Compare the market crash of 1929 with the market crash of 2007. Which one was worse?



1929. It was caused by unregulated speculation in the US stock market, with unsupportable levels of investing on margin. The crash of 1929-1932 led to a worldwide depression, as many countries relied on trade with the US and loans from US banks. Trade fell off significantly and banks either called in loans or went under. The situation played a major role in Hitler and his Nazis rise to power. Whereas prior to the crash, when times were relatively good in Germany, which had bounced back well from the disastrous Post-WWI period of the Weimar Republic (aided significantly by US investment), when hard times suddenly hit Germany, the people, in sufficient numbers, realized that Hitler had been warning about foreign influence and were desperate for someone strong to come in and fix it. And once Hitler got the power, he immediately made it so that no other party could challenge that power. The crash of 2007-2009 was tied to the 'housing crisis' that was created by US government interference in the mortgage market, which led to mortgage lenders easing restrictions on being approved - people who had no business owning property could suddenly own property. Mortgage money was easy to get and this overheated the market and created the housing price bubble. To keep the mortgage money flowing required investment, and financial institutions bought these mortgages, not understanding how shaky many of them were. When the people who had no business owning property stopped paying those loans they couldn't afford, the financial institutions that held this worthless paper took a hit, one went under (Lehman Brothers) and the US government didn't step in to save them. The stock market was shaken by this, as well as the housing market. The stock market saw a two-year recession. The housing market took longer to recover. But things were NOWHERE near as bad as the Great Depression, which never fully ended before the US entered WWII some 12 years after the 1929 beginning.


Curtisports2 provided an excellent summary. 1929 and its aftermath were much worse than 2007. You may wish to either read or get the movie, The Big Short, by Michael Lewis. In it he explains how the housing bubble evolved and burst from the perspective of a small group who saw it coming. Lewis is the author of Moneyball and The Blind Side, both were movies from his books.