Banking Crisis and Financial Collapse: Banks began People could ran run on “A not repay short of in “calling the bank” loans” loans money —> (Demanded People —> —> —> repayment of panicked that loans, esp. banks would those collapse “on margin”) Middle class Depositors <— <— suffered the lost their Banks collapsed (bankrupt) worst savings & pensions As economy quickly ground to a halt —> *** Factories closed (could not make sales) and Bankruptcies —> *** Unemployment / layoffs —> *** No jobs = No consumers = No profits = More layoffs —> Fewer Jobs Fewer Less More —> —> —> (Layoffs) consumers profits Layoffs
Banking Crisis and Financial Collapse: Banks began “calling in loans” (Demanded repayment of loans, esp. those “on margin”) —> People could not repay loans —> ran short of money —> People panicked that banks would collapse —> “A run on the bank” Middle class suffered the worst <— Depositors lost their savings & pensions <— Banks collapsed (bankrupt) As economy quickly ground to a halt —> *** —> Factories closed (could not make sales) and Bankruptcies *** —> Unemployment / layoffs *** —> No jobs = No consumers = No profits = More layoffs Fewer Jobs (Layoffs) —> Fewer consumers —> Less profits —> More Layoffs