Friday, September 9, 2011

The Depression

Basic CMYK
Giving anyone a bag stuffed full with cash is an excellent cure to depression. Why don’t you try it. Or better still, let someone else do it to you.
Alright, so on to the Depression. Long story short, it started in America, when the price of stocks, because of bad business, started to crash down.
If you don’t know what stocks are, here is an analogy. Companies are like puzzles (okay, let’s say that the puzzle is worth $50,000), with lots of puzzle pieces (let’s say 100 pieces). Each one of the stocks is a puzzle piece of the same size (so each puzzle piece is worth $500). However, a company is like a puzzle which can grow and shrink, depending on how good it’s business is. And instead of puzzle pieces, it’s money. Now, let’s say the puzzle grows enormous (we’ll say it is now $1,000,000). So, how will the 100 tiny pieces of $500 each fit into the gigantic puzzle frame? That’s right, as the puzzle gets bigger, the puzzle pieces also have to get bigger. There will be now 100 pieces worth $10000 each. However, if the puzzle shrinks to something like $1000, each piece will only be worth $10. Now, sometimes people will buy some stocks inside a company. They hope that the puzzle (company) will grow bigger, and the puzzle pieces (stocks) will become bigger, so that they can sell it to other people (not from the company) money. This is how companies earn money. They sell stocks to earn money. However, people will not buy the shares if they knew that the company would lose money. This is because that meant the stocks would be worth less, and if they tried to sell it, they would lose money. This was what happened in the Great Depression. The value of the stocks kept going lower, and no one dared to buy any stocks because they were scared they would lose money. With no one buying any stocks, companies couldn’t earn money, and they would close down.
Anyway, after that factories and shops and buildings and companies and department stalls and basically everything to do with business started to close down. After that, since America couldn’t do business or trade stuff with them anymore, other companies in other countries started to close down. However, you might be thinking that it couldn’t have been that bad, since not all countries traded with USA and those that did still had other countries to trade with. Unfortunately, it isn’t that simple.
If America can’t trade or do business any longer, then some country close to it, like Mexico, who depends on business with America to survive, will soon be under the Depression also, and its stocks’ values will go down as well. If it stopped there, it wouldn’t be that bad. but it didn’t. This meant that other countries in South America, like Brazil and Chile, could not do trade with Mexico and America, and their companies might not be able to survive, and they might go into the Depression as well. This will continue on to other countries like Canada and South Africa and Russia and Portugal and Spain and Rome and Britain and they will suffer from the Depression as well. It was like a disease.
Eventually, it reached Singapore around 1930, because no one could trade with Singapore any more, it suffered from the Depression. Companies closed down, and  LOTS of people lost their jobs. Some even had to sail to other countries (those not affected by the Depression yet) to work.
However, it’s not all storm clouds, because the trade started coming in by 1934 after some companies managed to recover and survive the Depression. As a result, Singapore’s trade rose again, and the Depression ended.
Well, that’s it. If you managed to understand all that, then you will have mastered the basics of business. Well done. I might consider setting up a class for business in the future. It will be very cheap, $5000 a week. For all of those who didn’t understand that, you should join as well.

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