Black Monday E-Book

50MINUTES

• Herausgeber: 50Minutes.com
• Kategorie: Fachliteratur
• Serie: Economic Culture
• Sprache: Englisch

Seitenzahl: 25

Veröffentlichungsjahr: 2017

Beschreibung

Understand Black Monday in no time! Find out everything you need to know about this major financial crisis with this practical and accessible guide.

On 19 October 1987, a number of factors came together to cause an unexpected drop in share prices on the New York Stock Exchange, with the Dow Jones ultimately losing 22.6% of its value in the course of a single day. This was the largest drop in the index’s long history, but fortunately the real economy emerged relatively unscathed from the crash and a crisis of the magnitude of the 1929 Wall Street Crash was averted.

In 50 minutes you will be able to:
• Identify the reasons for the sudden loss of share value on 19 October 1987
• Find out about the crash’s impact on stock markets around the world
• Understand the decisive action taken to prevent the crisis from worsening

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Leseprobe

Black Monday

A crash that shook the financial world

When: 19 October 1987.Where: the New York Stock Exchange.Context: against a backdrop of rampant speculation, the unexpected announcement of the US trade deficit seriously worried investors and drove share prices down.Key protagonists:Ronald Reagan (1911-2004), 40th President of the United States, 1981-1989. When Reagan came into office in January 1981, he embarked on a programme of tax reduction in order to stimulate economic growth. As a result, stock markets around the world rose constantly during his presidency.Paul Volcker (born in 1927), American economist and Chairman of the Federal Reserve from 1979 to 1987. He countered inflation by raising exchange rates on the Federal Reserve.Alan Greenspan (born in 1926), American economist and Chairman of the Federal Reserve from 1987 to 2006. He supported banks during the darkest days of the 1987 crisis by supplying liquidity.Key terms:Dow Jones: the Dow Jones was created in 1885 and is the second-oldest stock exchange index in the United States. Even though it only lists 30 companies, it is a key reference point for the New York Stock Exchange.Trading: the buying or selling of shares on the financial markets, carried out by financial operators known as traders.Speculation: a risky financial operation which involves anticipating fluctuations on the market and buying a commodity with the aim of later reselling it at a profit. Black Monday: the day when the Dow Jones lost 22.6% of its value, the largest drop ever recorded on the New York Stock Exchange.

The Wall Street Crash of 1929, with the famous Black Thursday on 24 October, hit the New York Stock Exchange and plunged the country into the Great Depression, before spreading across the world. It went down in history as the worst financial crisis of the 20th century, and now holds an important place in collective memory.

Almost 58 years to the day after this crisis, the world of finance was hit by another crash. While the world was enjoying a period of relative economic prosperity, panic spread through the New York Stock Exchange on Monday 19 October 1987: so many orders were placed that the computers struggled to keep up, share prices collapsed and the Dow Jones dropped by 22.6% in the space of a single day.

This crash on the world’s leading stock exchange had a knock-on effect around the world. The main stock markets were soon thrown into disarray, losing an average of 25% of their value on 19 October alone:

the Hong Kong stock market was closed for a week to deal with the fallout from a 45% drop in value at the end of October; the London stock market lost 26% of its value;the Sydney stock market lost 25% of its value;the Toronto stock market lost 22% of its value;the Tokyo stock market lost 15% of its value;the Paris stock market “only” lost 9% of its value, but continued to decline for several days afterwards.