The philosophy behind boom and bust
Over the last few months there has been much mention of the economic cycle, the so-called boom and bust scenario, but does it actually exist?
Statistics show that we have experienced regular boom and bust economic cycles since time began and despite the attempts of many political parties and political leaders, this is a human issue which will never go away. In the good times everybody wants a slice of the action and is desperate to make money while in the bad times everybody wants out of the market, often at any price.
While the property market is perhaps the traditional "boom and bust sector" this is a philosophy which is repeated in every single investment market in the world. We have seen similar phases in the oil market, the Internet market, and the gold market and an array of other niche investment market. The truth is that human emotion will ensure that even after the toughest of times, investors will at some stage flock back and pay over the odds for a slice of a potentially lucrative investment.
While authorities around the world can to some extent regulate the supply of funds by economic policies and adjusting base rates, ultimately the wave of human emotion and human investment philosophy will take over.
Share this..
Related stories
Mervyn King calls for UK banks to be split
Mervyn King, the Governor of the Bank of England, has been in the news amid calls for UK banks to be split to reduce their influence on the UK economy. This is not the first time that the Bank of England has in fact called for such a move as it is obvious to all parties that the UK financial sector is effectively running the UK economy.
There were calls to hive off the less risky de...
Bank Of England hold UK base rates
As expected, the Bank of England MPC committee has today confirmed that UK base rates will remain on hold for the sixth consecutive month. This came as no surprise to the UK market, with many expecting the move, although there was a small surprise with regards to the quantitative easing program which has been ongoing for some time.
Many had expected the Bank of England to put on hol...
RDR ‘could deal Blow to Savings’
Tory MP, Howard Flight, has spoken out against the Retail Distribution Review which is planned to come into effect at the start of 2013. It is his view that it could have a damaging effect on savers within the UK, reducing the availability of financial advice. He also added that this would have a detrimental effect on the economy, by obstructing savings needed to pull the nation out of recessio...
Read MoreUK mortgage market set to change
As we have mentioned on numerous occasions over the last few weeks, the Financial Services Authority (FSA) has been targeting the UK mortgage industry and looking to tighten the regulatory belt around this particular sector for some time. It would appear that in the years ahead, mortgage lenders will be directed to ensure their customers are able to cover future mortgage payments using various cal...
Read MoreIs the money market rescue starting to kick in?
News that the central libor rate (i.e. the rate charged when banks lend money between each other) has fallen and spreads have reduced is just the news that the stock market needs after a very rocky few days. Rates have actually fallen to the levels they were when Lehmans went under although there is a suggestion that until the economy picks up we may not see substantial further falls.