Stock Market Bubble

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Great Depression

Great depression was one of the worst and first blow to the global economy. Initiated in 1930, the global economy witnessed a economic collapse. This kind of economic failure was never experienced before and the one that started in 1930’s lasted till 1939 and the magnitude of after effects were extreme and harsh for liberal and democratic economies. Most of major global economies were shaken with total production falling by 25-30%, unemployment rates touching sky high with 25% in USA and UK and 40% in germany. Stock Market Crashes, Bank Failures and a lot more left the governments ineffective and this lead the global economy to what we call today- ‘’Great Depression’’.

As for the cause of Great Depression, there is no one set of issues or cause that led to this economic disaster, but as per various economists and academicians, it was a mix outcome of interaction of complex set of factors; economical, social and political. Below are some factors that lead to Great Depression from 1930-1939:

Stock Market Bubble:

Post the era of World War I, Europe and Germany were trying to get back on their feets and it was only United States that was enjoying the win in the war. Both during and post the war, the US economy grew tremendously as Europe purchased more goods from US and also new innovations in technology, automobiles, electrical appliances were boon to US economy as profits went high that pushed up stock prices and gold reserves. Thus, US became world’s biggest credit nation. US started investing through FDI in Europe and Austria while at this time american investors believed and invested heavy amiunt on Stocks. With low margins, they were able to purchase multiple dollars stocks and thus stock market was ...

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...e objective of restoring prosperity and also allowed the formation of cartels and other anti-trust activities such as allowing minimum prices and restrciting capacity expansion and with monopoly profits of cartel holders, wages were still above market trend.

However, it was only during the ned of 1930’s when these policy of NIRA was replaced with Taft-Harley Act and thus labor hours began to rise. Further, the industrial wages were back in line with productivity and market trends and per capita hours worked were back to their normal lvel and depression was finally over in late 1939. (Ohanian)

Works Cited

Matziorinis, Kenneth. The Causes of the Great Depression: A Retrospective . Research Report. Montreal: McGill University, 2007. PDF Document.

Ohanian, Lee E. Why Did The Great Depression Last So Long? 5 January 2009. Web. 12 December 2013.

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