What were the causes for a stock market crash?

What were causes of the stock market crash?

• can you put it into simple words.. i guess i don't understand it too well

• Answer:

  What triggered the crash on Monday was the disappoint of investors in Bush' plan to save the US from recession. But that was just the trigger, the cause of the problems is the credit crisis related to the sub prime mortgages. A credit crisis occurs when banks and other lenders suddenly become reluctant to lend money. The result is a slowing down of the economy, because there is less money available for new investments and housing construction. The crisis started last year because the rising interest rates of the last few years, had been increasing the monthly payments on the adjustable rate mortgages. This left many home owners unable to meet their payments. Normally a lender would then repossess the house of the home owner in default. But the simultaneous decline in value of these houses after the demise of the United States housing bubble, left lenders without the means to recoup their losses. This in turn threatened the solvency of a number of private banks and other financial institutions. Obviously this might lead to a recession, as the consequences of the credit crisis spread to the rest of the economy. No longer being able to borrow money, industries can no longer invest and grow.