and what is the cause for every financial crisis.?
2007-02-20 10:29:18 · 4 answers · asked by mako 2 in Business & Finance ➔ Other - Business & Finance
Speculation was the cause of 1929 crash. Back then you could buy a stock on the market and pay 10% of the value at purchase. If the market went up 10% - you made 100% on your investment. If the market went down 10% you only loss the 10% you invested. EXCEPT THIS IS A CONTRACT, where you are required to pay the additional 90% in the future. So many people got blinded by what look like easy money, they over looked this point.
JUST LIKE THE DOT-COM, people chasing EASY MONEY and loosing their shirts and homes. If it don't make sense, it is wrong and it don't matter if you are making money or not, WRONG IS WRONG.
2007-02-20 10:40:54 · answer #1 · answered by whatevit 5 · 1⤊ 1⤋
Too many stocks sold on margin. They had 5 % margins back then!!! . When the stocks started to slide people could not make the margin calls and then the bottom fell out
2007-02-20 18:37:52 · answer #2 · answered by Rick F 2 · 0⤊ 0⤋
The Fed raised interest rates to "cool down the economy". If the Fed just leaves interest rates alone, there would be economic stability. Whenever the Fed touches the interest rates, the economy takes a tremendous hit.
2007-02-20 18:59:45 · answer #3 · answered by Kilroy 4 · 0⤊ 1⤋
greed
2007-02-21 09:04:02 · answer #4 · answered by Anonymous · 2⤊ 0⤋