Lessons Learnt in Engineering and IT--Background Research Report Textual Analysis
“A Brief History of the 1987 Stock Market Crash with a Discussion of the Federal Reserve Response” is a documentation written by Mark A. Carlson and was published in November 2006. Mark finished his B.S. in Economics from the University of Minnesota in 1996 and further completed his Ph.D. in Economics from the University of Berkeley in 2001. The author’s nationality is American and currently working as Principal Economist at the Federal Reserve. The source is searched from an official federal website through google scholar. Therefore, it can be said that the contents of the following documentation are academically reliable. The purpose of this textual analysis is to determine if the document is acceptable for using in Lesson Learnt case study. The analysis begins with assessing the dependability of the following document and going through a brief overview of the main content and afterwards relating it to the semester topic and clarifying differences in research.
The topic of the document is to review the events corresponding to the crash, a brief history regarding the factors contributing to the severity of the 1987 stock market crash and several solutions carried out by the federal reserve in the time of crisis throughout the event. The initial information was given by
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Moreover, the stock market crash in 1987 was a shock of stability of the financial system, not only because of the substantial price drop but also, we can clearly see that our functioning systems are significantly flawed and can later be perfected for a better future. Therefore, we learnt more than technical flaws, further improvements of our daily systems have to be made for a better
There are primarily two theories as to why the stock market crashed in 1929, affecting innumerable people in the United States and around the world. One speculation to how the devastating catastrophe transpired is driven by the idea that there was an over-production of goods and services and an underconsumption by the people, creating a plummeting bubble; consumers held on to their money and stopped investing, hoping that the market would stabilize. Another common conjecture is the belief that the Great Depression was provoked simply by normal recession, within the business cycle, and was brought about by poor policy on the behalf of the Federal Reserve. Many believe the crash was frankly unavoidable because of the unprecedented combination
The panic of 1907 and the Great Recession of 2007-2009 has both been major economic events in the United States economic history. This paper compares and contrasts these two major events and enables us to understand importance of certain financial institutions and regulations during troubled times in the financial sector. In this paper, both panics of 1907 and 2007 are historically analyzed and compared.
The stock market crash of 1929, additionally called the Great Crash, was a sharp decrease in U.S. stock exchange values in 1929 that added to the Great Depression of the 1930s. The market accident was a consequence of various economic imbalances and structural failings (Pettinger). In the 1920s, there was a fast development in bank credit and advances. Energized by the quality of the economy, individuals felt the share
When the market crashed “[a] record 12.9 million shares were traded that day, known as ‘Black Thursday.’” With that only being Thursday and only five days later being ‘Black Tuesday,’ some 16 million shares were traded” (“The Great Depression”). Having the market crash made people plunge into despair as they did not have any source of income for their family. Furthermore, “so many people had sold stocks that it caused a massive drop in the stock market” (Cobb). Proving how the stock market crash can help explain why it caused such a big uproar for America.
The stock market crashed on Thursday, October 24, 1929, less than eight months into Herbert Hoover’s presidency. Most experts, including Hoover, thought the crash was part of a passing recession. By July 1931, when the President wrote this letter to a friend, Governor Louis Emmerson of Illinois, it had become clear that excessive speculation and a worldwide economic slowdown
When the stock market crashed in October 1929, the nation plummeted into a major depression. An economic catastrophe of major proportions had been building for years. The worldwide demand for
Many people believe the Stock Market crash and the Great Depression are one in the same. In the nineteen twenties the Dow Jones went from sixty to four hundred. People became instant millionaires. Trading became America’s favorite pastime and a quick way to get rich. There were Americans mortgaging their home and investing their life savings in stock such as ford. However, there were many fake companies that formed to deceive the inexperience investors. Many investors did not believe that a crash was possible; they all thought the market would always go up.
During the 1920s Wall Street was representing the decade of expanding economic opportunity for every American. During 1927 some American banks failed due to bad investments and low prices for agricultural products. On Thursday October 1929 American stock market failed and millions of investors are plunged into bankruptcy. Over 12,894,650 shares changed hands, many at fire. About two months after the crash in October, stockholders had lost more than $40 billion dollars. The slump was made worse by the share-buying fever that infected the country in the 1920s. Everyone wanted to make quick fortunes, therefore they bought company shares on margin. Competitive buying of the shares drove share prices high above their actual value. Then, when cautious
“[It] marked a fundamental break in U.S. history, a drastic change in basic attitudes and institutions that define the roles of citizen and state” (Reynolds 1416). On October 29, 1929, the U.S. Stock Market crashed, or the “the value of stock fell quickly” (Arnesen 36). This occurred after years of massive speculation, which was the purchase of high-risk stocks for a high return. In all actuality, the downward spiral began on October 18, when stocks first declined. The destabilization of the market convinced stockholders to begin pulling out their funds; they also traded stock for a lower amount in value, so shareholders lost the full value of their investments. This “panic” came to fruition on October 24, Black Thursday;
A Colossal Failure of Common Sense was one of many books to be published in the aftermath of the Financial Crisis of 2007. After seeing the global economy stall in the face of massive losses in word financial markets, many Americans sought to better understand the crisis and its causes. This book, written from the perspective of a financial market insider, provides a glimpse into the world of global finance and also seeks to explain how the players in this world were involved in the crisis. In the words of the author Lawrence McDonald, “My objective in writing A Colossal Failure of Common Sense was twofold. First, to provide … a close-up, inside view of how markets really work…..And, second, to give… as crystal clear an explanation as possible about the real reasons why the legendary Lehman Brothers met with such a swift end”1. By writing about his personal experience at Lehman Brothers and recounting stories from within the famous investment banking firm, Mr. McDonald largely succeeds at his first goal. However, the elements of personal biography and the chronological order of the book make it difficult for the reader to fully appreciate all of the varied causes of the financial crash. I believe that the main value of reading this book is in understanding these causes, with Lehman Brothers acting as a microcosm of the greater financial universe. As such, in this review I have isolated elements from Mr. McDonald’s book which highlight how the crisis
American Society suffered due to the crash. Unemployment in the United States rose to 25%. Even those who maintained a job suffered as wages fell 42%. The previously growing economy fell 50%, and trade between nations with the US plummeted 65% (Amadeo). All of these sudden changes caused an uproar in society. The response to the decline in America’s economy caused American’s to immediately begin throwing out accusations as to the cause of the crash. They began blaming each other and scared stock brokers calling it “panic selling” (Suddath).
In Frontline’s The Meltdown, the causes of the stock market crash of 2008 came into discussion. The topics regarding Bear Stearns, the Lehman Brothers’ and their collapse, and the huge bailout made in results to the market crash. There were great points being made on the mistakes Henry Paulson and Ben Bernanke did not view from their perspective, which in turns were the problems that made up the crash.
In 1929, shortly after President Hoover had taken office, there was unfortunate crash in the stock market (Foner 799). On Black Tuesday, over a period of five hours, over ten billion dollars had “vanished”. Although the crash of the stock market was a major proponent to America’s economic downfall,
During the 1920's, the North American economy was roaring, but this decade would eventually be put to a stop. In October of 1929, the stock market began its steepest decline to this date in history. Many stock market traders and economists believe and pray that it was a one-shot episode never to be repeated. On the other hand, many financial analysts and other economists believe that the current stock markets are in place to repeat the calamitous errors of the 1920's. In this paper, I will analyze the causes of the crash and discuss the possibilities of it re-occurring.
It was 1929, and in the United States things could not be better for those smart enough, or for that matter, brave enough, to gamble on the Stock Market. All of the big stocks were paying off handsomely, the little ones too. However, as much as analysis tried to tell the people that this period of great wealth would last, no one could imagine what would come of the United States economy in the next decade. The reasons for this catastrophic event in American 20th century history are numerous, and in his book, The Great Crash, John Kenneth Galbraith covers the period and events which lead up to the downward spiral in the fall of 1929 and the people behind the scenes on Wall Street who helped this fire spread.