Why did the market crash in 1987?

I keep seeing references to 1987 these days. Usually phrased like "Worst market crash since 1987..." or something along those lines. I was in the 5th grade back then and not exactly a day trader.

A brief look at 1987 shows that it was in the middle of the Iran Contra trials and in the Regan Administration. I haven't seen any clear reason behind the economic turmoil. I mean with how much "Reganomics" has been thrown around and how the man is revered amongst republicans, I guess I am surprised that such a large crash happened on his watch.

Can anyone fill me in?

As far as I understand it was a long similar lines. Except instead of the financial and banking industry something else fell out (I am not sure what) and started a chain reaction of high unemployment which lead to less consumer spending and then became of vicious cycle.

Then in the 90's the tech market and the energy market both boomed and brought us out of it in the Clinton days.

That being said I believe this is much more similar to the beginning of the Great Depression as the financial institutions fell out under similar fraudulent practices with the stock market. Essentially the books were cooked and it crashed. Also we had a President make a power grab and serve four terms and we somehow entered WW2. We have a would be dictator doing the same thing now and we are more than poised with our world standings with other countries to enter WW3.



[edit on 8-10-2008 by Anonymous Avatar]

reply to post by Karlhungis


There is no clear reason why "Black Monday" happened, actually.
Here's an interesting link discussing some possibilities, though!

reply to post by Anonymous Avatar


Was there as much fear and panic involved? Is this relatively similar only amplified and appearing worse due to being in the information era now?

reply to post by anachryon


Thanks for that link. It is interesting. It looks like we have done all of the things listed as triggers of black Monday.

I found this to be.. not reassuring

Unlike what happened in 1929, however, the market rallied immediately after the crash, posting a record one-day gain of 102.27 the very next day and 186.64 points on Thursday October 22.

It sure doesn't seem like we will be seeing any of those huge rebounds anytime soon. In that regard, this is feeling a lot more like the time line of the depression vs Black Monday.

reply to post by Karlhungis


No the fear and panic is purposely being brought on this particular case. It is two fold:

1st, fear and panic make the situation worse since the stock market reacts to psychology on a macro scale and then it can become self-prophesying.

2nd and more important the economic crash is more of a means to an end. It can be used to set off panic and fear and while we are not thinking clearly they can slip in things like the "bailout" or patriot act.

These are very similar tactics to how most dictatorships have come into power.

I personally think as flawed as Fractional Reserve Lending is, I see now reason why our economy won't make a full recovery. The question is how far are puppet masters going to go with this? Can they ride this all the way to NAU and/or police state?

We shall see...