An economic bubble (sometimes referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, a speculative mania or a balloon) is "trade in high volumes at prices that are considerably at variance with intrinsic values". It could also be described as a trade in products or assets with inflated values.
While some economists deny that bubbles occur, the cause of bubbles remains a challenge to those who are convinced that asset prices often deviate strongly from intrinsic values.
While many explanations have been suggested, it has been recently shown that bubbles appear even without uncertainty, speculation, or bounded rationality. It has also been suggested that bubbles might ultimately be caused by processes of price coordination or emerging social norms.
Because it is often difficult to observe intrinsic values in real-life markets, bubbles are often conclusively identified only in retrospect, when a sudden drop in prices appears. Such a drop is known as a crash or a bubble burst. Both the boom and the burst 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 erratically, and become impossible to predict from supply and demand alone.
... over time from mass partying during the economic bubble to conservative consumption at home after the collapse of the economy during the 1990s ... Golf became widely popular during the economic bubble, when golf club passes became useful tools for currying favor with corporate executives ... The collapse of the economic bubble led to the closing of many of these golf courses, and the ritual of playing golf with executives has become increasingly rare ...
Famous quotes containing the words bubble and/or economic:
“Then a soldier,
Full of strange oaths, and bearded like the pard,
Jealous in honor, sudden, and quick in quarrel,
Seeking the bubble reputation
Even in the cannons mouth.”
—William Shakespeare (15641616)
“According to our social pyramid, all men who feel displaced racially, culturally, and/or because of economic hardships will turn on those whom they feel they can order and humiliate, usually women, children, and animalsjust as they have been ordered and humiliated by those privileged few who are in power. However, this definition does not explain why there are privileged men who behave this way toward women.”
—Ana Castillo (b. 1953)