THE WALL STREET CRASH, OCTOBER, 1929
Crowd gathering on Wall St. after the 1929 crashKEY WORDS:
SHARES, STOCK MARKET OR STOCK EXCHANGE, DOW JONES, BROKERS, BUDGET, INVESTORS, SAVINGS
The wikipedia says:
"The Wall Street Crash of 1929 (October 1929), also known as the Great Crash, and the Stock Market Crash of 1929, was the most devastating stock market crash in the history of the United States, taking into consideration the full extent and duration of its fallout. The crash began a 10-year economic slump that affected all the Western industrialized countries.
The Roaring Twenties, the decade that led up to the Crash, was a time of wealth and excess. Despite caution of the dangers of speculation, many believed that the market could sustain high price levels. Shortly before the crash, economist Irving Fisher famously proclaimed, "Stock prices have reached what looks like a permanently high plateau." However, the optimism and financial gains of the great bull market were shattered on "Black Tuesday", October 29, 1929, when share prices on the New York Stock Exchange (NYSE) collapsed. Stock prices plummeted on that day, and continued to fall at an unprecedented rate for a full month.
The October 1929 crash came during a period of declining real estate values in the United States (which peaked in 1925) near the beginning of a chain of events that led to the Great Depression, a period of economic decline in the industrialized nations.
In the days leading up to "Black Thursday" (called "Black Friday" in Europe due to the time difference) and "Black Tuesday" the following week, the market was severely unstable. Periods of selling and high volumes of trading were interspersed with brief periods of rising prices and recovery. After the crash, the Dow Jones Industrial Average (DJIA) partially recovered in November–December 1929 and early 1930, only to reverse and crash again, reaching a low point of the great bear market in 1932. On July 8, 1932, the Dow reached its lowest level of the 20th century and did not return to pre-1929 levels until November 1954."
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THE FINANCIAL CRISIS, 2007
KEY WORDS:MORTGAGE, LEND-BORROW, FORECLOSURES, HOUSING BUBLE, CENTRAL BANKS, BAILOUT, LIQUIDITY
The wikipedia says:
"The financial crisis of 2007 to the present is a crisis triggered by a liquidity shortfall in the United States banking system. It has resulted in the collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market has also suffered, resulting in numerous evictions, foreclosures and prolonged vacancies. It is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. It contributed to the failure of key businesses, declines in consumer wealth estimated in the hundreds of trillions of U.S. dollars, substantial financial commitments incurred by governments, and a significant decline in economic activity. Many causes have been suggested, with varying weight assigned by experts. Both market-based and regulatory solutions have been implemented or are under consideration, while significant risks remain for the world economy over the 2010–2011 periods.
The collapse of the housing bubble, which peaked in the U.S. in 2006, caused the values of securities tied to real estate pricing to plummet thereafter, damaging financial institutions globally. Questions regarding bank solvency, declines in credit availability, and damaged investor confidence had an impact on global stock markets, where securities suffered large losses during late 2008 and early 2009. Economies worldwide slowed during this period as credit tightened and international trade declined. Critics argued that credit rating agencies and investors failed to accurately price the risk involved with mortgage-related financial products, and that governments did not adjust their regulatory practices to address 21st century financial markets.Governments and central banks responded with unprecedented fiscal stimulus, monetary policy expansion, and institutional bailouts."
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Well, after reading all of this information that you were giving, could you...?
- Make a short framework with causes and consequences of:
The Crash, 1929
the Financial Crisis, 2007
the Financial Crisis, 2007
- Do you find some similarities between the two crises?
