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Why does it matter to the rest of the world if the stock market falls? When economists talk about plummeting stock markets they talk as if it would have economic disasters, but the only actual consequence of it is that the stock owners lose money, right? I mean at least until the stock goes back up again. Why is it a global disaster if the stock market plummets?
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>>1827486
Stock markets falling are often the result of underlying economics issues. It less that the act itself is bad, but that a crash could be a very visible sign of other problems with the economy.
In 2000 when the dot com bubble burst, the only people really hurt were the tech companies, and the burst occurred because of the wildly optimistic and overvalued valuations of internet companies.
In 2008 the stock market burst when it became apparent that firms were either gonna make less money or even lose money as the economy melted down as a result of the massive credit crunch.
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>>1827542
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stock market crashes can affect corporate behavior too. Companies will be more conservative, government will use monetary/fiscal policies that can increase/decrease price levels. More things happen than just stock prices going down
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