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	ECB: Asset price bubbles and monetary policy
		Housing price peak-to-trough periods are longer on average and, despite the fact that the decline in prices is somewhat smaller, the associated output losses are notably bigger.
		Assets are claims to future consumption and it has been argued that the asset price today should be a reasonable proxy for future prices of consumer goods.
		Asset price booms that were followed by a sharp drop in real GDP growth rates are labelled as high-cost booms while those that were succeeded by a relatively mild slowdown in real growth are labelled as low-cost booms.
	www.ecb.int /press/key/date/2005/html/sp050608.en.html (6443 words)

	Japanese asset price bubble - Wikipedia, the free encyclopedia
		The Japanese asset price bubble was a time of skyrocketing land and stock prices in the Japanese economy, lasting from 1986 to 1990.
		At the height of the bubble, "it was a matter of pride that the land around the Imperial Palace in Tokyo was at one point worth more than California," the Financial Times said.
		Prices were highest in Tokyo's Ginza district in 1989, with some fetching over US $1.5 million per square meter ($139,000 per square foot), and just a bit less exhorbitant in other areas of Tokyo.
	en.wikipedia.org /wiki/Japanese_asset_price_bubble (390 words)

	Banking Sector: Roots of Recession In Japan
		The bubble economy may be said to have begun with the Plaza Accord of 1985, designed to reduce the burgeoning current account deficits of the U.S. The agreement resulted in a doubling of the value of the yen, which represented a sharp shock to an economy that had hitherto enjoyed export based economic growth.
		To understand the condition of the banks and their activities during the bubble, a lengthy analysis into the structure of industry and banking is necessary, which is of importance in its own right as it allows insight into some of the most significant features of the Japanese economy.
		At the collapse of the bubble nearly 50% of the city banks assets were denominated in foreign currency, a consequence of the huge increase in overseas lending in the 1980s.
	www.tcd.ie /Economics/SER/archive/1999/essay16.html (7085 words)

	The Role of a Central Bank in a Bubble Economy - Part I
		These bubbles pose an intriguing question of political and economic organization, and raise questions about the efficacy of central bank intervention in an era in which the nation-state and its fundamental institutions are under pressure from a variety of pressures, technological, political, and economic.
		The authority of a central bank to control a price bubble may be uncertain, because the bubbles may not affect the broader economic indicators typically relied on by central banks in formulating monetary policy.
		The bubble economy in Japan during 1988-90, when Japanese land and share prices more than doubled, was one of the most remarkable examples of financial speculation in modern times; in absolute terms, it was possibly the largest speculative event in the history of the world.
	www.gold-eagle.com /editorials/cscb001.html (1904 words)

	November-December1996, pages 34-36
		Japanese government ef-forts to end the late 1980s bubble in Japanese asset prices resulted in the most severe and the longest post-war recession for the Japanese economy in the early 1990s.
		This positive feedback loop of asset prices, their collateral value and borrowing for speculation in the same assets was a major driver of the asset price bubble of the late 1980s.
		This downturn in the Japanese economy was accentuated by the sharp rise of the yen in 1993-1994.
	www.nacm.org /bcmag/bcarchives/1996/articles1996/novdec/novdec96art5.html (2249 words)

	Economic bubble - Psychology Central
		The price of the good then reaches absurd levels and the bubble is usually followed by a sudden drop in prices, known as a crash or a bubble burst.
		In addition, the crash which usually follows an economic bubble can destroy a large amount of wealth and cause continuing economic malaise as was the case of the Great Depression in the 1930s for much of the world and the 1990s for Japan.
		Some regard bubbles as related to inflation and thus believe that the causes of inflation are also the causes of bubbles.
	psychcentral.com /psypsych/Bubble_economy (454 words)

	Post-Bubble Blues--How Japan Responded to Asset Price Collapse
		As is well known, the rapid growth achieved during this period was associated with the development of a major asset price bubble.
		Four possible explanations are considered: the absence of bold and consistent fiscal stimulus, the limited room for expansionary monetary policy because of a liquidity trap, overinvestment and debt overhang, and the disruption of financial intermediation.
		Financial system problems, largely triggered by the bursting of the asset price bubble in the early 1990s, caused a fall in demand that worsened in 1997 due to increased banking regulation and a premature shift toward fiscal tightening.
	www.imf.org /external/pubs/nft/2000/bubble (2534 words)

	Reference.com/Encyclopedia/Japanese asset price bubble
		The Japanese asset price bubble was a time of skyrocketing land and stock prices in the Japanese economy, lasting from 1986 to 1990.
		It is one of the most famous economic bubbles in the history of modern economics.
		Prices were highest in Tokyo's Ginza district in 1989, with some fetching over US$1.5 million per square meter ($139,000 per square foot), and only slightly less in other areas of Tokyo.
	www.reference.com /browse/wiki/Japanese_asset_price_bubble (566 words)

	Over the Counter: Asset price bubbles Archives
		No, we aren't, says MIT's Ricardo Caballero; asset prices are up, but it's not a bubble, it's a rational response to a shortage of assets in the face of high global demand.
		First Japanese assets melted down in the early 1990s; then Europe stagnated in the late 1990s; now China and the oil states are evincing huge demand for assets but aren't producing many themselves.
		Bubbles are, in a way, just the market's response to a shortage of assets, and trying to control them could cause further damage.
	blog.risk.net /2007/01/asset_price_bubbles_1.html (463 words)

	Balancing the bouncing bubble - Business - Business - smh.com.au
		Australia had an equity and property boom and bust in the late 1980s, and a house price boom during the past decade that had many of the characteristics of a bubble, but fortunately it was not followed by a bust.
		Even if the central bank was confident that a destabilising bubble was forming, and that its bursting would be extremely damaging, the community would not necessarily know that this was in prospect, and could not know until the whole episode had been allowed to play itself out.
		These considerations do not mean that asset prices are ignored altogether in the current monetary policy framework; they are taken into account to the extent that they affect the level of economic activity and the prospective rate of inflation.
	www.smh.com.au /news/business/balancing-the-bouncing-bubble/2006/12/15/1166162317800.html (2110 words)

	Morgan Stanley (Site not responding. Last check: 2007-10-24)
		In the bubble years, for example, I estimate that rising equity prices contributed 150 basis points to the growth in U.S. consumer spending; conversely, the deflating equity bubble has sliced nearly that much from the advance in consumer outlays in the past 18 months.
		Oil prices recently have risen as a result of low stockpiles, the approaching winter in the Northern Hemisphere and -- most importantly -- a war risk premium that experts reckon is worth at least 4-5 dollars out of the current Brent spot price of USD 28.2 pb.
		Egypt and the Middle Eastern oil producers are also benefiting from high oil prices, but would nevertheless be affected by their proximity to the area of conflict, as has been the case this year (although in the case of Egypt, recent months have seen a recovery in tourism and Suez Canal revenues).
	www.morganstanley.com /GEFdata/digests/20020913-fri.html (10012 words)

	Reviving Fiscal Policy.(John Maynard Keynes)
		He notes that the Japanese government appears hesitant to propose a large fiscal stimulus because the public debt in Japan, roughly 100 percent of gross domestic product (GDP), is high among economically advanced countries.
		Prices are determined by the supply and demand for goods.
		Following the bursting of the Japanese asset-price bubble at the beginning of the decade, the Japanese economy stagnated.
	www.geocities.com /ecocorner/intelarea/jmk3.html (7405 words)

	ECRI - Economic Cycle Research Institute (Site not responding. Last check: 2007-10-24)
		The larger question is whether the outcome for the economy would necessarily be catastrophic, as the 1929 crash in the U.S. and the bursting of the Japanese asset price bubble in 1990 would appear to suggest.
		This was when the Japanese government, in a bid to close the budget deficit, decided to raise the sales tax from 3% to 5%.
		The devastating effect on consumer confidence was reflected in the dive in JLLI growth in late 1996, before the tax was imposed on April 1, 1997, plunging the economy into deep recession, which was finally followed by a period of persistent deflation.
	www.businesscycle.com /showstory.php?storyID=394 (539 words)

	What the Bubble Got Right
		The fact is, despite all the nonsense we heard during the Bubble about the "new economy," there was a core of truth.
		By the end of the Bubble, companies going public with no earnings were being derided as "concept stocks," as if it were inherently stupid to invest in them.
		The fact that a few crooks during the Bubble robbed their companies by granting themselves options doesn't mean options are a bad idea.
	www.paulgraham.com /bubble.html (3438 words)

	PrudentBear.com - The One-Stop Shop for the Bear Case (Site not responding. Last check: 2007-10-24)
		Asset Management generated record quarterly net revenues of $1.49 billion… (Asset Management) Net Revenues were 89% higher than the previous record.” Net Earnings were up 62% from a year ago to a record $2.453 billion.
		Most fluctuations in stock prices, real estate values, and other asset prices pose no particular challenge to central banks, as they are just some of the usual factors influencing the outlook for real activity and inflation.
		If policymakers suspect that a bubble is likely, say, to expand for a time before collapsing, the implications of that possibility for future output and inflation need to be folded into their deliberations.
	www.prudentbear.com /creditbubblebulletin.asp (5725 words)

	asset prices bubble bubbles Alan Greenspan
		The decline of bond prices in response to the strong economic news this week may not have been surprising, but the weakness of the stock market was.
		Third, the eventual outcome of the asset bubble is not known - and may not become clear for years.
		argues, with an eloquence rare in such research papers, that it is not asset prices themselves that pose a threat to the stability of the financial system but the combination of rapid credit growth, rapid increases in asset prices and, sometimes, high levels of physical investment.
	www.internetional.se /assetpricebubbles.htm (9914 words)

	Global House Price Boom: The greatest BUBBLE in history
		Comparing output behaviour by quartiles of the price declines corroborates the notion that housing price busts are different when it comes to their association with economic activity.
		Japanese property prices have dropped for 14 years in a row, by 40% from their peak in 1991.
		Yet the rise in prices in Japan during the decade before 1991 was less than the increase over the past ten years in most of the countries that have experienced housing booms.
	www.finfacts.com /irelandbusinessnews/publish/article_10002284.shtml (3168 words)

	Economic Forces Shaping U
		Much of the growth of the Japanese economy during this period was driven by exports to the U.S. and other industrialized countries.
		Following the collapse of the Japanese asset price bubble in the late 1980s and early 1990s, the Japanese economy has struggled, and since 1990, GDP growth has averaged only about 1.5 percent.
		Currently, for example, the Japanese population is expected to decline beginning in 2007 and the labor force in Japan is expected to decline by 0.5 percent per year through the year 2025.
	www.kc.frb.org /spch&bio/MidwestJapanAssn.htm (2479 words)

	RealEstateJournal \| After the Stock Bubble: Housing Out of Balance
		Faced with an asset bubble, a central bank has two choices: Prick it early or wait for it to burst and try to contain the damage.
		When the stock bubble finally burst, the Fed cut short-term rates aggressively beginning in 2001 and then held them at a 45-year low of 1% through early 2004 until the Fed was sure the threat of deflation had receded.
		Greenspan to declare victory: "Our strategy of addressing the bubble's consequences rather than the bubble itself has been successful." While "large residues" of household and foreign debt remained, they would not be a barrier to growth; such imbalances, he suggested, would dissipate with time.
	www.realestatejournal.com /buysell/salestrends/20050610-ip.html (2026 words)

	Time-Tested Tools See No Double Dip Ahead
		Under those circumstances, that summer's sharp spike in oil prices was dangerous, and I warned of an oil recession ahead.
		The way to predict turning points is not to extrapolate backward-looking indicators into the future; it's to look at the most durable, reliable forward-looking indicators of recession and recovery.
		One concern about the current period is that this is the aftermath of a popped asset-price bubble, like the period after the 1929 U.S. crash and the "lost decade" of the 1990s in Japan, both of which saw deflationary spirals.
	www.thestreet.com /comment/spincycle/10040304.html (1164 words)

	Nico Valckx - PhD Dissertation (Site not responding. Last check: 2007-10-24)
		Any information that affects asset prices, such as inflation (reducing real asset returns) and economic perspectives (pertaining to dividends and economic growth), should be discounted in financial asset prices (see Chen et al.
		Consider, e.g., the 1987 and 1989 US stock market crashes, the bursting of the Japanese asset price bubble in 1990, the exchange rate turmoil of the EMS in 1992-93 and the emerging market currency crashes in 1997-98.
		The asset pricing theory learns that there is a connection between asset prices and the macroeconomy.
	www.ufsia.ac.be /~nvalckx/phd2.htm (699 words)

	Transaction services and asset-price bubbles (Revised) RIETI
		Thus an asset-price bubble can emerge due to the externality of self-reference, wherein the asset price reflects the transaction services that it can provide, while the amount of the transaction services reflects the asset price.
		If the collateral ratio of the asset (θ) and money supply (m) are not very large, a steady state equilibrium exists where the asset price has a bubble component and resource allocation is inefficient; if θ)and/or m become large, the bubble component of the asset price vanishes and the equilibrium allocation becomes efficient.
		The paper shows that in the case where the equilibrium concept is relaxed to allow for sticky prices and a temporary supply-demand gap, an equilibrium exists where a bubble develops temporarily and eventually bursts.
	www.rieti.go.jp /en/publications/summary/06030007.html (235 words)

	Press Release Network - Newsletter Archive
		FINANCIAL bubbles are a phenomenon as old as old as capitalism itself.
		From tulip mania in Rembrandt's Amsterdam to the Souk Al Manakh crash in Kuwait and the Nikkei-real estate asset spiral in Japan in the 1980s, financial bubbles in disperse cultures and societies exhibit eerie parallels.
		Financial bubbles are the deadliest of all monetary phenomena, not least because of the painful losses they cause investors who are swept along in their madness.
	www.pressreleasenetwork.com /newsletter/2000/main7_news52.htm (789 words)

	Asset price crash - Wikipedia, the free encyclopedia
		An asset price crash is a sudden and usually unexpected fall in the price of a particular asset class.
		Examples of asset price crashes include Dutch tulips in the 1600s, Japanese metropolitan real estate and stocks in the early 1990s, and internet stocks in 2001.
		This page was last modified 18:52, 12 March 2006.
	en.wikipedia.org /wiki/Asset_price_crash (89 words)

	Economists warn of real estate bubble
		CASS economists said in the report, 2006-07: World Economy Analysis and Forecast, that it was necessary to keep the interest rate high and real estate cool to avoid the risk of a crisis such as the one Japan weathered in the 1990s.
		But the situation was not given enough attention by the Japanese government, which introduced further financial and property policies to drive up the market.
		The Japanese economy did not recover from the nightmare until the end of 2005.
	www.chinadaily.com.cn /china/2007-01/13/content_782681.htm (589 words)

	Transaction services and asset-price bubbles
		Thus an asset-price bubble can emerge due to the externality that the asset price reflects the transaction services that it can provide, while the amount of the transaction services reflects the asset price.
		If the liquidity of the asset (θ) is not too high, there exists a steady state equilibrium where the asset price has a bubble component, and if θ exceeds a certain value, there exists no stable equilibrium.
		Finally, in the case where the equilibrium concept is relaxed to allow for sticky prices and a temporary supply-demand gap, I show that there exists an equilibrium where a bubble develops temporarily and bursts eventually.
	ideas.repec.org /p/eti/dpaper/04026.html (506 words)

	Plaza Accord - Psychology Central
		The G-5 agreed to devalue the US dollar in relation to the Japanese yen and German Deutsche Mark by intervening in currency markets.
		The Plaza Accord was successful in reducing the US trade deficit with Western European nations but largely failed to fulfill its primary objective of alleviating the trade deficit with Japan due to the fact that this deficit was due to structural rather than monetary conditions.
		The recessionary effects of the strengthened yen in Japan's export-dependent economy created an incentive for the expansionary monetary policies that led to the Japanese asset price bubble of the late 1980s.
	psychcentral.com /psypsych/Plaza_Accord (459 words)

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