Wall Street is a familiar name to many. It is both symbolic and geographic that embodies the spirit of capitalism in America. It technically encompasses all the American hedge funds, backs, and even the security traders that make the money go round in America. The physical place is located in Manhattan and it stretches for about eight blocks. Some of the most notable landmarks that are a part of the street include the New York Stock Exchange, the Federal Reserve Bank, Goldman Sachs, and JPMorgan Chase.
What Is It, Exactly?
Wall Street is both metaphorical and physical. The metaphor encapsulates all the major businesses in the United States that make the money circulate in their financial systems. It captures all of the different types of markets in the United States such as commodities, bonds, stocks, foreign exchange, etc. These markets started out as a source of employment for many individuals. For a while, it was successful in creating jobs for many people. However, it became so profitable that it came out as a capitalist movement.
The primary change that occurred in Wall Street happened back in 1999 when the Glass-Steagall Act was abolished. It enabled any bank to use the savings of their investors in various derivatives. These include loans, mortgages, and credit card debt. The danger is that these derivatives are unregulated when compared to stocks or bonds.
Wall Street is not as smooth-sailing as it seems. Its history is littered with crashes and financial crises that affected many. One popular crisis is the one in 2008 which stems from deregulation. The money was being successfully traded into various avenues like mortgages and everything was fine until it met the downfall of housing prices in 2006. A lot of individuals were then placed under debt. This snowballed into the stock market process dropping and the banks refused to lend money to each other in order to keep their respective institutions afloat. It led to the worst financial recession in history, even worse than the Great Depression.
Another crash in history was the stock market crash that happened in 1929. It was actually the event that led to the famous Great Depression. All of the bankers failed to stop the downfall of stock prices. It led to a panicked atmosphere because so many individuals placed their entire life’s savings into stocks. When the prices dropped, these investors lost faith in the American economy and in Wall Street. The other panicked individuals took their savings from banks which then led to the collapse of the said banks.
The only thing that pulled the nation out of the Great Depression was the government’s spending on the Second World War. As of 2010, certain government regulations were put into place in order to prevent the recurrence of financial crises. Wall Street is stable as of today, still providing countless jobs and circulating the money of the United States.