These days the stocks don't do well.
First the American interest loans thing, now is is going to whole the world and everybody gets problems.
What do you people think about the "crisis"?
And can someone explain what will happens if the stocks will keep sinking.
I'm not really an economist.
Greetz
Dirkvb
well stocks go up and down, right now we're on a down cycle. Ultimately a big stock crash can lead to a loss of jobs and the world could go into recession.
Stock prices seem to be determined by two things, fundamental stuff and technical stuff. Fundamental stuff includes the earning prospects of companies, interest rates (the cost of borrowing money), and other economy and individual company related stuff. Investors use fundamental stuff to choose stocks.
Technical stuff is basically the ongoing battle between greed and fear. While the fundamental stuff usually determines a basic value of a stock (what one investor will pay for it and another investor will sell it for) it is the gambler (trader) who determines the wild daily gyrations.
The economy is in a mess right now because lenders were allowed to make real estate loans without requiring the traditional 20% down, good credit, and proof of income. The resulting bubble was bound to burst, and it's taking the stock market and everything else with it.
All things will pass. There are still about 3 million homes that will probably go into foreclosure. And the values of other homes in the neighborhoods will suffer because of it as well. So unless there's a massive government sponsored bailout (taxpayer funded of course) things probably won't turn around for at least 2 years.
But even the great depression was eventually over. All it took was World War II.
