the Boom Bust Cycle

[Sluggy]

All economies seem to have a cycle of boom and bust. Why exactly does this happen, is the govenment to blame or is an inevitable consequence of capitalism? And can we predict a recession long before it happens?

The state of the economy could be one of the most important factors in making a long term investment or even a short term trade.

 

[Glenn]

There's an old saying "Give them and inch and they'll take a mile".
Doesn't matter whether it's Communism or Capitalism, once the (regulatory) restraints are released some people will do anything they can get away with for personal gain irrespective of the consequences down the line.
If you can see a bubble you can see it being burst soon after. So when your taxi driver is talking stocks, or buying to let, or taking on a big mortgage (etc etc etc) watch out for a crash.

On the plus side, remember that the market starts to recover before the economy - around 6 months earlier historically.
Glenn

 

[0007]

All economies seem to have a cycle of boom and bust. Why exactly does this happen, is the govenment to blame or is an inevitable consequence of capitalism? And can we predict a recession long before it happens?

The state of the economy could be one of the most important factors in making a long term investment or even a short term trade.

All economies seem to have a cycle of boom and bust. Why exactly does this happen,(?)

The economists have been trying to work this one out ever since they came into existence!

 

[Sluggy]

Do you have an opinion on this matter or do see it as a mystery of economics?

 

[laptop1]

Every bubble and market crash has the same important elements. Greed and unrealistic expectations will continue to foul people’s judgment as it always has.

 

[fibonelli]

All economies seem to have a cycle of boom and bust. Why exactly does this happen, is the govenment to blame or is an inevitable consequence of capitalism? And can we predict a recession long before it happens?

The state of the economy could be one of the most important factors in making a long term investment or even a short term trade.

http://www.trade2win.com/boards/news-current-affairs/39112-biggest-scam-history.html

 

[JTrader]

http://www.trade2win.com/boards/news-current-affairs/39112-biggest-scam-history.html

Yes. This discussion will pretty much cover all the REAL issues that lead to the boom bust cycle.

 

[stocktrader77]

boom = greed, low interest rates, cheap credit, rising asset prices
bust = fear, high interest rates, dear credit, deflating asset prices

 

[blancspa]

Bc

read the theories of evolutionary economics:
Kondratieff, Keynes, Schumpeter (creative dectruction), Clarke (clustering of innovations)
Marx, van Gelderen (first to appear to be working on business cycles).

best of luck

 

[kassieB]

How Did It All Go Wrong?

The best explanation i've seen by far of why we are in such a mess - please make sure you pass it on and maybe we wont make the same mistakes again - only different ones!!

Origins of the Financial Mess

 

[blancspa]

thanks , I like the one from related video section in the bottom right corner entitled
Technology and Invention in Finance
Yale / Economics
Robert Shiller

I have seen it few months back and it was pretty funny as Shiller is famous for loosing the plot while story telling

Cheers