The Great Depression Of The 1930s Essay

The number one concern for most policymakers is how to recognise the cause of a crisis, and how to stop it from occurring. The two crisis I will be comparing and contrasting today will be “The Great Depression of the 1930s” and “The Global Crisis of 2007-2009”. Although they are a number of years apart these two crisis do have some key similarities and differences. Usually crisis rise from sudden market reactions and crashes, but there is no signs that can reveal when we should expect a crisis to occur. We can however expect a crisis to occur when “the economy is worked up, inflation is high, the exchange rate being appreciated, deficits spreading and asset prices becoming inflated.” (IMF's World Economic Outlook, 1998). I will be discussing

Shares began being worthless and investors who believed in these shares fell into a black hole of debt. October 28th, 1929 was famously known as Black Monday since the market took back some of its losses on Friday after Black Thursday. Investors felt a sense of safety over the weekend, thinking that the market was about to rebound but on Monday the markets once again began to decline sharply. “Trading volumes were near 9.25 million shares, and market confidence declined sharply. By the end of the day, the market was down another 13%.” On the fifth day of this historic crash known as Black Tuesday, October 29th 1929, many agreeing that this was the final setback and was the starting point of the Great Depression. 16.4 million shares were exchanged on Black Tuesday, and with all hope of a market recovery now shattered, panic trading continued and the market fell another 12%. A Great Depression was about to start taking

Both crises crashed after an extended period of economic growth. Each crisis also saw a burst of a bubble. The great depression saw the stock market bubble burst and the global crisis saw the housing market bubble burst. They also saw some mouth-dropping decreases in production and increase in unemployment. Both crisis were similar in the fact that both crises started in the financial sector before seeing itself spread through to the real sector. In both crises many financial companies either defaulted or had to be bailed out by different institutions or by the government itself. One last similarity was that the crisis started in the US and spread through to other neighbouring