Examples of economic bubble in the following topics:
-
- Speculative economic bubbles are an obvious anomaly, in that the market often appears to be driven by buyers operating on irrational exuberance, who take little notice of underlying value.
- These bubbles are typically followed by an overreaction of frantic selling, allowing shrewd investors to buy stocks at bargain prices.
- Rational investors have difficulty profiting by shorting irrational bubbles because, as John Maynard Keynes commented, "markets can remain irrational far longer than you or I can remain solvent. " Sudden market crashes, like the one that occurred on Black Monday in 1987, are mysterious from the perspective of efficient markets, but allowed as a rare statistical event under the Weak-form of EMH.
- Market strategist Jeremy Grantham has stated flatly that the EMH is responsible for the current financial crisis, claiming that belief in the hypothesis caused financial leaders to have a "chronic underestimation of the dangers of asset bubbles breaking. " Noted financial journalist Roger Lowenstein blasted the theory, declaring "the upside of the current Great Recession is that it could drive a stake through the heart of the academic nostrum known as the Efficient-Market Hypothesis. " Former Federal Reserve chairman Paul Volcker chimed in, saying, "[it is] clear that among the causes of the recent financial crisis was an unjustified faith in rational expectations and market efficiencies. "
- The financial crisis has led Richard Posner, a prominent judge, University of Chicago law professor, and innovator in the field of Law and Economics, to back away from the hypothesis and express some degree of belief in Keynesian economics.
-
- Economic rationale, the reasons or thought processes that impact economic decisions, is influenced substantially by the interest rate.
- In economics, rationale are the reasons or thought processes that impact economic decisions.
- The interest rate is one of the primary influences on economic rationale.
- Low interest rates are enticing, but can be problematic if an economic bubble forms.
- When these bubbles pop, the investments fail, resulting in large unpaid debts and financial bankruptcy for individuals and banking institutions.
-
- A recession is a business cycle contraction; a general slowdown in economic activity.
- In economics, a recession is a business cycle contraction; a general slowdown in economic activity.
- This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock, or the bursting of an economic bubble .
- A recession has many attributes that can occur simultaneously, these include declines in component measures (economic indicators) of economic activity (GDP) such as consumption, investment, government spending, and net export activity.
- Strategies favored for moving an economy out of a recession vary depending on which economic school the policymakers follow.
-
- In economics, the demand for money is the desired holding of financial assets in the form of money (cash or bank deposits).
- In economics, the demand for money is generally equated with cash or bank demand deposits.
- However, when the demand for money is not stable, real and nominal interest rates will change and there will be economic fluctuations.
- However, low interest rates can create an economic bubble where large amounts of investments are made, but result in large unpaid debts and economic crisis.
- Capping or adjusting the interest rate parallel with economic growth protects the momentum of the economy.
-
- Many Americans engaged in speculation before the crash, investing heavily as shares steadily rose until an unstable bubble had formed.
- Speculation thus fueled further rises and created an economic bubble.
- The decline in stock prices caused bankruptcies and severe macroeconomic difficulties, including contraction of credit, business closures, firing of workers, bank failures, decline of the money supply, and other economic depressing events.
- According to economists such as Joseph Schumpeter and Nikolai Kondratieff, the crash was merely a historical event in the continuing process known as economic cycles.
-
- The housing bubble of the 2000's is a recent example of a boom in the business cycle.
- Unfortunately, this was short-lived; the bubble burst and the boom turned into a bust that snowballed into a recession.
- In economics, "economic growth" or "economic growth theory" typically refers to growth of potential output, i.e., production at "full employment," which is caused by growth in aggregate demand or observed output.
- Inflation and Deflation can make it difficult to measure economic growth
- Inflation or deflation can make it difficult to measure economic growth.
-
- He stated the the Fed was ready "to serve as a source of liquidity to support the economic and financial system. " Throughout his early years as chairman, Greenspan impacted all the presidencies in various ways.
- During President Clinton's terms in office, Greenspan was consulted regarding economic affairs and assisted in the 1993 deficit reduction program.
- As a whole, the 1990s saw healthy economic growth.
- He raised interest rates several times in 2000 which was likely this cause of the bursting of the dot-com bubble.
- Greenspan did not accept responsibility for creating the housing bubble that led to the mortgage crisis.
-
- The United States, Ireland, Spain, and many countries experienced a strong real estate bubble that deflated in 2007.
- During the housing bubble, many banks increased their leverage ratio to unsustainable levels.
- Many banks accumulated debt to acquire properties at the peak of the housing bubble.
- Once the bubble deflated, the property fell in value, and the banks could not sell it without enormous losses.
- Thus, government regulations and regulatory differences among countries will diminish because governments want to avoid an economic crisis like the 2008 Financial Crisis.
-
- After World War I, the U.S. faced hard economic times and
problems over labor, race and reintegration of veterans.
- A
wartime bubble in farm prices burst, leaving many farmers bankrupt or deeply in
debt after purchasing new land.
- An
economic recession hit much of the world in the
aftermath of World War I.
- In the United
States, 1918–1919 included a modest economic retreat, but the next year saw a
mild recovery.
- Discuss the causes of the post-war economic recession, and its effects on race relations and organized labor.
-
- Despite economic growth in the 1990s and steadily increasing productivity, wages had remained largely flat relative to inflation since the end of the 1970s; despite the mild recovery, they remained so.
- The result was a housing bubble, in which the value of homes rose year after year based on the ease with which people now could buy them.
- The bursting of the U.S. housing bubble, which peaked in 2007, caused the values of securities tied to U.S. real estate pricing to plummet, damaging financial institutions globally.
- With houses at record prices and growing economic uncertainty, people stopped buying new homes.
- Some European nations had suffered similar speculation bubbles in housing, but all had bought into the mortgage securities market and suffered the losses of assets, jobs, and demand as a result.