Bubble Economy

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Bubble Economy

An economy market in which prices for goods and services rise far above actual values. This trend continues until investors realize just how far prices have risen, usually but not always resulting in a sharp decline. Bubbles usually occur when investors, for any number of reasons, believe that demand in the economy will continue to rise far beyond what is sustainable. This results in the increased prices. See also: Bubble.
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There is, as well, the critical issue of bubble economies, prolonged only by escalating credit creation.
These developments (which we have come to refer to as globalisation) together with various instabilities that have developed along with global capital (a hyper-mobility of capital which heightens real insecurities; tensions between East and West which are evident in the present crisis; major bubble economies) lie at the core of the present crisis.
The second novel aspect of the boom and crisis in Asia is the emergence of bubble economies. Bubble economies are, of course, familiar developments for economic historians.