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

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

On the other hand, in some places, a speculative bubble is fueling today s boom in vacation home 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. Will it be in housing again?

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.

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

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.

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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.

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.

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

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

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

There are also ideas to address speculative swings.

So we live on the most fragile, little soap bubble you can imagine, a very sacred soap bubble, but one that is very, very easy to affect.

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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.

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.

Take away land speculation, price of land drops.

And, when the evidence is confronted, it points to speculation as a culprit.

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

Maybe the word bubble is used too carelessly.

By exploiting a record credit bubble to borrow against an unprecedented property bubble, American consumers spent well beyond their means for many years.

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

Third, financial speculation should be limited as well.

Gold is a purely speculative investment.

Speculative booms are driven by psychological feedback.

So Sarkozy shouldn t be lashing out against speculative capitalism.

For several years, I argued that America s economy was being supported by a housing bubble that had replaced the stock market bubble of the 1990 s.

So there are striking similarities, I think, to the Internet boom, right?

The Internet bubble was unusual in this regard.

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

Big speculative bubbles are rare events.

There are two key features of this carry trade.

The very announcement of the Fund s creation was meant to deter speculative attack.

Financial speculation has been, and remains, one required source of funding.

During the housing bubble, prices signaled a severe scarcity of houses.

On top of these two powerful fundamental factors sits a bubble.

But this agency never even acknowledged that there was a housing bubble.