General Question

Riser's avatar

How much involvement do you believe President Hoover had in the 1929 crash?

Asked by Riser (3485points) March 7th, 2008 from iPhone

And do you see parallels of Hoover’s actions to the current administration’s that could result in a second crash since, obviously, our country is facing an economic demise.

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5 Answers

ironhiway's avatar

Very little, during the 1929 crash you could buy stock for 10% down.
Now purchase requires at least 25% though for most it’s 50% and when your equity falls to 35% you must take action. You must deposit more cash or sell the stock. If you don’t the brokerage can sell the stock.

People can take the same risks as they did in 1929 by using options but for the most part they can only lose what they have risked. These changes have allowed us to experience 30% drops in value with out forcing a crash.

In 1929 credit caused the crash in stocks, now it’s housing but housing has a permanent use where stocks can become worthless. So there will remaim some value in the property and many people will just live in their houses even though they owe more than it’s worth knowing that the value will return. Since the demand, population growth, will continue to increase.

The probability of economic demise is in the hands of lenders, investors, and innovators not so much the President.
The wost thing a president can do is reward the offenders with a bailout, giving them the green light to go back and do it again.

LuckVIII's avatar

do you not think bush’s economic bailout hurt the housing market by only delaying the inevitable at the cost of taxpayers money ?

Riser's avatar

on that we might not be able to recover from? Yes.

TrenchMouth's avatar

Not to correct grammar or anything, but it wouldn’t be “an economic demise.” You usually don’t survive a single demise, never mind leaving room for a second. The 1920’s crash parallels a few issues that we see today but today’s issues are largely different. The current issues seem to deal more with market failure in the mortgage/credit market. The great depression struck globally within the period of a few years, not really driven by American economic struggles. This time around it seems to be just us bringing everyone else down. I am no economist but I assume it is something we will come out of. But there is a question as to whether or not we should. Might we need to accept a lower quality of living that we might have wanted a year or two ago? I suppose that is another question for another thread…

mirza's avatar

I don’t think it was Hoover’s fault, but he was pretty ignorant about the issue—Hoover thought that depression was “just a state of mind” and refused to accept the fact that America might be headed for a recession for a while. Plus he was hesitant for the federal government to interfer in state affairs and did not want to provide aide to the people (but later had to do so due to pressure from congress).

As for the actual crash itself, i think the cause was years of stock-specualtion, bad trades, giving out loans to people who could not pay it back, buying on the margin, etc.

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