The causes of the Wall Street Crash were many, but the worst was a financial bubble built on credit that just burst, causing a global financial crisis. This has been labeled as one of the biggest financial crashes in history. It was a combination of many factors including; irrational exuberance, hope, and overconfidence leading to the overproduction of consumer products. The rise of American consumerism, easy credit schemes, and excessive debt.
Causes of the Wall Street Crash
Although it might seem like there are many effects factored into the Wall Street Crash, it should be noted that the cause of this event was the loosening of credit standards that was done by the Federal Reserve Essay Wall Street. The easing of these credit standards allowed banks to start lending money more loosely which lead to the real estate bubble in the United States. The result of this is that you can see the effects of the Wall Street Crash in many areas of the country.
In New York City alone, house prices have increased by fifty percent and even though home sales have leveled off, it does not look as if there will be any slowing down in the near future. The culprit that is being mentioned the most is the easy credit loans that banks were giving out leading up to the event. With all the bad economic news going around, many consumers are getting extra credit because they are too scared to default on their home loan payments. Another factor is that the consumer goods sector of the economy has also suffered a downturn, with major retail outlets closing their doors and small businesses not being able to stay in business due to rising labor costs. This all leads to a growing frustration among many people who are trying to figure out what causes the Wall Street Crash.