Overall, it was the combination of the desire for money mixed with ignorance towards making quality financial decisions that led to the financial crisis. 2. In the past, to get a mortgage you had to go through a series of steps; list them. Show up at the bank with tax records, pay stubs (to verify your income) and proof that you have enough savings to make a 20% down payment
Even though many factors contributed to cause the Great depression, many argue that the biggest contributor was the stock market crash in 1929. During the years, previous to the recession, real state became very popular market to invest in. People were borrowing a great deal of money from banks to invest on purchasing lands, fixing roads, building houses, and buying houses. Even though people did not have enough money to repay their loans, they continued to borrow more, because of low tax returns. People believed that if they waited longer to invest, prices and interest rates will increase.
Leuchtenberg sad, “There was no single cause of the crash and ensuing depression,” [Doc2]. Many things as stated earlier contributed to the crash, such as overexpansion of credit, goods, industries and rising rates of unemployment. Many Americans saw the Stock Market as an easy way to create wealth by buying stocks cheap, usually at a margin, and selling for a higher price, hopeful to profit. Buying on margin was the act of paying some money on a stock, but loaning the rest from a bank who expected would be paid back when profit was made. Stocks became more expensive to the point where nobody wanted to buy them because of their extreme price.
This being the cause of prices concerning stocks and shares to increase, to the point that it was nearly impossible to invest in the market. This being a factor in causing companies to terminate their employees swiftly, and if an individual remained employed, their wage decreased dramatically below the minimum wage. Many counterparts had invested in the stocks with loans or borrowed money, and when the market crashed, their share had been utterly wiped out, leaving them with absolutely no money. Individuals who had their money in banks, became skeptical of the banks and started to withdraw their money, to preserve their remaining savings. This, causing the banks to have to take out loans from bigger banks so that they could pay the individuals their money.
The Stock market Crash was one of the causes of the Great Depression. One cause of the Stock Market Crash was the stock exchange. This led thousands of Americans to invest in stocks and lose money. Many Americans borrowed money from the bank to buy stocks. Most of the time, people who lost money were unable to pay the banks back their debt; which caused banks to fail.
This continuous rising of the stock market was in a deep increase and the stock market made a lot of investors to dump their shares. Shares were sold to people, and a lot of people borrowed money from banks to buy those shares with the hope of economy getting better soon. But as time went on the stock market fall became so severe that those who borrowed money to buy shares were faced with a lot of danger. And they were finally wiped out because of how worthless their shares became in the market. The dumping of these shares by the investors put bankers in a high risk of losing money.
While the lenders get their money without having to inflate prices. Also, financial corruption from banks and wall street had influenced the creation of The Great Recession. There was predatory lending in the mortgage markets and banks had knowingly loaned millions of checks on mortgages . This led to a tremendous Economic crash as stated in (document e ).
Nevertheless, there are so many other factors. It is almost as if the roots of the Great Depression were a domino effect. Gambling on stocks was just the
and why did it happen? One of the biggest causes was the market crash in 1929. This was believed to begin the great depression that lasted over a decade. The market crash had caused over nine thousand banks to shut down. Millions of people were left unemployed because of banks shutting down.
The stock market crash was one of the major causes of the Great Depression. During the Great Depression, the American people were struggling. Franklin Delano Roosevelt, the President at the time, had a plan to help the people. He called his plan the New Deal. Ultimately, the New Deal was successful
The companies kept pushing higher prices than what their products were really worth. This lead to the stock market crash. This meant workers were fired, wages cut, and business went out of business. After the stock market crashed, Americans lost trust in their banks to hold their
Because they could no longer continue to expand, a slowdown was inevitable. While profits went up, wages increased – which widened the distribution of wealth. Because banks didn’t have guarantees with their customers, a situation was created causing most people to panic when times got hard. Very few regulations were placed on banks, enabling people to spend money recklessly in the stock markets. This series of events set off the worst economic downturn in the history of the industrialized world (History.com, par.
The initial factor was the First World War, which upset international balances of power and caused a dramatic shock to the global financial system.
Great depression A lot of the investor got wiped out, because they invested their money. This related to the stock market. The American banks invested their money to the Europeans and the European never pay them back so the people that deposit their money to the bank got played, so the
Many people said that one cause was that the stock prices were too high so the crash was inevitable. The stock market had a hard time stabilizing when such a massive amount of money was borrowed from it. One way to display this would be to look back at old data. “Compare the September 1929 prices with those in November 1929 or, more impressively, with prices in 1932. In 1932 prices were 32 percent of the year-end 1929 prices.
