The proximate reason for all financial crises is excessive credit growth a credit boom that goes bust.

To some extent, this is the natural aftermath of any credit boom.

This excess supply of credit results in additional consumption and investment, triggering a boom.

Credit mistakes are made during the boom, not during the crash, so the argument goes.

At the same time, expanded access to credit has supported a building boom to meet vast untapped demand.

No, the main cause of the recent recession is surely a global credit boom and its subsequent meltdown.

Banks magnify the boom by making credit too easily available, and they exacerbate the bust by withdrawing it too abruptly.

The strategy worked too well the large credit inflows that it attracted triggered an inflationary boom that reduced the country s competitiveness.

Granted, the credit boom itself may be rooted in excessive optimism surrounding the economic growth potential implied by globalization and new technologies.

In doing so, officials are reluctant to take into account that the recent crisis resulted from an unprecedented credit boom gone bust.

What was stunning was how the Fed, under Greenspan s leadership, stood by as the credit boom gathered steam, barreling toward a subsequent crash.

China s remarkable growth has been financed recently by a rapid expansion of money and bank credit that is producing an increasingly unsustainable investment boom.

As a result, households want to spend less and pay down their debts. To some extent, this is the natural aftermath of any credit boom.

Instead, US banks, widely blamed for the international lending boom that preceded the bust, were so intimidated and weakened that the flow of American credit stopped.

Huge boom. Huge boom. Huge bust. Huge bust.

The key problem is simple until 2008, these countries enjoyed a long boom based on cheap and plentiful credit, which allowed them to finance large current account deficits.

The key problem is simple until 2008, these countries enjoyed a long boom based on cheap and plentiful credit, which allowed them to finance large current account deficits.

Euro accession and bull market convergence trades pushed bond yields in these countries toward the level of German bunds, with the ensuing credit boom supporting excessive consumption growth.

BOOM

(Boom!

But there were unintended consequences. The failure of US regulators to tighten capital and lending standards when abundant capital inflows combined with loose Fed policies ignited a furious credit boom.

His reappearance comes just as the credit bubble fueled by the sub prime mortgage boom is about to burst, triggering the worst financial and economic crisis since the Great Depression.

To be sure, pro active anti poverty programs, loose credit, a commodity export boom, and heavy government spending (financed by an equally heavy tax burden) lifted millions out of poverty.

Banks magnify the boom by making credit too easily available, and they exacerbate the bust by withdrawing it too abruptly. But the legacy is a more efficient stock of capital equipment.

Asia s Invention Boom

Africa s Big Boom

But 350 billion is roughly what the financial sector as a whole earned in an average quarter during the credit boom and profit levels in recent quarters have reached or exceeded those levels.

Boom bust processes usually revolve around credit, and always involve a bias or misconception usually a failure to recognize a reflexive, circular connection between the willingness to lend and the value of the collateral.

But Germany will boom.

Germany s Pathological Export Boom

Long Live China s Boom

Harnessing the Remittance Boom

If you saw 2001 A Space Odyssey, and you heard the boom, boom, boom, boom, and you saw the monolith, you know, that was Arthur C. Clarke's representation that we were at a seminal moment in the evolution of our species.

A Productivity Boom in Waiting?

There is again a major economic problem, the end of a credit driven boom, and a threat to the banks (except that it all looks much bigger, owing to the financial system s massive growth and internationalization).

Credit Where Credit is Due

The three small Baltic EU members provide an alternative model they had developed current account deficits of over 20 of GDP during the credit boom, and over the last three years have experienced double digit GDP contractions.

It is far more defensible and correct to argue that everyone bankers, households, regulators, and politicians contributed to (and took credit for) the boom while it lasted, only to point fingers at one another when it collapsed.

But the boom is not uniform.

Perhaps Europe will just boom anyway.

BRUSSELS The misguided belief that this time is different led policymakers to permit the credit boom of the early 2000 s to continue for too long, thus preparing the ground for the biggest financial crisis in living memory.

First, in contrast to the dot com boom, it is difficult to identify the technological shock that set off the boom.

A German Glimmer in a Global Boom

Those who borrowed recklessly during China s credit boom are not small private firms or average consumers (household indebtedness in China is very low), but local governments, SOEs, and well connected real estate developers (many of them family members of government officials).

Credit