments. With in only 2 more months, more than $40 billion dollars were lost by stockholders. The economy was destroyed and America entered into the
The Great Depression was one of the most important historical events that has happened within the last century that impacted every Americans life one way or another. There were many factors that could be an explanation of why The Great Depression happened, but there is no one definitive list of the reasons of what caused The Great Depression. It was a mixture of events in the United States and outside of it that probably led to this period of time to happen. The main reason that everyone could agree on was the event of the Wall Street Crash of 1929. Because of The Crash, it made people go on a bank run which made thousands of banks to close because they simply did not have all the money for all the people wanting to withdraw their savings. Because everyone was trying to take their savings out, most people were turned down by the bank and essentially lost of their savings in the bank. The banks were failing and because they had no more money left, this stopped the banks from having available credit for people to use which made matters even worse for the people. This leads people to poverty and were left with nothing. Because people were poor and were scared of spending their money now, it made people stop buying extra things that weren't essential to live. This was the cause of the unemployment rates during this time period because if no one was buying anything, then there was no reason to keep extra workers for things people are not buying.
The Great Depression was caused by the stock market crash. The stock market crash was an event that happened on October 29, 1929. The crash was caused by overproduction in the United States and high import tariffs in Europe.
Great Depression was one of the most severe economic situation the world had ever seen. It all started during late 1929 and lasted till 1939. Although, the origin of depression was United Sattes but with US Economy being highly correlated with global economy, the ill efffects were seen in the whole world with high unemployment, low production and deflation. Overall it was the most severe depression ever faced by western industrialized world. Stock Market Crashes, Bank Failures and a lot more, left the governments ineffective and this lead the global economy to what we call today- ‘’Great Depression’’.(Rockoff). As for the cause and what lead to Great Depression, the issue is still in debate among eminent economists, but the crux provides evidence that the worst ever depression ever expereinced by Global Economy stemed from multiple causes which are as follows:
The great depression came about because the flow of money had become stagnant due to overproduction. As products became too numerous prices began to drop in a bad way. Everything began to lose its value and companies began to lost profits. In order to keep above bankruptcy, companies began to lay off employees, and with people getting laid off, people began to spend less money which made profits go down even lower. This downward spiral caused many to go unemployed and would be the main reason the great depression was so difficult to deal
The Great Depression was the longest American slump in the economy to ever occur. The Great Depression lasted for about a decade between 1929 and 1939, the dates of the Stock Market Crash of 1929 and the starting of World War II. A number of factors actually caused the Great Depression. One commonly known factor said to have caused the Great Depression is the Stock Market Crash of 1929, although this is not directly correct. The market crash was only a symptom of, as well as a transition into, the Great Depression. Other symptoms and causes includes, wealth inequality, overproduction, stock speculation, excess loaning, deflation, unemployment, and no profits.
The Stock Market crash happened on October 29, 1929 and the Great Depression started in 1929 and ended in 1939. In the end of September and the beginning of October stock prices began to decrease. The crash was caused by the nervous investors which sold 16.9 million stocks on the New York Stock Exchange in one day. Many businesses invest most of their money in the stock market to make more money, but when the stock market crashed, so then businesses had to shut down because they have no money. Most of the nation’s banks also failed because they had to put the depositors money in the stock market to increase but when it crashed people lost most of their money. Many people started to lose faith in the stock market and “you can’t have a healthy economy without confidence in the market.” When banks and businesses started to close many people became unemployed and then people can’t afford food for themselves or for their family. People started to take loans from banks but then couldn’t repay the banks and the banks couldn’t let their depositors withdraw any money because it is all gone or given for loans. From the start of the depression the United States economy was going down day by day. President Roosevelt had closed all the banks for three days and then some banks opened backed up with strict limits on withdrawals. Some people started to regain confidence in the market and the American economy and then
The 2008 financial crisis led to a sharp increase in mortgage foreclosures primarily subprime leading to a collapse in several mortgage lenders. Recurrent foreclosures and the harms of subprime mortgages were caused by loose lending practices, housing bubble, low interest rates and extreme risk taking (Zandi, 2008). Additionally, expert analysis on the 2008 financial crisis assert that the cause was also due to erroneous monetary policy moves and poor housing policies. The federal government encouraged the expansion of risky mortgages to under-qualified borrowers. Congress pushed for the support of affordable housing through extended procurement of non-prime loans for applicants with low income (Zandi, 2008). The cutting down of interest rates to low levels to supplement for technology bubble of early twentieth century and the effects of Sept 11, a housing bubble was created. This move facilitated individuals with poor credit to obtain mortgages in high percentage when lenders created non-conventional mortgages by offering mortgages with extensive amortization periods, loans with interest and payment alternatives such as ARMs (Angelides et al, 2011). Ultimately, interest rates rose again and many subprime borrowers stopped paying for their mortgages when their interest rate were reset to higher monthly payments. This paper will discuss the impact of the financial crisis as a result of subprime mortgages.
The Great Depression was evoked by what many thought was the stock market crash of 1929. However, that was not the case, the stock market crash on October, 29 1929 was just the
The Great Depression was the deepest and longest-lasting economic downfall in the history of the United Sates. No event has yet to rival The Great Depression to the present day today although we have had recessions in the past, and some economic panics, fears. Thankfully the United States of America has had its shares of experiences from the foundation of this country and throughout its growth many economic crises have occurred. In the United States, the Great Depression began soon after the stock market crash of October 1929, which sent Wall Street into a panic and wiped out millions of investors ("The Great Depression."). In turn from this single tragic event, numerous amounts of chain reactions occurred.