Speculative Bubbles in the Near Future? Not Unlikely Indeed

Giovanni Cossiga

Applied Economics and Finance, 2018, vol. 5, issue 2, 13-31

Abstract: In the near future, the world economy would be crossed by a new wave of speculative crisis? To answer this question, we can have a look at the economy performance during the speculative bubble formation and the 2008-2009 financial crisis. Our intention is to verify whether the troubles of the last decade speculative crisis may recur again in the coming years. Particularly, we want to look at the price trend, which may be the forerunner of new speculative waves, if and when prices would show a prolonged deflation trend. At the same time, we¡¯ll look at the growth profile in the economy which, during the speculative phase, is showing an ambiguous measured trend. This behaviour of the main variables, low inflation and almost regular growth, is for operators and families a sort of mirage about the economy outlook. A deceptive mirage, however, that gives the feeling that the speculative wave is a sort of catalyst for a long growth phase. Actually, the economic system seems to follow the physical laws of the material world, according to a growth trend compatible with environmental resources. A system derailing from this path becomes unstable and sooner or later must return to the equilibrium natural state. The speculative wave can be defined as an extreme natural mechanism, put in place by the system to get out of the accumulated errors. If this correction is done, the wave of speculative tensions ends with the return of the economy within the compatible growth virtuous course. Well, there are symptoms that the natural correction of economic systems is not complete, despite the strength and intensity of the 2008-2009 crisis. Therefore, we can expect that a new speculation wave could be hidden in our next future.

Keywords: speculative bubbles; speculative crisis; instable economy; natural correction; deflation (search for similar items in EconPapers)
Date: 2018
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