Lesson # 25 : Wall Street Crash of 1929 and the Aftermath

It's any other Thursday in 1929. Investors and traders wake with a hope to see their investments multiply. The market has been performing wonderfully and was at it's all time high. Investors wanted to be there for the long run.

The market closed that day with a record sale of 12.9 million shares. Bankers from all over the country met up and pumped in money in the market. They bought US Steel and a bunch of other blue chip shares{ Shares they expected would rise sooner or later}. This action is somewhat similar to the US Government's pumping in of around a trillion dollars at the time of the Economic Recession of 2008 only in this case it was the bankers and not the government that was putting in the money.

However, over the weekend President Hoover chose not to veto- the pending Smoot Tawley Tariff bill{ Which was basically a bill that was aimed to provide protection to American businesses similar to India's closed economy prior to 1992 Liberalisation}

As a result, the market tanked and what followed was the worst bear market ever. Stocks plunged, debt in the economy increased, bankruptcies were filed for and wages were reduced. A similar situation is in the works today and if we don't act now perhaps we should be prepared for the Great Depression 2. Though Governments and Analysts will state everything is all right perhaps they should look at America's 14 trillion dollar debt or the current crisis in EU and the weakening of Euro. They should look at China where manufacturing costs are increasing.

The future seems bleak with the current economic situation it wont be surprising if sooner or later we do go into The Great Economic Recession.

With a hope for a brighter future,

-Doodle