Expectations become self fulfilling, oil prices rise, a speculative bubble is born.

This raises the question just what is a speculative bubble? The Oxford English Dictionary defines a bubble as anything fragile, unsubstantial, empty, or worthless a deceptive show.

On the other hand, in some places, a speculative bubble is fueling today s boom in vacation home prices.

The state must also preserve continuity in the market economy when the speculative bubble that has funded its transformation bursts.

The resulting supply surge drives down prices, reinforces expectations of further declines, and produces the inverse of a speculative bubble a collapse in prices.

NEW HAVEN People frequently ask me, as someone who has written on market speculation, where the next big speculative bubble is likely to be.

But the rationale must be to get the world economy out of its current risky situation, not to propel us into yet another speculative bubble.

The occasion was Brazil s decision to impose a 2 tax on short term capital inflows to prevent a speculative bubble and further appreciation of its currency.

National leaders must speak out, and they must match their words with concrete actions, to help signal to the public that the speculative bubble cannot be expected to continue.

NEW HAVEN People frequently ask me, as someone who has written on market speculation, where the next big speculative bubble is likely to be. Will it be in housing again?

One problem with the word bubble is that it creates a mental picture of an expanding soap bubble, which is destined to pop suddenly and irrevocably. But speculative bubbles are not so easily ended indeed, they may deflate somewhat, as the story changes, and then reflate.

Similarly, a new speculative bubble can appear anywhere if a new story about the economy appears, and if it has enough narrative strength to spark a new contagion of investor thinking.

As a result, a housing bubble, a mortgage bubble, an equity bubble, a bond bubble, a credit bubble, a commodity bubble, a private equity bubble, and a hedge funds bubble are all now bursting simultaneously.

True, everybody is complaining about America s speculative bubble, and they are right to do so. But the whole world economy from China to Germany benefited for decades from Americans debt driven over consumption.

Taming Speculative Capitalism

Increased fear of competition from emerging countries is also a natural consequence of the collapse of the speculative bubble in equities in 2000 stock markets in some countries fell to less than half their peak value.

A speculative bubble, I wrote then, is a situation in which news of price increases spurs investor enthusiasm, which spreads by psychological contagion from person to person, in the process amplifying stories that might justify the price increase.

Bubble Spotting

Big speculative bubbles are rare events.

Gold is a purely speculative investment.

This means making capitalism work better, and making it clear that there is no threat of protectionism. But the rationale must be to get the world economy out of its current risky situation, not to propel us into yet another speculative bubble.

Speculative booms are driven by psychological feedback.

Dark energy, though speculative, solves numerous problems.

America s Education Bubble

A bubble forms when the contagion rate goes up for ideas that support a bubble.

The crisis was caused by the largest leveraged asset bubble and credit bubble in history.

There are also ideas to address speculative swings.

That bubble has burst.

They had no compunction about calling a bubble a bubble, or in intervening to deflate it.

And to do that it needs to create a housing bubble to replace the Nasdaq bubble.

Bubbles are caused by feedback loops rising speculative prices encourage optimism, which encourages more buying, and hence further speculative price increases until the crash comes.

Their speculative frenzies ruined shareholders, customers, and the economy.

So Sarkozy shouldn t be lashing out against speculative capitalism.

But talk of bubbles keeps reappearing new or continuing housing bubbles in many countries, a new global stock market bubble, a long term bond market bubble in the United States and other countries, an oil price bubble, a gold bubble, and so on.

The Great Emerging Market Bubble

Talk about a bubble mentality.

They made the bubble burst.

Israel s Election in a Bubble

So we should think hard about what speculative capitalism means.

Frei Otto was starting to use foam bubble diagrams and foam bubble models to generate his Mannheim Concert Hall.

Greenspan stoked two bubbles the Internet bubble of 1998 2001 and the subsequent housing bubble that is now bursting.

But no bubble can expand forever.

The Illusion of a Chinese Bubble

Unlearned Lessons from the Housing Bubble

So in a sense, the Chinese bubble as much an intellectual and political bubble as an economic one has burst.