How Bubbles Form and Burst
Bubbles occur when investors begin to buy assets without considering its economic value. They are buying because they plan on quickly selling it to the next investor at an inflated price.
Welcome to the weekly newsletter of Impact Economics. Every week I’ll be sharing some of the featured stories from the publication while curating a few headline economic stories making the news this week.
Two Stories to Ponder this Week
The first is a discussion of asset bubbles. I review what a bubble is, how the form and what causes them to finally burst. I then review three of the most famous bubbles in history; the financial crisis of 2008, the .com bubble of 2001 and “Tulipmania” in the 17th Century.
Read the Full Story Here
The second story discusses why Gross Domestic Product is an outdated measurement of the health of an economy and why it also does a poor job of measuring the welfare of people within that economy.
Read the Full Story Here
Economic Headlines of the Week
Some Investors Had Hunch Yields Were About to Fall published in the Wall Street Journal
Almost nobody saw the nosedive in bond yields coming, but a few players were positioned well enough to profit. Some think there is more room for yields to fall further.
Trump Hints at More Details; Mexico Still Baffled by Farm Claim published in Bloomberg
President Donald Trump hinted at additional measures between the U.S. and Mexico, a day after he vowed that Mexico would soon make “large” agricultural purchases from the U.S. as part of a deal on border security and illegal immigration that allowed Mexico to avoid U.S. tariffs.
