Asian Economics Comment Bubble House

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Asian Economics Comment
Presented to:
Prof, Jima G.DeLeon, MBA
Professor, School of Graduate Studies
Central Philippine University

In Partial Fulfilment of the Course Requirement in
MBA 612
Financial Systems Presented by:
Mehrdad Alavi
MBA Thesis Option
September 13, 2013


1- The title of paper is Asian Economics Comment, The anatomy of bubbles, part 1. It is written at August 27 2009 by Dr, Feredric Neumman, whom is senior Asian Economist. The issuer of report is The Hongkong and
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3- The subject matter portion is the main body of that paper which is started with the explanation of uncertainty. In the uncertainty situation economic prospect is very difficult and the judge the risks. The policy makers reaction to a uncertainty situation has a critical important. If the Central Bank is not alert to what is happening, it will discouraging picture of possible economic. Referring back to the US housing bubble which it as started from 2001 up to 2006 and remind that at that time low interest rate extended plus inflow of foreign saving and new financial instruments, all together made a worth less situation for end users.
Let us take a brief look to the financial history in the asset market and specially buying house from 2001 to 2008. * The background of USA Housing Bubble The housing bubble in the United States grew up alongside the stock bubble in the mid-90s. The logic of the growth of the bubble is very simple. People who had increased their wealth substantially with the extraordinary run-up of stock prices were spending based on this increased wealth. This led to the consumption boom of the late 90s, with the savings rate out of disposable income falling from close to 5.0 percent in the middle of the decade to just over 2 percent by 2000. * Increase in Demand The stock wealth induced consumption boom also led people to buy bigger and/or better homes, since they sought to spend some of their new stock wealth on
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