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Writing, Speech, Debate, & General Knowledge
5.8 Economic Bubbles

An economic bubble (sometimes referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, or a speculative mania) is “trade in high volumes at prices that are considerably at variance with intrinsic values”.

Because it is often difficult to observe intrinsic values in real-life markets, bubbles are often identified only in retrospect, when a sudden drop in prices appears. Such a drop is known as a crash or a bubble burst. Prices in an economic bubble can fluctuate erratically, and become impossible to predict from supply and demand alone.

Examples of economic bubbles include:

  • Tulip mania (top 1637)
  • The South Sea Company (1720)
  • Mississippi Company (1720)
  • Railway Mania (1840s)
  • Florida speculative building bubble (1926)
  • The Nifty Fifty American stocks of the late 1960s and early 1970s
  • Poseidon bubble (1970)
  • Sports cards and comic books in the 1980s and early 1990s
  • TY Beanie Babies (1996)
  • The Dot-com bubble (circa 1995–2001)
  • Japanese asset price bubble (1980s)
  • 1997 Asian Financial Crisis (1997)
  • Real estate bubble
  • British property bubble (as of 2006)
  • Irish property bubble (as of 2006)
  • United States housing bubble (as of 2007)

Directions: Write a research report on any of the economic bubbles listed above. In your report, include a description of the bubble, its causes and effects.