Crack of 29

The crash of 291 2 was the most catastrophic crash in the stock market in the history of the US stock market, taking into account the global reach and long duration of its aftermath and that led to the 1929 crisis also known like the Great Depression. The following three phrases are often used to describe this stock crash: Black Thursday, Black Monday, and Black Tuesday. All of them are appropriate, since the crash was not a one-day event. The initial crash occurred on Black Thursday (October 24, 1929), but it was the catastrophic deterioration of Black Monday and Black Tuesday (October 28 and 29, 1929) that precipitated the spread of panic and the beginning of unprecedented consequences. and in the long term for the United States.

The falls continued for a month. Economists and historians disagree on what role the crash played in subsequent economic, social, and political events. In North America, the crash coincided with the onset of the Great Depression, a period of economic decline in industrialized nations, and led to the establishment of financial reforms and new regulations that became a benchmark.

In the days leading up to Black Thursday, the market was severely unstable. [Citation needed] Sales periods and high trading volumes were interspersed with brief periods of price increases and recovery. Later, economist Jude Wanniski linked these swings to the outlook for the enactment of the Smoot-Hawley Tariff Act, which was being debated in Congress.5 After the crash, the Dow Jones Industrial Average (DJIA) did not recover until the early 1930s, but only to recede again, reaching its lowest level since 1800.6 on July 8, 1932 and did not return to pre-1929 levels. until 1954.7

Indebtedness

Internal: in the United States, American investors invest all their life savings since, with little money, they could amass great fortunes; These began to buy through credits, but without sufficient guarantees or means to pay; loan officers would go to their bank and deliver unsecured loan tokens, banks went to the Federal Reserve for gold, but with no demand, investors run out of money to pay off their loans, and banks could not pay to the Federal Reserve

External: an excessive supply and too little demand caused debt and deflation that made countries take drastic measures to cover their debt; European countries ask for money, especially from the US after the war, due to reconstruction. France's public debt was multiplied by 6.5, Great Britain's by 11 and Germany's by 27.

Inflation

Consequences: the excess supply, together with the overproduction, caused the devaluation of the European currencies against the dollar, the excessive production and the low demand caused that the inflation of the loans grew even more; the debts grow and the values of the different materials fall in the market, causing the absence of product sales.

How to understand the 'black Monday' that has caused the fall in the world stock markets

The main European stock markets sank at the close of a Black Monday registering falls between more than 7 and 11%, very affected as in previous days by the coronavirus epidemic and the failure of the negotiations between OPEC and Russia. Oil this day suffered a fall of about 30% in Asia, the most important since the 1991 Gulf War, as a result of the decision of Saudi Arabia to drastically lower its prices after the failure last week of its negotiations with Russia. Wall Street also opened with heavy losses on Monday, leading to a suspension of trading for about 15 minutes. At around 2:15 PM GMT, the Dow Jones was down about 5.62%. The Nasdaq was down 5.02% and the S&P 500 was down 5.51%. A barrel of WTI crude in New York on Monday had its worst drop since the first Gulf War in 1991, with a drop of more than 30% at the beginning of the day, to $ 27, a price level at which many wells of shale oil in the United States is no longer profitable.

A negotiation tactic?

Last week, Saudi Arabia, the leader of the Organization of the Petroleum Exporting Countries (OPEC), pushed again to reduce oil production to offset the decline in global demand due to the novel coronavirus epidemic. But Russia, the world's second largest producer after the United States, objected.

In response, Saudi Arabia ordered the biggest price cut in 20 years, trying to grab a segment of Russia's market share and shaking up financial markets. "What Saudi Arabia is doing could be a negotiating tactic to bring Russia to the table, but the market is unlikely to be optimistic in the short term," said investment bank Berenberg.

Economic consequences

According to analysts, the collapse in prices will have notable consequences, from the erosion of income in energy-dependent economies to global deflation, to a slowdown in oil exploration projects.

It could also be particularly devastating for the Gulf countries, which account for a fifth of the world's crude supply, and where 70-90% of government revenues depend on oil

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