how is the situation now with the stock markets similar to situation right before the Oct. 1929 crash?
all people thought market would just keep going up and up ? and then what happened? why? and how similar to now?
IT FELL HARD AND VERY FAST? WHY? HOW POSSIBLE?
- FredLv 74 weeks agoFavorite Answer
The problem was during the 1920s the USA economy boomed. Manufacturers were expanding rapidly and were selling shares in their expansion which rose rapidly in value. Many people borrowed heavily to buy shares and people used their homes, businesses, farms, etc. to borrow against as the shares were paying big dividends compared to bank interests. There was no real banking regulations in those days and even banks were putting every cent into shares.
The problem was the shares climbed so much they no longer represented the true value of the companies and were very over valued, and people started to realize it so madly tried to sell their shares and get their money back before the bottom fell out of the market. Companies could not pay out the full money to their shareholders at such a large share price and the shares started to crash. As soon as shareholders realized many in the know were dumping their shares it became an epidemic of scared shareholders trying to sell their shares while they were still worth something. People rushed the banks to withdraw their cash but the banks were losing huge amounts themselves on their shares. Many banks locked their doors so customers could not come in and withdraw their money to try and save their banks. No one wanted to buy the shares as they were desperately trying to offload their own and had no idea how far their value would fall. Companies were failing all over the place as their shares were now worth nothing. Banks went bankrupt and many lost their savings. Farmers lost their farms and many had nothing and were homeless. The banks who had survived scrambled to grab whatever they could off those who owed them money. Houses, farms, businesses etc. were all foreclosed on. Many committed suicide as they watched themselves go from wealthy to poverty having lost everything. Some men unable to cope with not being able to support a family hit the road and the rails travelling across the country hoping they could find work. They deserted their families and became hobos.
With a lot of American industry closing down and huge numbers of people unemployed America went into a huge recession which became known as the Great Depression. It was not until WW2 that America really pulled itself out of the Depression so it lasted there about 10 years for many of total poverty and struggle to survive. The War brought a huge number of military manufacturing jobs and for many men it was being called up for military duty.
I remember my Grandmother telling me that on their farm during the depression hobos would walk in asking for food for some work. My grandparents struggled through the depression and could not help them. I remember my father say that for Christmas my grandfather had been saving the round shoe polish tins and made him and his 2 brothers yoyos. My grandparents could not afford to buy them a present so made them. Many people no longer trusted banks and buried what little money they had in jars in the back yard amongst the vegetables. Many who struggled through the depression stayed very frugal for the rest of their lives never spending any money on any luxuries as they were scared that there would be another depression and they were hanging onto as much money as they could to be ready for it.
- curtisports2Lv 74 weeks ago
Not at all similar.
The meltdown in 1929 began months before October. Do some reading.
- Anonymous4 weeks ago
Republican presidents are usually in office during the onset of significant economic declines. Trump, both bushes, Reagan (1987 stock market crash) Nixon, Hoover etc. ... they pass the mess to the dems.
- KiethLv 74 weeks ago
In 1929, the market was heavily based in steel, the market is more diversified now. One industry going bad won't crash the market. There have been several dips over the years, and it has always recovered higher.