The Great Crash

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Joined: Mon 28. Feb 2011, 11:17
PostPosted: Mon 23. May 2011, 19:20
1929: The Great Crash

The high concentration of income and assets is certainly one reason for the big crash, why it had to happen. In 1929 the rich were rich beyond measure. This concentration of income and wealth means that a growing portion of the earned money spent on luxury goods or is applied. People with incomes of 50, 100 or 500 million dollars have no chance to consume their income. they have to invest their money back. Compounding this instability, if the investments are primarily in speculative financial assets because it lacks real and productive investment opportunities. That was the case in 1929, when many investors bought shares on credit.
In the Great Depression, the domestic product of the United States fell by a third in four years. The unemployment rate was 24.9% in 1933. Only a few years earlier, the belief in progress of the twenties had known no bounds. Introduced by Henry Ford assembly-line production had enabled nearly every family to own a car. Now, in the thirties, over 50% of mortgage borrowers were insolvent and could no longer service their loans. Before the charity soup kitchens were formed long lines as they were for many people the only way to get their hands at all to a hot meal. In Chicago, one of the greatest kitchens of Al Capone was operated. Before the cities were growing tent cities, where lived completely impoverished people.

This followed a speculative bubble. The Dow Jones climbed 331 points, 1923, he was about 100 points. They spoke of an eternal prosperity. This miscalculation of the situation speculated not only companies and major investors, including many small investors risked much. Million took short term loans to high to like to buy stocks, hoping they can to pay back profits. In December 1928, gave the stock market values for the first time. Most speculators and brokers, however, saw no reason for alarm. But the central bank reacted nervously and continued to increase interest for long-term loans. Investors simply switched to short-term loans on the asset bubble inflated to continue. The Dow Jones reached on September 3, 1929, a record high of 381 points.
As the Dow Jones lost significantly in October, broke out of nervousness. Many realized how high the risk was that they had been received. By 19 October 1929 the Dow Jones had lost 15%. Banks and investment firms began buying support.

Retail investors were aware of the vague threat to mid-October. The courses were still at a high level stagnated, however. Many realized that they did not have to pay back their loans. Capital inflow collapsed. The entire week before the collapse was marked by nervousness. Agents work late into the night and police cordoned off the area as a precaution to the Stock Exchange. On 23 October 1929 the Dow Jones was only 300 points. On October 24 the nerves of many brokers were bare. However, the trade began quietly. At 11a.m., the clock suddenly changed. Massive sales brought the courses in the fall flight. In a panic, many brokers were required to sell, no matter at what price. The trade went down several times. Two hours was the total value of listed companies fell U.S. $ 11 bn, which was about 1.5% of the then annual gross national product. The banks sought with soothing words and support purchases to calm the mood. On Friday, the trend continued. The message had arrived in the European stock exchanges. This, however, responded initially more optimistic about the collapse of the bubble on the New York Stock Exchange. It was expected that the U.S. credit type would lend her money again in the future in Europe. The U.S. banks tried to further support the market.
Finally broke the market only then together on Tuesday. The courses had fallen too far to cover the loans still can. The banks now demanded their money back and forced the investors often sell their shares deposited as collateral. This struck with massive selling at any price, trading volume continued to increase. The Dow Jones fell 250 points. The courses wobbled further down the market value of the company fell a further 14 billion dollars. The following Tuesday was the trade volume is further increased, some stocks lost 99% of its value. Some investors took their own lives.

The market fell another three weeks. On November 15, the Dow Jones stood at 180 points. Some now believe the low point was reached, and keep buying the supposedly high-risk penny stocks. But the rates continue to fall, until the summer of 1932, the soil at 41 points was achieved. The same value as on 26 May 1896, the firstpublizierung of Dow Jones.
Many investors remained deeply in debt, while many companies were now bankrupt. Other companies had bought their own shares and loans also fell into problems. This led to mass layoffs, unemployment spread. In Europe, stock markets also collapsed. Some property was destroyed and had to have ceased. The demand collapsed, there was a deflation.
Between 1870 and 1914 there was also a global economic system. It was held in those decades, a world-embracing goods and capital, and people were moving with great freedom between the continents back and forth. The gold standard ensured that no citizen of the world had to do to worry about the value of his money. Not in the home country not abroad. We are far, very far in today's world.
It is time to look behind the curtains and to understand and recognize what is happening precisely in this global world. Many things that had happened in past studies to test large Big Bang. This Big Bang is controlled. True to its motto, the money is still there, but it belongs to someone else ....

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