The Foreclosure Crisis: The Rise And Fall Of The Stock Market

The stock market is a major component of our society and it is instrumental in investing. People trust in the stock market as it has a consistent trend of movement and when it is rising to its peak people profit immensely. In most savings accounts, there is a high chance your gains will be less than in the stock market as you gain money off interest at a slower rate. When inflation rises people’s, money is as of less value, so they decide to invest in the stock market when the economy is healthy in order to gain a more instant profit off their investment. Everyone is familiar about the nature of the stock market rising and constant expansion, along with the contraction cycle of the market. However, because of the risk associated with the downturns

It all began in September 1929, with an economy that was thriving at an all-time high. People were extremely confident in the stock market and felt as though their investments were sure to profit at the rate the economy was rising. However, the market dipped and people began to panic and take their money out of the market. More people saw this dip in the market and followed the trend of pulling their investments out of the stocks in fear they would lose all their money. The market crashed as with everyone pulling money out at once there was no money left in the stock market, leaving business bankrupt and investors completely broke. At first, the market began to decline relatively modestly in comparison to what later happened from the end of the month, continued into October. The day the market completely crashed is known As Black Thursday. Black Thursday occurred on Thursday (October 24) when record shares were sold and leaving the market in complete shambles. Investors and bankers thought that greater losses could be avoided through buying mass amounts of stock, but they were wrong again and Black Thursday was later followed by black Monday and black Tuesday. Stocks continued to be traded and losses began to be piled up. The great depression was in full force and unemployment was rising at rapid rates and people’s banks were shutting

It all began when the banks dramatically increased the number of subprime mortgages they were giving out. The whole idea was that they would be able to charge incredibly high interest while providing the mortgages needed for people with lower incomes and bad credit. This was viewed as something that could end up being dangerous for the economy in the long run but gained support because of the American dream it was able to provide to many people who otherwise would not be able to. Since the homeowners were typically not the most ideal candidates for a mortgage they used the thriving housing market as their fall back. This worked for a period of time because the mortgage was typically less than the value of the home when it would hit the market so people would just use this extra equity to pay off their loan. When working as planned there was no issues at all however, when the housing market crashed many of these people were left with negative equity or a house worth less than purchased for. This left it up to the homeowner to make up the difference and very few were able to this so as a result, many of the people’s homes were left for foreclosure and their only option was to file for bankruptcy sending the market into