Stock Market Crash
What is the stock market crash?
A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of paperwealth. Crashes are driven by panic as much as by underlying economic factors. The 1929 Stock Market crash was a result of many economic imbalances and structural failings.
Stock Market info
- It lasted for four days.
- it Led to a catastrophic sell-off.
- The crash happen on Black Tuesday, October 24, 1929. The stock market opened at 305.85, falling 11% during the day, barely a stock market correction. It regained, to close just 2% down for the day.
- Great depression.
- This was a time of wealth and excess.
Oct 28,1929 Black Monday: More investors decided to get out of the market, and it fell 13%.Then another 12% fell the next day.
The beginning of World War II marked the beginning of America’s recovery out of the Great Depression.
Economic growth went down 50%
World trade went down 65%
Causes of the stock market crash
1. Overproduction and Underconsumption of consumer goods and farm products.
2. Consumer’s debts
3. Widening gap between the rich and the poor; uneven distribution of income; wealth was not being shared fairly.
4. Wages did not keep pace with the growth of production.
5. Heavy increases in stock speculation and gambling; buying stocks on margin.
6. Shaky banking contributed to speculation and an overexpansion of credit.
7. Depressed conditions on the farms (overproduction of farm products; falling prices, and farmers’ debts.)
8. Laissez-faire economic approach by the government (the consolidation of corporations was not challenged under antitrust laws; tax policies that favored the wealthy).
9.The Business Cycle: The economy was bound to go down eventually; it can only be prosperous for a certain period of time.
10. The federal government introduces a tight money policy in order to control credit.