How did the stock market crash in the great depression ?
It crashed because of what was called "buying on margin".
The first thing that must be realized was that, before the crash, the market was on one fantastic upswing. So, people would invest with a broker "on margin", meaning that they would say, pay the broker $10 for a stock worth $100, and then, in a short time, sell the stock when it went to say $150, making a huge profit per share with an investment of only $10. But, when steel went bust, the market fell, and the margins were called in. But most could not pay up, so the market went down even more.
What does a stock-market crash mean to the average person on the street?
It can affect a few things... if you are wanting to sell your home you might have a hard time finding a buyer who will be approved for a loan. If you are trying to buy a home you might experience difficulty obtaining a loan. In a nutshell, getting credit will be increasingly difficult. Everything from a car to a credit card. Some companies get part of their operating money from investment companies. For instance, the place your friends or family work for might use lending as a means to pay them a salary. These companies can start to be denied these types of services and thus will not be able to pay their employees. Layoffs, increased unemployment, etc. On the flip side, it can be a great time to invest in the stock market since everything is "on sale" at a discounted price. Historically the market eventually goes back up and those that bought lots of shares at a low price come out wealthy when those cheap stocks become valuable again. Hope some of this info helps. By the way, thank you for serving our country!
The stock market crash or rise or decline has nothing to do with lawyers, as it does more with economics.
Certain lawyers often sue when stocks drop sharply whether they have a legit claim or not. This was rapid following the .com bust of 2000. They sue all deep pockets from brokerage firms (complaining about compliance/ lack of supervision reasons) and brokers (complaining unsuitable trades), to companies (failure to warn, disclose or providing misleading information about a company's prospects, etc).
The lawyers in these class action suits are the only ones who really make the money doing this. The recovery from individuals is usually very small, if any, requires a lot of proof and paper work from individuals ("class members") who don't have that paperwork anymore, nor can they easily obtain it.
How the stock market crash of 1929 could have been prevented?
This would be a book or an extensive thesis or dissertation.
No one is going to do that homework here.
I can tell you that the gov screwed up the economy and the market and kept the US in Depression for raising taxes on individuals, and on business and created socialist programs that if not addressed properly could create sever financial issues for the the USA in the future.
Frontline: $10 Trillion and Counting
Note: the first part (of the above program) is Bush bashing with some good arguments. The last part where they show the graphs and address actual projections of entitlements and not argue solely on politics is what I would pay attention to.
In addition during the late 1920's, the FED made a series of pre-Depression interest rate (increase) blunders just like it did in 1998-2000, and 2004-2006.
Corporations during the stock market crash of 1929 and later depression?
The biggest reason companies didn’t fail when the market crashed is that stock price has nothing to do with company success.
So just because a stock price falls by 70% does not mean that sales fell by 70%. During every market downturn some companies have falling stock prices in the face of rising sales. The depression is particularly acute because the lofty stock prices seen prior to the crash were due to speculation and low margin requirements, not due to economic performance.