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The Great Depression & The Great Recession

The Great Depression & The Great Recession. THEN: Stock Market Crash. October 29, 1929 Investors ruined and banks closed: businesses can’t grow businesses forced to cut back on production, lower wages or layoff workers. WHY?: Margin Buying/Speculation.

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The Great Depression & The Great Recession

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  1. The Great Depression&The Great Recession

  2. THEN: Stock Market Crash • October 29, 1929 • Investors ruined and banks closed: businesses can’t grow businesses forced to cut back on production, lower wages or layoff workers

  3. WHY?:Margin Buying/Speculation • Paying a small part of a stock’s price as a down payment and borrowed the rest. When the prices went up, one would sell the stock, pay off the loan, and keep the profit • System worked as long as stock prices kept rising!!

  4. NOW:The Housing Crash/Speculation

  5. THEN:Unequal Distribution of Wealth • By 1929 the top 10% of the nation's population received 40% of the nation's disposable income • Salaries so low, people couldn’t buy what they wanted/needed • Farm income declined 66% from 1920 to 1929

  6. NOW:Occupy Wall Street

  7. NOW:Occupy Wall Street In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers) http://www2.ucsc.edu/whorulesamerica/power/wealth.html

  8. NOW:Occupy Wall Street

  9. THEN: Unemployment

  10. NOW:Unemployment

  11. April 2011 - Unemployed workers wait to file claims outside a state office in Los Angeles, Calif.

  12. THEN: Bank Failures • Banks in the 1920’s loan too much $$ to investors • Market crashers . Banks not paid back from investors so they can not give the depositors their cash. RESULT: BANKS WERE FORCED TO CLOSE!!!! PEOPLE LOST ALL THEIR SAVINGS!!!

  13. NOW: Bank Failures

  14. THEN:Installment Buying • Allow people to purchase on credit, and people piled up debts. • They used their money to buy on margin, hoping that prices would rise and they would make a profit • When people cant pay back debt, it results in a cutback in spending….which leads to?????? • Inflation: By 1929 71% of American families earn less than $2500/year(minimum needed to live decently) • However- top 0.1% had a combined wealth of the bottom 42%

  15. NOW:Credit Debt

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