Stock Markets Exposed

why did the stock market crash, which affected only a few people, come to paralyze the entire country?

why did the stock market crash, which affected only a few people, come to paralyze the entire country?

Public Comments

1. Because those few people lost a lot of money and the company suffered greatly from the loss causing more people to become in debt. I think that's why!
2. Because people stopped investing and consequently money stopped rolling and lo and behold the country came to a stand-still
3. Hmm. I presume you mean the US stock market crash of 1929. The answer is simple: You're wrong. Millions of people were margin players in the stock market in the 1920's. When the crash came, they were wiped out. Millions of others who'd invested responsibly were also wiped out when the crash destroyed the value of their holdings, as well as that of the speculators. When they were wiped out, the banks and businesses that had them as customers suffered. Their employees suffered, as did their suppliers, as did the government entities that relied on them for tax revenue, as did the employees of those government entities, etc. etc. etc. Think of the stock market crash as the beginning of an avalanche on a mountaintop. Plenty of people at the bottom who never got close to the summit are crushed.
4. Think of the stock market as a bank with a lot of money. Businesses borrow against that money. Banks make money on peoples investments with that money and few individuals buy things with that money. Now Half it. Businesses can't borrow (no collateral), Banks go broke (investments gone), and the few rich people can't buy anything (no major sales). It snow balls everyday people get put out of work so the businesses don't go bankrupt. Banks weren't insured and went bankrupt causing everyday people to lose there savings (causing zero sales). More people put out of work More banks closing etc.
5. it all because of MONEY!!!! hahaha
6. For the same reasons that the sub-prime crisis is damaging the USA now. Businesses, which employ people, need capital to carry on. Where there is a lack of confidence in the capital markets money is harder to get, and costs more by higher interest rates. People choose to invest in other ways. If the capital is not available business activity contracts and people lose their jobs. The sub-prime debacle affected comparatively few people directly, but the ripples it is causing by increasing the cost of capital are having a significant indirect effect. The 1929 crash has scared regulators and capital markets so there is less chance of another crash occurring, but it is possible.
7. I think those few people who get affected, make the others to stop investing in the market that affects rolling of the money.