What are the consequences when the stock market crashes?

Answer 1

The stock market "crashes" when investors take their money out of the stock market in large amounts. The may do this for a number of reasons that basically boil down to three: the risks are too high, the prospects are too narrow, or the payouts are too low.

Their money doesn't just disappear off the face of the earth, though. Usually investors will simply transfer their wealth from one storage medium to another, such as treasury bills or corporate bonds. All this means is that companies who choose to offer profit shares as an investment incentive (that is, selling the rights to a part of their profits on the stock market) lose the power to raise additional funds as their stock price goes down.

The stock market as we know it is actually a relatively small piece of the larger investment pie, though, and really a "crash" of any kind would be better seen as a symptom of a shift in the economy, so when you ask what the consequences of a stock market crash are, what you probably want to know is, "what other consequences are associated with the cause of the stock market crash?"

The answer to that requires an understanding of interest rates, inflation, monetary policy, and all kinds of other boring things. Money does little to reflect what actually exists in the world; it simply helps us understand how to distribute our real wealth. Eventually we find that regardless of the abstract workings of the money market, our power to produce, exchange, and consume is real, and in the long run reality emerges over the confusion of any method of counting it.

Answer 2

stock market is the mirror of the country's economy. If it crashes, it means there is some deficit in the economical infrastructure of the country. The consequences are :-
(1) If you have invested a lot of money in a perticular company and the value of that company slashes down, you can be bankrupt.
(2) As the value of some shares comes down, it is the perfect time to purchase some of them with the hope that they will go up in the next quarter.

Answer 3

Stockholders lose huge sums of money, businesses go bankrupt, unemployment increases drastically, along with debt because people can't pay their bills. Basically, the economy collapses. What happened this week is not really considered a crash, and stocks are already making a comeback.

Answer 4

Very few, except that smart people make even more money. This China thing wasn't a crash anyway, just a bit of volatility.

Answer 5

Depression. Money gets very not there for anything..man should learn from history and the great depression.