The Causes Of The Stock Market Crash Of 2008

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).

The Stock Market Crash occurred on October 29th, 1929. Wall Street got struck on Black Tuesday when, on the New York Stock Exchange, investors traded 16 million dollars worth of shares in one single day. Billions of dollars were cut, destroying the investments of thousands of investors. After the event of Black Tuesday, America’s industrial world spiraled downwards into the Great Depression. This was the most powerful and extended economic breakdown in the history of the Western Industrial world up till then.

In 2008, the world experienced a tremendous financial crisis which rooted from the U.S housing market; moreover, it is considered by many economists as one of the worst recession since the Great Depression in 1930s. After posing a huge effect on the U.S economy, the financial crisis expanded to Europe and the rest of the world. It brought governments down, ruined economies, crumble financial corporations and impoverish individual lives. For example, the financial crisis has resulted in the collapse of massive financial institutions such as Fannie Mae, Freddie Mac, Lehman Brother and AIG. These collapses not only influence own countries but also international area. Hence, the intervention of governments by changing and

In late October of 1929, the U.S. stock market crashed, setting our nation into the Great Depression. In an attempt to reveal the true catalysts of the event, the book “Causes of the 1929 Stock Market Crash” examines popular beliefs of what really caused the economic tragedy. The nine questionable causes that are discussed in this book are that the stock market was too high in September of 1929 due to “excessive speculation” (Bierman 32), there was a downturn in business activity, the Hatry affair, the Federal Reserve Board’s actions, a message that there was a “war” against speculators, excessive buying on margin and of investment stocks, excessive leverage in terms of debt, a competitively priced utility market segment paired with a setback in the public utility market, and an overreaction by the stock market.

The “Great Depression” and the “Great Recession” are two of the darkest times in American history. There is much debate about the cause of the Great Depression and how it differed from the cause of the Great Recession. Many people believe that the stock market crash of 1929 played a major role the Great Depression. On the other hand, the stock market crash of 2008 drove America into the Great Recession. The causes of stock market crashes are often unforeseen, but many have detectable indicators. There are many differences between the 1929 stock market crash and the 2008 stock market crash, but we can learn more from the similarities between the two.

Levin, Carl, and Tom Coburn. United States. United States Senate. Wall Street and the Financial Crisis: Anatomy of a Financial Collapse. Washington: Committee on Homeland Security and Governmental Affairs, 2010.

On October 29, 1929 the United States Stock Market Crashed. It was devastating. About 16 Billion U.S. dollars went down the drain. I live in New York with my 2 brothers and sister: Jack, Daniel, and Maggie. We use to live in a pretty upscale apartment. However,The depression hit us like a train. My dad, Tom was laid off at his law firm right after the stock market crashed. He was desperate for money so he began work in a textile factory. Unemployment rates skyrocketed from a mere 3% to 25%! My mom, Jean, use to be a stay at home mom, but now works in a clothing sweatshop to put food on the table. With such little pay we were forced to move out of our beautiful apartment into a crummy run-down tenement. Shortly after, my father lost his job at the Textile factory. It 's 1931 right now and he hasn 't worked since. We couldn’t even depend upon our savings. Thousands upon thousands of banks were closed down, so we lost all of our money in the bank. My widowed aunt Celeste has also come to live with us. Her husband committed suicide after losing all his money when the Stock Market collapsed. My mom had to get a second job and make ends meet. But it just not enough. We were evicted from our tiny one bedroom tenement. We now reside in a Hooverville. We barely have enough money to put a little food on the table. My little sister has asthma and her medication costs a lot so she 's been sick lately. I mainly blame our financial situation on margin buying and President Hoover.

The stock market is what one would know as a collective group of buyers/sellers that trade stocks, also known as shares on a stock exchange. These securities are listed on the exchange itself and trade freely each and every day. On the exchange, stocks move hands day in and day out. Companies are able to get their stock listed on the exchange at any time that they want. There are other stocks, too...known as OTC stocks or over the counter stocks that go through a specific dealer. Larger companies tend to have their stocks listed on exchanges all throughout the world. Participants in the market can be anyone from your grandma, to retail investors, day traders, institutional investors, and so forth. One notable exchange is the NYSE; also known as The New York Stock Exchange. Moving forward, a stock market crash is when a decline of stock prices takes place throughout the stock market that results in a catastrophic loss of wealth via paper. The crashes are driven strictly by panic 9 times out of 10 a crash takes place. As a crash is happening, panic occurs; the panic keeps evolving and ends up like the snowball effect before you know it. A crash occurs when economic events take place. These events are always bad news... The behavior of traders follows, which leads to a crash when panic ensues. Crashes normally occur of a seven day period and may extend even further. Crashes happen in bear markets as the market is already weak to begin with. Once traders see a drop in prices,

Many people believe the depression began October 24th, 1929 when the stock market collapsed when over 12 million shares of stock were sold. Then on Tuesday Oct 29 over 15 million shares were sold. True these events had devastating repercussions for the United States and can legitimately be called one of the things for the great depression. According to L. Diane Barnes and Mark D. Bowles, “The stock market crash was not the cause but a symptom of the nation’s larger economic problems” L. Diane Barnes and Mark D. Bowles (2015).

On October 24, 1929 the Stock Market Crashed causing the economy to fall. This brought the nation to its lowest point, called the Great Depression. This had a huge negative effect on the United States and on many families. Most of the United States capital was represented by stocks and when it crashed most of the money was gone and the economy plunged.

After the Lehman Brothers’ investment bank failed, the stock market began to drop, and successful companies laid off a lot of the employees, therefore recession in America happened: This was the financial crisis of 2008. Two hypothetical solutions that could have cured this crisis are the creation of more pet banks, and the demolishing of Fannie Mae and Freddie Mac. With the creation of more pet banks, the local taxes would be less than if the government was taxing the people. And since so many people were left unemployed, a lot of people would be unable to pay their taxes. Therefore, with the smaller local state banks, people would not have to worry about paying the Federal Government. Additionally, having a larger supply of pet banks could result in the reinstalling of more employment opportunities for the unemployed workers. Moreover, less people would be unemployed, and people would be able to pay their taxes not only to local banks, but also to the Federal Government.

During the 1920s the United States boomed in stock markets. Millions of Americans began to purchase stocks, causing the market to dramatically increase in value. but for the economy so many Americans invested so much money into the stock markets it started to inflate in price. Which it worried shareholders, but the shareholders heard rumors that the stock markets were going to crash. Many were afraid that the stocks would be worthless. As stocks climbed in price many Americans believed that they could obtain a lot of money even if they only had one or two stocks. But unfortunately, for many potential investors, these people did not have enough money to afford shares of stock.

The housing market crash, which broke out in the United States in 2007, was caused by high risk subprime mortgages. The subprime mortgage crisis resulted in a sudden reduction in money and credit availability from banks and other lending institutions, which was referred to as a “credit crunch.” The “credit crunch” and its effect spread across the United States and further on to other countries across the world. The “credit crunch” caused a collapse in the housing markets, stock markets and major financial institutions across the globe.

In this essay, we are trying to look at the factors responsible for the global financial crisis in 2008-09 which started in US and later spread across the world. By now, a lot of studies have been done on the global financial crisis of 2008. We explain briefly the role of the financial engineering which leads to combination of various financial securities, the actual risk of which is not clearly assessed and hence leading to the financial crisis. There were also some serious lapses in regulation and failure of the rating agencies in assessing the risks assumed by the financial products which accentuated the crisis.

The reasons that led to the Wall Street Crash can be put into two main