1929 Stock Market vs 2008 Housing Loan Crash

Topics: Wall Street Crash of 1929, Stock market, Stock market bubble Pages: 1 (346 words) Published: August 14, 2012
In 1929, the stock market crashed and people suffered. Everyone was affected by the crash and everyone said that they would never allow such a thing to happen ever again, but history repeated itself in the year 2008…

The 1929 Stock Market crash started to brew at the start of the decade when people were buying a lot of stocks. Soon the stocks became overpriced for whatever the company was worth when the stock market was working turning at a high, Dow average of around 498. This was forming a bubble economy, and the bubble kept on becoming bigger and bigger as time went by. Huge amounts of money were at the hands of bankers and they were the ones who were doing the leverages. It was only time before the bubble popped and the people realized that what they were buying was actually not worth the money that they were splashing out. That's when the big crash came falling down on everyone, stock prices plummeted and people made a run on the bank, to get rid of their stocks. But the bank was also in trouble, they made too much leverage and didn't have the money in their pockets to pay the stockowners back. Because of this, the banks defaulted and they closed, making the pieces of stock almost worthless. The stock market’s Dow average was 45, 90% lower than before and it left 25% of the people unemployed.

Even with the mistakes made in 1929, history would repeat itself in 2008, except this time in the form of the housing market. Just like in 1929, the banks made too much leverage to gain profit for themselves and it would end up with the banks not being able to pay people back. They bought mortgages so that they could receive monthly payments from the house owners. Because the nation was out of trustworthy home owners, the banks turned to untrustworthy families or sub prime owners who would end up not being able to make their monthly payments, causing these families to default from their houses
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