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The second biggest crash in global markets occurred in 2008. It was preceded by a housing market crash which led two Wall Street banks, Bear Stearns and Lehman Brothers declaring bankruptcy. By 2008 the world economy was so interconnected that the market crash led to a global financial crisis. Although it wasn’t the largest crash in percentage terms, it was the largest drop in terms of value in the history of the New York Stock Exchange.
Another reason for sudden fall is IL&FS debt crisis . It has defaulted over 3 payments this month . Since alot of banks have exposure to it's 90,000 crore debt, banking stocks are also seeing a sell off owing that they may to write off this amount . Although LIC has come to it's rescue by buy agreeing to subscribe to it's right issue ,but only the time would tell whether they will able to save this crisis or not.
Surging oil prices: Oil has been rallying as worries about Iran sanctions, which kick in on November 4, threaten global supply. International crude oil benchmark Brent yesterday hit a four-year high of $86.74 a barrel. Given that India is the world's third largest oil consumer, and heavily dependent on imports to boot, this is the biggest threat to the domestic economy.
Indeed, Tesla’s performance has all the makings of a stock market crash chart to reflect the irrational exuberance of 2018. Investors have pushed Tesla’s stock market valuation to such a degree that it has infected the healthiest hedge fund. It’s a one-stock Black Monday warning! Note the Tesla stock market chart. It’s moving on hope and expectations alone; every time the quarter results are released, the stock tends to drop.
A bear market evolves, often after a stock market crash, when investors grow pessimistic about the stock market, and as share prices fall as supply begins to outpace demand. Economists usually refer to a bear market as the result of the stock market losing 20% of its value over a 52-week period. They usually last about four years, although many don't last even that long. Historically, bear markets are a great time to buy stocks, as prices are low and value is high, and that's exactly what smart investors do.
The Trump tax reform plan might trigger a fall in prices that could lead to a collapse. Congress has suggested removing the deduction for mortgage interest rates. That deduction totals $71 billion. It acts like a federal subsidy to the housing market. The tax break helps homeowners have an average net worth of $195,400. That's much greater than the $5,400 average net worth of renters. Even if the tax plan keeps the deduction, the tax plan takes away much of the incentive. Trump's plan raised the standard deduction.
On May 6, 2010, U.S. stock markets opened and the Dow was down, and trended that way for most of the day on worries about the debt crisis in Greece. At 2:42 p.m., with the Dow down more than 300 points for the day, the equity market began to fall rapidly, dropping an additional 600 points in 5 minutes for a loss of nearly 1,000 points for the day by 2:47 p.m. Twenty minutes later, by 3:07 p.m., the market had regained most of the 600-point drop.:1
The bottom line: As a sandpile grows, all sort of sand “avalanches” take place, but it is impossible to predict how big or how often they occur. Sometimes a few grains roll down the slope, while occasionally a large avalanche carves a big section of the sandpile. The size and frequency of those avalanches, mathematically speaking, bear a notable resemblance to the size and frequency of earthquakes, solar flares, river floods, forest fires, and stock market returns. Intriguingly, all of them have defied attempts at prediction. The question is why.
In March 2017, William Poole, a senior fellow at the Cato Institute, warned of another subprime crisis. He warned that 35 percent of Fannie Mae's loans required mortgage insurance. That's about the level in 2006. In some ways, these loans are worse. Fannie and Freddie lowered their definition of subprime from 660 to 620. The banks are no longer calling borrowers with scores between 620 and 660 subprime. Poole was the head of the Federal Reserve Bank of Kansas who warned of the subprime crisis in 2005.
As the year drew to a close, the Bureau of Economic Analysis revised its growth estimate higher. It said that the nation’s gross domestic product had increased 0.5 percent in the third quarter. Its prior estimate said it had shrunk 0.5 percent. It seemed the U.S. economy could shrug off a housing downturn and banks’ liquidity constraints. The Dow ended the year just slightly off its October high, at 13,264.82.
That was six years ago. Funnily enough, the author of this blog, David Haggith, recently posted an article titled I Bet My Blog on a 2018 Economic Collapse. Basically, he is going to throw sh*t at the wall until something finally sticks – then he’ll pontificate to everyone about how his prediction was correct. It is worth noting that he also predicted that 2016 would be the year of the economic apocalypse and that he was “fairly sure” that stocks would slump in January, 2017.