How financial bubbles are formed and what influences them in their formation and bursting

The reasons for the formation of financial bubbles are complex and difficult to advance in advance. The downstairs is still more professional.

A financial bubble refers to an economic phenomenon in which the market is greater than the actual price of a financial asset or a series of financial assets after experiencing a continuous price increase. The financial bubble is an illusion of improper macroeconomic regulation and control of the economy, excessive investment causing excessive expansion of assets, blind pursuit of economic growth, and rapid expansion of domestic investment, leading to false prosperity. When the financial bubble begins to burst, the main characteristics are that people's consumption is high, prices are rising, and people spend money when they have it, and they do not save or save very little.

Financial bubbles are often formed because of economic overheating, and bubbles are reflected in real estate, credit, etc. The collapse is because the asset ** deviates from the value excessively, and even investors no longer dare to continue to invest, and they sell one after another, thus forming a chain effect.

If you pay close attention, you will find that on the streets and alleys, people's hot topics have shifted from the previous soy milk and fritters to the ** and property market. In China, especially in cities, people's pursuit of some virtual assets and financial assets once reached an unprecedented heat.

In economics, the market price of an asset, whether virtual or physical, is for some reason far beyond its actual value, and this part of the difference is what we call an "economic bubble".

Not only financial assets, but also commodities sometimes lead to the emergence of "bubbles" due to unreasonable factors, but because financial assets are basically virtual capital separated from the real economy, they have the characteristics of producing bubbles. So, we often talk about "financial bubbles".

So, when will a financial bubble be created? To put it simply, virtual capital, such as the value of valuable ****, has been completely separated from physical capital, such as the disorderly development of commodities operated by the company, far beyond its actual value. In fact, there are many factors that lead to the emergence of financial bubbles, such as the defects of the economic system, the loopholes in the financial market environment, and the reasons for the speculative psychology of investors.

Eventually, these factors will lead to the aforementioned value deviation, resulting in a financial bubble. From the beginning of 2006 to October 2007, the Shanghai Composite Index soared from about 1,300 points to 6,124 points, and the value of some ** even rose dozens of times.

It stands to reason that a company's performance is mainly determined by its operating performance, and the annual operating profit margin of a normal company generally does not exceed 50%, and the operating profit index of some companies with good growth rarely exceeds 100%; However, in the past year and a half, the stock prices of these companies have been able to rise several times, more than ten times, or even dozens of times, which is very different from the development of the real economy. Then, at this time, it can be said that such a huge market capitalization expansion is full of "** bubbles".

There is a large amount of money circulating in the market, the market economy is developing very well, and the banks will close the valve when they see that the time is ripe, which is very easy to produce financial bubbles at this time, and the impact on the economy is also very large, and the economy will also recession.

It is that the whole society is in a state of prosperity, and in such a situation, it is easy to have a financial bubble, and the financial bubble is also a term in the financial world, with a multi-layered meaning, and it is not good to be in such a situation.

Too much money is invested or the overall macro policy is not selected for appropriate adjustments, and the overall development speed is too fast, creating a false situation, and there will be a financial bubble.

Economic bubbles. It refers to a series of expansions of assets, that is, in the process of increasing the size of the market, the market far exceeds its actual value, forming a false prosperity and containing too much "bubble" economic aggregate. The total amount of state-owned assets of a country can generally be divided into tangible assets (including land) and financial assets.

In today's asset market, the most traded listed assets are concentrated in ** and real estate, so asset ** inflation is particularly pronounced in ** and real estate. There are two main reasons for the bubble: speculation has become a trend, pushing up assets**; The return on asset valuation is too high and abnormal.

China's valuations are so high that the market** of assets is far from the real value of the economy, which is the true basis of the economy.

It is worth noting that in 2006-07, **substantially**, real estate** remained high. It's a huge bubble. This led to the crisis of 2008.

The formation of bubbles requires a certain amount of dependency, and economic bubbles are no exception. They also require attachments, academically called carriers. To sum up, the market mechanism can be seen.

No matter how it runs, there is a possibility of economic bubbles. Speaking of the bubble economy.

I believe that many people are not very familiar with it, but it is a phenomenon that we often see, involving countries and even the global economy.

development. If a country's economic development does not conform to the laws of the market, then no matter how prosperous it is, it will eventually create a bubble economy.

A bubble economy refers to a false boom characterized by an abnormal asset (real estate), i.e., a large number of events in a continuous process that makes the market far exceed its actual value. In short, the bubble economy refers to the excessive growth of virtual capital. The bubble economy has its pros and cons.

On the one hand, it is conducive to the concentration of capital and promotes active competition and prosperity in the economy. On the other hand, there is a speculative factor, which can easily lead to excessive volatility of assets**, causing market chaos and social unrest. In fact, there are two reasons for the formation of the bubble economy:

First, the macro environment is loose and there is speculative capital**; In addition, there is a lack of restraint mechanism for the formation and development of the bubble economy.

China's capital markets.

The bubbles are mainly concentrated in the Growth Enterprise Market and the SME Board.

The myth of wealth creationThe gem on the SME board has a huge motivating effect on entrepreneurs. In the current difficult economic situation, the national level encourages "mass entrepreneurship and innovation", which may welcome a certain degree of bubble in the capital market. Another benefit of a bubble is that it encourages businesses to raise funds directly, reducing their reliance on indirect financing from banks.

A bubble means that it is cheaper to raise capital directly through the issuance of new shares, and the company can use less share capital.

Normally, people use the bubble economy as a synonym for false prosperity, and once the bubble bursts, the prosperity disappears completely. Economic bubble refers to the imbalance that often occurs in the process of economic development, and the specific manifestation of these imbalances is the ups and downs of the economic cycle, just like a mountain stream, the water flow is fast, it is inevitable to stir up some bubbles, but it cannot be judged that the water quality of the creek has changed. The foam in the stream is completely different from the foam blown by soapy water, and because the causes of the two are different, the harm caused is different, and the countermeasures to solve the problem are also different.

It is a term in economics, which refers to a series of assets that suddenly **expand, continuously and sharply** over a period of time, exceeding the value actually represented, if the economic bubble bursts, the effect is that these things will depreciate rapidly, and then they will lose money.

An economic bubble is a false boom in the economy. After the bursting of the economic bubble, it will have a great impact, affecting people's income levels, as well as social progress and development, and there may be an economic crisis.

The meaning of this word is that the economic structure has been adjusted, and then it will also cause particularly serious factors to the economy, and then the economy will also have a large loss, and the economy will also be sluggish, which will lead to a decline in the price level, and will also lead to a particularly serious loss of investors, and will also lead to a complete collapse of the market.

Financial assets are symmetrical physical assets and assets that exist in the form of value. A company's financial assets include: transactional financial assets, loans and receivables, financial assets available for **, and investments held at maturity.

Personal financial assets include: personal deposits, bonds, collective wealth management, bank wealth management products, third-party deposit margins, insurance, trusts, etc.

Recently, a large number of shady scenes have broken out in the currency speculation circle, and the phenomenon of virtual currency continues, according to the National Internet Financial Risk Special Rectification Team Office, necessary control measures will be taken for the virtual currency trading platform, and the currency will be in strict accordance with the policy to contribute to the creation of the market environment!