Mark Twain allegedly once said, “History doesn’t always repeat itself, but sometimes it does rhyme”. The stock market crashes of 1929 and 2008 had many similarities and differences for their occurrence. On October 29, 1929, Black Tuesday hit Wall Street as investors traded around 16 million shares on the New York Stock Exchange in a single day. Billions of dollars were lost, wiping out thousands of investors. In the aftermath of Black Tuesday, America and the rest of the industrialized world spiraled downward into the Great Depression until 1939, the deepest and longest-lasting economic downturn in the history of the Western industrialized world up to that time. On September 29, 2008, it seemed as if another Black Tuesday had reoccurred. From
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During the 1920s, the U.S. stock market underwent rapid expansion, reaching its peak in August 1929, after a period of wild speculation. By then, production had already declined and unemployment had risen, leaving stocks in great excess of their real value. Among the other causes of the eventual market collapse were low wages, the proliferation of debt, a struggling agricultural sector and an excess of large bank loans that could not be liquidated. Similarities between the two crashes were a housing and stock market boom, creating a bubble that burst, setting off a deflationary spiral. Also investment banks were merging with, or taking over commercial banks, using depositors money for high risk, speculative investing. Commodities out of sync with free market supply and demand. After October 29, 1929, stock prices had nowhere to go but up, so there was considerable recovery during succeeding weeks. Overall, however, prices continued to drop as the United States slumped into the Great Depression, and by 1932 stocks were worth only about 20 percent of their value in the summer of 1929. The stock market crash of 1929 was not the sole cause of the Great Depression, but it did act to accelerate the global economic collapse of which it was also a symptom. By 1933, nearly half of America’s …show more content…
Home mortgages were financed with ARM's. The 1st couple of year’s home mortgages were affordable, but when the interest rate adjusted upward, the house payment doubled or tripled, resulting in foreclosures, causing housing prices to plummet. The effects were unemployment, people losing their savings, in commercial bank deposits in 1929 and in retirement investments in 2008. Also frozen credit, home foreclosures, business and bank failures, a long, drawn out recovery, more government involvement and regulations in the private sector. Differences are, in 1929, agriculture and livestock commodities were way over supplied, and many of the stocks on Wall Street were bought on margin. In many cases, two-thirds of the stock purchased was on credit. The stock market value was greater than all the combined currency issued value. In addition, savings were lost, or only paid at cents on the dollar, when depositor’s money were lost by investment banks. That created bank runs on banks still operating. People horded cash and gold, putting it in hiding places instead. The stock market crashes had many differences and similarities in the way they have developed.
Relief and reform measures enacted by the administration of President Franklin D. Roosevelt
During the 1920s, the U.S. stock market underwent rapid expansion, reaching its peak in August 1929, after a period of wild speculation. By then, production had already declined and unemployment had risen, leaving stocks in great excess of their real value. Among the other causes of the eventual market collapse were low wages, the proliferation of debt, a struggling agricultural sector and an excess of large bank loans that could not be liquidated. Similarities between the two crashes were a housing and stock market boom, creating a bubble that burst, setting off a deflationary spiral. Also investment banks were merging with, or taking over commercial banks, using depositors money for high risk, speculative investing. Commodities out of sync with free market supply and demand. After October 29, 1929, stock prices had nowhere to go but up, so there was considerable recovery during succeeding weeks. Overall, however, prices continued to drop as the United States slumped into the Great Depression, and by 1932 stocks were worth only about 20 percent of their value in the summer of 1929. The stock market crash of 1929 was not the sole cause of the Great Depression, but it did act to accelerate the global economic collapse of which it was also a symptom. By 1933, nearly half of America’s …show more content…
Home mortgages were financed with ARM's. The 1st couple of year’s home mortgages were affordable, but when the interest rate adjusted upward, the house payment doubled or tripled, resulting in foreclosures, causing housing prices to plummet. The effects were unemployment, people losing their savings, in commercial bank deposits in 1929 and in retirement investments in 2008. Also frozen credit, home foreclosures, business and bank failures, a long, drawn out recovery, more government involvement and regulations in the private sector. Differences are, in 1929, agriculture and livestock commodities were way over supplied, and many of the stocks on Wall Street were bought on margin. In many cases, two-thirds of the stock purchased was on credit. The stock market value was greater than all the combined currency issued value. In addition, savings were lost, or only paid at cents on the dollar, when depositor’s money were lost by investment banks. That created bank runs on banks still operating. People horded cash and gold, putting it in hiding places instead. The stock market crashes had many differences and similarities in the way they have developed.
Relief and reform measures enacted by the administration of President Franklin D. Roosevelt