Boom and Bust
From around the year 1996 to the year 1999 there was a huge rise is stock market prices. The S&P 500 rose about 20% each of these years, and NASDAQ rose a whopping 500%. These ludicrous rises in prices were due to “dot coms,” or companies that conducted business through the Internet. Americans were getting very excited over the hype of these companies and poured billions into the stock market. However, to everybody’s dismay, the stock market crashed in 2000. The bubble burst on April 14, and stocks plummeted. The market had the greatest one day drop in history! NASDAQ alone fell 80% from its 2000 prices. It wouldn’t be until 2006 that the stock market retuned to its 2000 levels. By 2001 the American economy fell into a recession, not too different from the one we recently had.
What also helped fuel this recession was the greed of corporate America. Many companies lied, cheated, and stole, from their shareholders in order to make huge profits. When these companies were proven to be a scam the companies crashed, pulling down their stockholders with them. The most famous example of this was a Houston based energy company named Enron. Enron was supposed to be showing billions of dollars in profit. It was the hottest company, and took up many magazine covers. Everybody was talking about Enron. However, one day somebody discovered Enron had been lying, and that it had really been operating at a loss. The insiders knew this, and sold the stocks high. Once the company fell most shareholders lost their shirts. Enron wasn’t the only companies pulling scams. Tyco International and GE were also among companies found to be crooked in one way or another. Even respectable companies such as Chase and Citigroup had to pay back investors for selling them worthless stocks.