Question:
What were 3 causes of the Stock market Crash?
3-Dementia Glasses
2008-09-09 12:07:19 UTC
The Great Depression was time of down-lows and lacked prosperity. Well,
what were the 3 main causes of the great depression/ stock market crash?
How did it affect people's lives?
What impact did it have globally?
Three answers:
Voxygen8
2008-09-09 12:29:40 UTC
The first cause was an unsustainable increase in credit, creating a self-reinforcing boom/ escalation of share prices. As shares were used as collateral and bank reserves, higher share prices permitted more lending which permitted more purchase of shares leading to higher share prices...



The Federal Reserve bank belatedly responded to this bubble by tightening credit. This caused overall credit to contract as less credit forced share sales which lowered share prices, leading to less collateral and reserves for lending which conditioned more share sales.



In addition, many countries responded by raising tariffs, such as the Smoot-Hawley Act which suffocated trade and retarded the development of more competitive businesses. Otherwise, governments were reluctant to directly interfere or take actions that might counteract the "natural" behavior of the markets.



In the U.S., unsustainable agriculture practices combined with adverse weather to ruin harvests. In turn, farm failures drove banks that lent to farmers to also fail. As these farmers' banks failed, they in turn defaulted on their loans to other banks, aggravating the problems mentioned above.



The global impacts were a loss of trade, contraction of output and prices, and an increase in unemployment and forced migration.
2014-09-23 00:51:47 UTC
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?
2016-11-02 02:33:11 UTC
Greed, greed and greed. Did I point out traders have been given grasping? the subject replaced into compounded by way of lack of expertise. Many (if no longer maximum) of the traders had no concept how the inventory industry worked. And the third reason replaced right into a loss of study. They have been making an investment in any and each thing, without finding out relating to the business enterprise, its heritage, its record etc. a lot of human beings have been enjoying on the margin - which skill they only placed down a small proportion of the money that replaced into required to purchase the inventory, by way of fact they figured whilst the inventory went up, they had sell sufficient of it to pay off their debt. whilst the inventory did no longer flow up and the margins have been referred to as, they have been wiped out. additionally, lots of the traders have been over-prolonged, so whilst the crash got here, they have been wiped out. Had that they had reserves, they could have ridden out a downturn of their shares. that's what various the business enterprise-smart moguls did, and whilst shares have been at their lowest and human beings have been being ruined, those human beings have been determining to purchase extra, by way of fact they knew it may flow up and that they had to reserves to attend till that got here approximately.


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