Magazine article The Spectator

Pop Goes the Bubble

Magazine article The Spectator

Pop Goes the Bubble

Article excerpt

FOR what can happen when a bubble bursts, we can refer to the world's second biggest economy, where the banks are under strain and the stock market has sunk back to its lowest level for 15 years. Japan enjoyed its bubble in the 1980s. Share prices and property values took off, in an economy which grew by 5 per cent a year while prices in the shops were stable. It seemed to have cracked the secret of prosperity without inflation, No such luck. The inflation was there, all right, not in retail prices but in asset prices. When the bubble burst, asset price deflation set in. By now it has worked its way through to the shops and, of course, to the banks' balance sheets. Some of this history was to repeat itself when share prices and property values took off in America. Had the legendary central banker cracked the secret of prosperity without inflation? Perhaps the inflation was in asset prices: a bubble, in fact. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.