Preview

A Comparison of 1929's Stock Market Crash and Today's Financial Crisis

Best Essays
Open Document
Open Document
3019 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
A Comparison of 1929's Stock Market Crash and Today's Financial Crisis
Introduction
The most recent financial crisis was an all encompassing meltdown that affected the entire global economy. It is nearly impossible to quantify the distress this crisis put on the American economy and the world has yet to see the long term damage. After any disaster, people are eager to point fingers. This financial meltdown was no different, as critics were quick to blame anything and anyone from Wall Street to fair value accounting. It’s hard to pinpoint exactly what caused the most recent financial crisis, and even time may not tell. Economists are still trying to figure out why the stock market crashed in 1929, and Ben Bernanke recently stated “to understand the Great Depression is the Holy Grail of macroeconomics.” (Bernanke) Most of the discussion aimed at identifying causes of the crisis is focused on the financial structure of our economy. This has led to incongruent conclusions by many financial experts. It may be more important to direct attention to the social mechanisms that could have influenced not only this most recent crisis, but also the stock market crash of 1929 that threw the United States into the Great Depression.
While these two crises have their differences, at the very core we can find striking similarities. Both the state of the economy and pre-crisis attitudes and behaviors are similar in the two meltdowns that are separated by nearly a century. After seeing the devastation that these attitudes and behaviors caused in the 1920s, it can only be described as a social phenomenon that we allowed the recent financial crisis to occur. One of the most notable factors seen in behavioral and social mechanisms that led to the crises is greed. Instead of choosing to learn from past mistakes, the economy and its willful participants, blinded by greed, happily succeeded in repeating the past. In addition, some mistakes may never be learned from if the government continues to bail out large public corporations. The repeat in financial



Cited: Bernanke, Ben. Essays on the Great Depression. Princeton, NJ. Princeton University Press, 2000. Print. Bierman Jr., Harold Blumenthal, Karen. Six Days in October: The Stock Market Crash of 1929. New York, NY: Antheneum Books for Young Readers, 2002. Print. Clikeman, Paul M Crotty, James. “Structural Causes of the Global Financial Crisis: a Critical Assessment of the ‘New Financial Architecture’” Cambridge Journal of Economics. (2009) n. pag. Web. 27 January 2013. Folsom Jr., Burton Frank, Thomas. Pity the Billionaire. New York, NY: Metropolitan Books, 2012. Print. James, Harold. Destruction of Value: The Globalization Cycle. Cambridge, MA: Harvard University Press, 2009. Print. Jarvis, Jonathan Khan, U. 2009. “Does Fair Value Accounting Contribute to Systematic Risk in the Banking Industry?” Columbia University Working Paper. Phillips, Kevin. Bad Money: Reckless Finance, Failed Politics, and The Global Crisis of American Capitalism. New York, NY: Penguin Group, 2008. Print. Powell, Jim. FDR’s Folly. New York, NY: Crown Forum, 2003. Print. Ritholtz, Barry Schraff, Anne E. The Great Depression and The New Deal: America’s Economic Collapse and Recovery. New York, NY: Moffa Press, 1990. Print. Taylor, B. “The Stock Market Crash of 1929” Fundamentalfinance.com. n.p., 2006. 27 January 2013.

You May Also Find These Documents Helpful

  • Powerful Essays

    Field, A. (2009, July-August). The great depression, the new deal, and the current crisis. Challenge Magazine, 52 (4) 94-105.…

    • 4009 Words
    • 17 Pages
    Powerful Essays
  • Better Essays

    Stock market crashes, bread lines, bank runs, and currency speculation, all occurring with war looming in the background. This period has provided economists with an excellent opportunity for studying the links between economic policies and institutions and economic performance. Ben Bernanke put together his essays on why the Great Depression was so devastating throughout the book. These essays show that while the Great Depression was an incomparable disaster, some economies pulled up faster than others, and some made an opportunity out of it. By comparing the economic strategies of the world's nations as they struggled to survive economically, lessons of macroeconomics stand out in a background of severe human suffering. The essays in this book present a consistent view of the economic causes and worldwide phenomena of the…

    • 1143 Words
    • 5 Pages
    Better Essays
  • Better Essays

    In America there have been great economic struggles and triumphs. The many great leaders of this country have foraged, failed, and overcome some very difficult times. Comparing the Great Depression of 1929 and the Great Recession of 2008 has revealed similarities that by learning from our mistakes in 1929 could have prevented the latest recession. I will discuss the causes of the Great Depression and the Great Recession, and what policies were implemented to reverse the economic downfalls.…

    • 2793 Words
    • 12 Pages
    Better Essays
  • Better Essays

    Heng, Michael Siam Heng, Great Recession: History, Ideology, Hubris and Nemeis, Ashford University ebrary, 07/2010…

    • 1932 Words
    • 8 Pages
    Better Essays
  • Powerful Essays

    Federal Reserve System

    • 1519 Words
    • 7 Pages

    As an academic specialist of the Great Depression, Bernanke is aware that the US economy is still vulnerable to a…

    • 1519 Words
    • 7 Pages
    Powerful Essays
  • Powerful Essays

    The year of 1929 is marked by the Stock Market Crash in which most consider to be the beginning of the Great Depression. This was not the sole cause of the Great Depression, though. The Stock Market Crash was caused by an economy that was not stable enough to handle the high stock prices. The Stock Market Crash helped bring on the Great Depression which forced the United States government to make changes in the regulation of stock exchanges, providing much greater protection for investors.…

    • 3961 Words
    • 16 Pages
    Powerful Essays
  • Good Essays

    Topvl on the New Deal

    • 493 Words
    • 2 Pages

    This is an informative article written by Alan Brinkley for anyone interested in learning about history. Its purpose is to educate about the Great Depression, specifically its solution found in the New Deal. The author also gives his opinion about the New Deal, which isn’t very optimistic. He describes it as an adequate solution, but not nearly what it was thought to be by those that lived through it. It is valuable for this opinion, which differs from that of most people that know about the New Deal. This point of view is unique and shows a realistic, if somewhat cynical, opinion which is based on evidence from the time period. It shows that the New Deal wasn’t quite the magical resolution that people thought it was. It is limited, however, focuses only on the effectiveness on the New Deal in solving the Great Depression, while ignoring other factors that could have impacted the effectiveness of the programs.…

    • 493 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Hobsbawn Great Depression

    • 956 Words
    • 4 Pages

    It is no doubt that the Great Depression of late 1920’s to the early 1930’s had a dramatic effect that not only affected the united States of America, but the whole world. However, it is rare to find historians that analyze the Depression from a global stand point. Often, it is analyzed from a national standpoint, one in particular, the United States of America. In the both excerpts “Into the Economic Abyss” and “Roosevelt and Hitler: New Deal and Nazi Reactions to the Depression” written by Eric Hobsbawn and John Garraty, respectively, evaluates the Great Depression from a more international view point. They both do, however, differ in their approach. Hobsbawn…

    • 956 Words
    • 4 Pages
    Good Essays
  • Good Essays

    In 1929, one of the most devastating financial crisis occurred. It was just seventeen years ago when the greatest disaster in the United States financial history occurred. People were fired, the stock markets fell, and people jumped from buildings. The fear and anxiety that was struck into people left them in a shell shock. The Great Crash of 1929 was the United States most devastating era of history and became known as “ The Great Depression.”. It created fear for life, hatred for the Government, and the failure of everyday life. The day the stock market crashed was one of the most memorable times in the financial history of America…

    • 686 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    World History

    • 1779 Words
    • 8 Pages

    5) Mitchener, Kris J., (2012). The Great Depression in the World Book of Encyclopedia (p.339 to p.342). Chicago, IL: Scott Fetzer Company.…

    • 1779 Words
    • 8 Pages
    Powerful Essays
  • Better Essays

    The Federal Reserve

    • 3909 Words
    • 16 Pages

    The world financial crisis began in 2006 in the United States housing and related mortgage markets. Soon it spread to the entire U.S. economy and then to the rest of the world. In August 2007, the turmoil moved from the securitized U.S. mortgage markets to the interbank lending market, causing it to freeze up. Before long people became concerned about the extent and distribution of the mortgage related losses, market participants lost confidence in one another’s credit-worthiness, and the market that provides U.S. banks and other financial institutions with their liquidity became illiquid as a result. Institutions such as large commercial banks, investment houses, and insurance companies are the base of the U.S. financial system and because of the crisis they lost the ability to borrow short-term from one another. The general macro economy had weakened causing debt deflation, falling asset prices, falling real estate prices, and falling commodity prices; feeding one another into a downward spiral. Finally in September 2008, the breakdown of the international banking system based on the dominance of the major U.S. investment banks, commercial banks and insurance companies amplified the turmoil, sending severe shocks through the world economy. The economic crash international in its reach was characterized by falling employment, income, and output across the globe. The entire U.S. banking and financial system collapsed as a social financial system similar to banking crisis of 1931. From this point forward, what at first appeared as a U.S. “subprime mortgage market crisis” revealed itself to be a world economic crisis of major proportions.…

    • 3909 Words
    • 16 Pages
    Better Essays
  • Good Essays

    “I pledge you, I pledge myself, to a New Deal for the American people.” Said by Franklin D. Roosevelt for accepting the Democratic nomination for President in July 2, 1932. The New Deal as Dramatically reshaped the politics, presidential power, and the role of the federal government in the economy of the United States at that time. In the following paragraph, I would like to use two books, The New Deal America’s Response to the Great Depression and Roosevelt, the Great Depression, and the Economic Recovery, to analysis whether the policy successfully tackled the problem brought from the Great…

    • 444 Words
    • 2 Pages
    Good Essays
  • Better Essays

    "Stock Market Crash of 1929." Gale Encyclopedia of U.S. Economic History, edited by Thomas Riggs, 2nd ed., vol. 3, Gale, 2015, pp. 1269-1271. U.S. History in Context, link.galegroup.com/apps/doc/CX3611000866/UHIC?u=whea73603&xid=bd4b1120. Accessed 26 Apr. 2017.…

    • 1513 Words
    • 7 Pages
    Better Essays
  • Powerful Essays

    2007-2008 Financial Crisis

    • 1317 Words
    • 6 Pages

    Economists and scholars spend years dissecting financial markets and evaluating the causes of booms and busts. Throughout United States history there have been multiple economic booms that were underestimated and followed by recessions. In the situation of the 2007-2008 global financial crisis many culprits have been identified as causes, such as loose monetary policy, credit booms, deregulation, over complexity, and greed. Since the economic boom was solely dependent on weak policies and misconceptions, this leads me to believe prevention was possible with adequate regulatory policy, risk assessment and clarifications for commercial banks.…

    • 1317 Words
    • 6 Pages
    Powerful Essays
  • Good Essays

    The Stock Market was the most important event in the 1900s starting the beginning of the Great Depression. It all began after the end of World War I, changing the social and political lives of people. On September 3, 1929, the Stock Market peaked only to fall a month later (The Stock Market). The Stock Market started to fall for a month and on October 29, 1929, the stocks fell an entire 13 percent and more as days went on (Lange). The United States lost twenty five billion dollars, almost the same as three hundred billion dollars in today’s money (The Stock Market). This event left people without money, food, or shelter.…

    • 518 Words
    • 3 Pages
    Good Essays