Four Facts Media Loves To Ignore About The Economy

Fear is a great motivator for selling anything. Few groups know that better than mainstream media.

News organizations appear to be in a competition to outclass each other by way of the next terrible prediction and headline.

A news group recently went as far to refer to the economy as teetering on a Great Depression.

Let's set the record straight.

Historians call October 24, 1929 Black Thursday. On this day, investors began selling their stocks as quickly as they could. Sell orders inundated market exchanges and the bull market suddenly shifted to a bear market.

Bank deposits were uninsured and so as banks failed people just lost their savings. Surviving banks, uncertain of the economy and afraid for their own survival, stopped being as ready to create new loans. Bankers were reportedly urging joined interests to buy stocks at current levels. In addition to banking support, considerable purchasing was reported from investment trusts, utility operators, big individual investors, and some small investors.

Black Tuesday , October 29th, 1929 - is that day that a large amount of historians agree gave the last whack to the Roaring 20s and was the starting point of the Great Depression. On Black Tuesday, a record 16.4 million shares changed hands.

Black Tuesday marked the launch of the Great Depression, a period of economic poverty in the United States lasting from 1929 to 1939. On Black Tuesday the Dow Jones Industrial Average lost just about 12% of its worth after having lost almost 13% the preceding day on Black Monday. The Great Depression led to the establishment of the majority of regulation still in force in the present day.

Stocks started to decline precipitously, leading to additional dumping. Stock traders could not pay the interest on their margin accounts causing the banks that had loaned the money to go out of business. Stock prices dropped to new lows. All through the day, Seattle stock exchanges and local stockbroker's offices were densely crowded with apprehensive stockholders watching the collapse. Stock prices were run up to very high levels prior to Black Thursday, which everyone knew (so we are told) were unsustainable. It also was the first time in investing history that masses of investors were allowed to borrow on margin in order to buy stocks.

Stocks dropped so much, that at a lot of times during the day no buyers were available at any price. Markets lost virtually $16 billion during the month of October or 18% of the beginning of the month value. Twenty-nine public utilities lost $5.1 billion in the month.

Four Facts News Organizations Like To Disregard About Why There Will Be No Great Depression

1 - Bank deposits are insured. In reality, one of the initial things President George Bush did at the start of the recession was to increase the amount your bank account is insured. The public will not just suffer the loss of all their money because a bank fails like they did in the Great Depression.

2 - Margin accounts are now regulated. There are margin call limits currently that stop excessive risk in the stock market by average investors. Banks limit margin borrowing. A person has to fill out a special application for a margin account and demonstrate some knowledge of stock trading first.

3 - Banks who are big are not permitted to go out of business like they were in the Great Depression. Government action saved all the biggest banks from collapse.

4 - The stock market is not allowed to go down too much in a given period of time. Trading halts or breaks are forced in times of panic selling like right after 911. In addition breaks are placed on SHORT selling like how the SEC temporarily banned short-selling on 80 financial stocks on September 19th, 2008.

Comments? Questions? Email Here

© HowtoAdvice.com

How to Advice .com