Stock market crash

sudden dramatic decline of stock prices across a significant cross-section of a stock market

A Stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of paper wealth. Crashes are driven by panic as much as by underlying economic factors. They often follow speculation and economic bubbles.

Crowd gathering on Wall Street the day after the 1929 crash.
The banks... took huge gambles... then broke the world system... Then they rushed out to say 'bail us out, bail us out...we're too big to fail... and the public is standing there, amazed, because we just bailed you out how can you be paying yourself billions of dollars of bonuses again? Jeffrey Sachs

QuotesEdit

  • While most of the attention paid to the October 19 experience in the stock markets has focused on U.S. markets and exchanges, the stock market crash-and the bull market that preceded it-were international in scope. Major exchanges around the world have become increasingly connected. They all experienced substantial increases in stock prices in the years prior to the crash, and similarly experienced sharp drops in value in the period of the crash.
  • [After the markets totally collapse] the number one priority will be the provision of adequate food for all the people; two, the provision of adequate housing for all...; thirdly, the provision of adequate healthcare and education for all... When the economic collapse occurs, humanity will begin to recognize its oneness, and the need to co-operate and share the world’s resources... After the preliminary shock [of the collapse of the stock market], the nations will meet together to discuss the means of coping with the future in ordered fashion. Those who have stood most emphatically behind the rule of market forces will find themselves outvoted in the dispensation which will pertain, and those advocating co-operation will gain the ascendancy. This will not happen overnight... Each nation will be asked to make an inventory of what it has and what it needs. In this way the world’s ‘cake’ will be known. Each nation will be asked to make over into a common trust that which it has in excess of its needs in any given commodity... a very sophisticated form of barter will replace the present economic system... The new government which will emerge after the stock market crash will reflect the will of the people and stand for the people.
    • Benjamin Creme Maitreya's Mission Vol. II, Share International Foundation, 1993
  • What happens in the event of a global stock-market crash when the credit worthiness of many individuals, corporations, and governments will be called into question? Such a crash would bring wild fluctuations in the value of the stocks, bonds, commodities, and currencies which underlie every derivative transaction. How much is at risk? $30 trillion? $60 trillion? Losses totaling 5 or 10 per cent of these amounts would be enough to wipe out the capital position of every bank, broker, and financial institution on earth...With the sophistication of computers and modern telecommunications, we have placed ourselves in a much greater risk position than in 1929. It is not a question of whether or not the system will fail, but when. The Law of Cause and Effect ever holds sway. Ultimately, the world's central bankers will not have the ability to prop up the world's collapsing financial structure.
  • First to go will be the world’s stock markets. They are, as Maitreya has said, about to crash. They will come down because they stand in the way of right relationship. They really bear no relation to the needs even of trade between countries. They are an anachronism, what Maitreya calls, very accurately, “gambling casinos” which have no part to play in the future time, at least in their present form. When the world stock markets collapse — as soon as it is obvious that they are on their final plunge — Maitreya will emerge...introduced...simply as a man of extraordinary wisdom and love.
  • The crash of 1929 was not really the cause of the Depression. The cause of the Depression was the failure of banks, and people panicking. So what the Fed is trying to do is trying to prevent another massive failure of banks. Now, why Bear Stearns ended up in that situation, that’s the key question. Why was a bank allowed to borrow way over the amount of money that it could actually pay back? This is the key question. And the answer is, lack of regulation.
  • The banks have said, leave us deregulated, we know how to run things, don't put government in to meddle. Then with that freedom of maneuver they took huge gambles, and even made illegal actions, and then broke the world system. As soon as that happened then they rushed out to say 'bail us out, bail us out, if you don't bail us out, we're too big to fail, you have to save us'. As soon as that happened, they said 'oh, don't regulate us, we know what to do'. And they almost went back to their old story, and the public is standing there, amazed, because we just bailed you out how can you be paying yourself billions of dollars of bonuses again? ... There is a lot of greed and there's very little accountability... One wonders in the United States sometime whether the government is regulating the banks, or are the banks determining government policy?... Why have the politicians protected them all along? You know why? Very simple they pay for the politicians.
  • Well, companies themselves have been causing this crisis as much as speculators, because companies like Amazon, like Google, or Apple especially, have been borrowing money to buy their own stock. Corporate activists, stockholder activists, have told these companies, we want you to put us on the board because we want you to borrow at 1 percent to buy your stock yielding 5 percent. You’ll get rich in no time. So these stock buybacks by Apple and by other companies at high prices can push up their stock price in the short term. But when prices crash, their net worth is all of a sudden plunging... this morning in the stock market was a huge wipeout of borrowed money on which people thought the market would go up, and the Federal Reserve would be able to inflate prices. The job of the Federal Reserve is to increase the price of wealth and stocks and real estate relative to labor. The Federal Reserve is sort of waging class war. It wants to increase the assets of the 1 percent relative to the earnings of the 99 percent, and we’re seeing the fact that this, the effect of this class war is so successful it’s plunged the economy into debt, slowed the economy, and led to the crisis we have today.
  • As a foreign correspondent I covered collapsed societies... It is impossible for any doomed population to grasp how fragile the decayed financial, social and political system is on the eve of implosion. All the harbingers of collapse are visible... We suffer the usual pathologies of impending death. I would be happy to be wrong. But I have seen this before. I know the warning signs. All I can say is get ready.
  • The U.S. economy crashes when it becomes too top heavy because the economy depends on consumer spending to keep it going... For a time, the middle class and poor can keep the economy going nonetheless by borrowing. But, as in 1929 and 2008, debt bubbles eventually burst. We're getting dangerously close. By the first quarter of this year, household debt was at an all-time high of $13.2 trillion. Almost 80 percent of Americans are now living paycheck to paycheck.... 40 percent of Americans said they wouldn't be able to pay their bills if faced with a $400 emergency. The underlying problem isn't that Americans have been living beyond their means. It's that their means haven't been keeping up with the growing economy. Most gains have gone to the top... Trump and his Republican enablers are now reversing regulations put in place to stop Wall Street's excessively risky lending. But Trump's real contributions to the next crash are his sabotage of the Affordable Care Act, rollback of overtime pay, burdens on labor organizing, tax reductions for corporations and the wealthy but not for most workers, cuts in programs for the poor, and proposed cuts in Medicare and Medicaid—all of which put more stress on the paychecks of most Americans.
  • A friend recently asked, "Ben, just between you and me, the market is going to crash, right?" My answer was a resounding "yes." The stock market will definitely crash at some point. That's just the nature of the beast... Humans are prone to taking things too far in both directions but that doesn't help predict how far we'll collectively take things during the next melt-up or meltdown. I know for sure there will another market crash at some point. It's something all investors should mentally prepare for. The hard part is knowing when that will be.

See alsoEdit

External linksEdit

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