Talk:Economic bubble
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I did not know that the cause of bubbles was in dispute: I thought that it was a well understood phenomenon - in fact it pretty well described in the first paragraph of this article. —The preceding unsigned comment was added by 68.122.224.81 (talk • contribs).
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[edit] Speculative Bubble?
I have always known this phenomenon as "speculative bubbles" however this is never mentioned in the entry. I live in Australia and this may be why I haven't heard the other terms, I have done a little research and found that Investopedia.com uses the term "speculative bubble" - [1]. There is no mention of the 'bandwagon effect' that is often used to describe economic bubbles. —The preceding unsigned comment was added by Ryanesplin (talk • contribs).
[edit] Propose move to "Speculative bubble"
To comply with Wikipedia's common name rule, I propose moving this article to "Speculative bubble" because it seems to be a much more common term than "economic bubble". Investopedia uses the term "speculative bubble". Also, a quick Google search produces the following number of results:
- "Speculative bubble" - 148,000
- "Economic bubble" - 93,600
- "Financial bubble" - 56,900
- "Speculative mania" - 15,600
- "Market bubble" - 369,000 - I believe the results of this term are highly exaggerated due to the frequency of the word "stock", "bond", or "housing" immediately before the word "market".
--JHP 05:52, 24 February 2007 (UTC)
- Interesting, I checked Google AdWords and it appears that more people search for the term "financial bubble" than for "speculative bubble", "economic bubble", or "market bubble". BTW, the term "financial bubble" does not automatically redirect to this article. --JHP 07:33, 24 February 2007 (UTC)
- There is no perfect solution, but "price bubble", seems the most descriptive, objective ("speculative" is a subjective interpretation, some bubbles express just plain scarcity, or examples "oil shocks") and generic notion. It covers all cases: economic (commodities, business cycles), financial (stocks, bonds, derivatives) real estate, art and collectible markets (elvis bubble ?), and plenty of other - speculative or not - either plain scarcities or collective fads, crazes and mania (tulipomania was among the firsts in history), that push up market prices beyond the stratosphere. Anyway, all redirects are possible for the more specific species of bubbles. --Pgreenfinch 08:04, 24 February 2007 (UTC)
[edit] "The central bank"?
"Therefore, it is imperative for the central bank to keep its eyes on asset price appreciation and promptly take preemptive measures to curb high level of speculative activity in financial assets." Really? Maybe it's just imperative that people learn not to do stupid things? The idea that (a) there is a central bank and (b) that if there is one, it should get involved in speculative bubbles seem to me to be unwarranted assumptions. There is no guarantee that any given economy that generates a speculative bubble will have a central bank, and I'm sure that it is hotly debated among finance geeks whether such an entity should intervene in a situation like this. --Michaeljsouth 11:23, 19 March 2007 (UTC)
[edit] Definition
This definition (and the related causation) does not seem to be commonly acceptable in the research literature on bubbles. Please provide a reference.
"The term refers to a market condition in which the prices of commodities or asset classes increase to absurd or unsustainable levels (that no longer reflect utility of usage and purchasing power). It occurs when speculation in the underlying asset causes the price to increase, thus encouraging even more speculation. The bubble is usually followed by a sudden drop in prices, known as a crash or a bubble burst. Both the boom and the bust phases of the bubble are examples of a positive feedback mechanism, in contrast to the negative feedback mechanism that determines the equilibrium price under normal market circumstances. Prices in an economic bubble can fluctuate chaotically, and become impossible to predict from supply and demand alone."
