what are the events of the wall street crash

Question

please can you state the effects as well as the events of the wall street crash

Answer 1

Assuming you are talking about the crash of 2008.   Like most things, it there was not a singular event.   A number of events - some policy driven, some market driven, some political and physicological   - all came together at a point in time to cause the '08 crash.

 

Repeal of the Glass - Steagall Act in 1999.   Passed by Congress, this eased restrictions on the banking system allowing banks to now engage in activities the the original GS Act of 1933  had intended to separate. (The GS Act of 1933 was passed in the wake if the 1929 stock market crash).

 

Low interest rates - following 9/11, the US economy was in the midst of a mini recession.  As a consumer based economy, the idea was to stimulate the economy by lowering taxes and interest rates to stimulate the economy. This created "easy money" and everyone wanted their share.

 

Easing of lending restrictions.  Prior to this period, the purchase of a new how required a 20% down payment. Suddenly, with the above mentioned reasons political influences, creative bank financing (offering 5%, 3%, 0% down, "Liar Loans" - not having to prove income to support loan repayment).

 

Now, in an era of low unemployment, get rich quick by buying and flipping houses...these and a number of other influences at the time created an unrealistic sense of these good times never ending.  Everyone in the system wanted "theirs"... which ultimately all came to a halt and crash as the banking and finance systems could not sustain what had been created. 

 

Once, the easy money dried up, everything fell apart, lead by the housing market which had been created as a result of the above mentioned events.