The Great Depression

&

The Great Recession

THEN: Stock Market Crash

• October 29, 1929• Investors ruined and banks

closed:

businesses can’t grow businesses forced to cut

back on production, lower wages or layoff workers

WHY?: Margin Buying/Speculation

• Paying a small part of a stock’s price as a down payment and borrowed the rest. When the prices went up, one would sell the stock, pay off the loan, and keep the profit

• System worked as long as stock prices kept rising!!

NOW: The Housing Crash/Speculation

http://www.reuters.com/article/2013/02/01/us-usa-housing-corelogic-idUSBRE9100OR20130201

THEN: Unequal Distribution of Wealth

• By 1929 the top 10% of the nation's population received 40% of the nation's disposable income

• Salaries so low, people couldn’t buy what they wanted/needed

• Farm income declined 66% from 1920 to 1929

Income Distribution, 1929

1

5

29

65

$10,000 andOver$5,000-$9,999

$2,000-$4,999

$1,999 andunder

NOW: Occupy Wall Street

NOW: Occupy Wall Street

In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers)

http://www2.ucsc.edu/whorulesamerica/power/wealth.html

NOW: Occupy Wall Street

THEN: Unemployment

NOW: Unemployment

April 2011 - Unemployed workers wait to file claims outside a state office in Los Angeles, Calif.

THEN: Bank Failures• Banks in the 1920’s loan too much $$ to investors• Market crashers . Banks not paid back from investors so they can not

give the depositors their cash.

RESULT: BANKS WERE FORCED TO CLOSE!!!! PEOPLE LOST ALL THEIR SAVINGS!!!

NOW: Bank Failures

THEN: Installment Buying• Allow people to purchase on credit, and

people piled up debts. • They used their money to buy on

margin, hoping that prices would rise and they would make a profit

• When people cant pay back debt, it results in a cutback in spending….which leads to??????

• Inflation: By 1929 71% of American families earn less than $2500/year(minimum needed to live decently)

• However- top 0.1% had a combined wealth of the bottom 42%

NOW: Credit Debt