There are two important reasons for the formation of bubble economy. The first reason is that the macro environment is relaxed and there is a source of funds for speculation. The bubble economy occurred at the stage when the country relaxed monetary policy and the economy developed rapidly, and the social economy was prosperous on the surface, which provided a source of funds for the bubble economy. Commodity economy is characterized by periodic growth. After each round of economic depression, the government often lowers interest rates, relaxes monetary policy, and stimulates investment and consumer demand to start economic growth. Some enterprises and individuals with funds in their hands, the first thing they think of is to invest these funds in resources with potential for maintaining and increasing value, which is the social foundation for the growth of bubble economy. From 1955- 1985, Japan completed its economic take-off and entered the ranks of developed countries, becoming the second largest economy in the world. Japanese enterprises and residents with money in their hands believe in the "land myth". Japan is an island country with many mountains and few plains. Land has become a scarce resource in Japan. With the development of economy, the area of industry and city is increasing. At the same time, due to the increase of land investment in infrastructure construction, land prices, especially urban real estate prices, are on the rise. The Japanese, on the other hand, regard this trend as absolute, believing that land prices will only rise, not fall, and even regard real estate investment as a way to preserve and increase assets. They began to create a land bubble. Since the second half of 1980s, land prices in Japan have soared, and speculators can get more loans from banks as collateral, and then seek new speculative opportunities. As a result, more and more funds are chasing limited land, which leads to further increase in real estate prices. The Japanese banking industry is a faithful believer in the "land myth". In the second half of 1980s, due to the development of financial liberalization and interest rate marketization, the competition among financial institutions intensified, and the financing cost of banks tended to rise. In this case, banks regard real estate as a way to seek high rate of return, and the financing for the real estate industry has greatly increased. If the base period is 65438+March 0985, by March 199 1, the amount of banking loans increased by 60.6%, while the increase of real estate loans in the same period was as high as 150.6%. The balance of bank loans to the real estate industry increased from1985 March 17. 1 trillion yen to1991March 42.8 trillion yen, and the proportion of real estate loans to total bank loans increased from 7.2% to1kloc in the same period. In the 1990s, the "land myth" was shattered with the bubble economy, and land-based loan projects became indigestible bad debts.
The second reason for the formation of bubble economy is that society lacks a restraint mechanism for the formation and development of bubble economy. Judging from the development process of previous bubble economies, so far, society lacks an effective restraint mechanism for the formation and development of bubble economies. The key to restrain the formation and development of bubble economy is to supervise and control all kinds of speculative activities that promote the growth of economic bubble, but so far, society still lacks such supervision means. This kind of speculation takes place between speculators, which is a two-for-two transaction, and no intermediary can monitor it. As the most critical step in the process of speculation-payment, there is no monitoring mechanism. Although the payment is generally made through the bank, the bank is only a payment intermediary, paying according to the customer's instructions, and the content of payment cannot be constrained. In addition, the decentralization of banks can not play a role in supervising speculative activities. The government is external, and it is impossible to intervene in the trading activities between enterprises. Moreover, the government is often easily confused by the illusion of economic prosperity formed by speculative exchange, and it is not until the problems have accumulated to a considerable extent that it realizes the speculative activities hidden behind it. After the land bubble occurred in Japan, since the middle and late 1980s, urban land redevelopment upsurge has been set off all over Japan, and land prices have soared. The price index of commercial land in the economic circles of six major cities, such as Tokyo, Osaka and Nagoya, increased by 53.6% compared with 1980, and 1980 even exceeded 1980. During this period, the average land price in Japan has also increased by more than 1 time. About half of the people in Japan own land, and about 20% have the right to inherit land. Therefore, with the increase of land price, most Japanese feel that their property has increased by 1-2 times in recent years. During this period, Japan's gross national product grew at an average annual rate of less than 6%, while the prices of financial assets and real estate broke away from the false rise in the level of productivity development, making the economy show a false prosperity. 199111On October 22nd, officials of the Ministry of Economic Planning of Japan also talked about the fact that Japan's economy is in a prosperous state at the regular cabinet meeting. A few days later, the economic situation turned sharply and the number of corporate bankruptcies increased greatly.
In the palgrave English Dictionary published by 1926, the bubble economy is defined as "any highly speculative bad business behavior".
In the 1987 edition of the palgrave Dictionary of Economics, C.Kindleberger, a famous economist and former president of the American Economic Association, was quoted to redefine the bubble economy: "The word bubble state, casually speaking, refers to the sudden price increase of one or a series of assets in a continuous process. The initial price increase will make people expect price increases, thus attracting new buyers-these people. The price rise is often accompanied by the expected reversal, followed by the price collapse, and finally ended in the financial crisis. Generally, the "boom" lasts longer than the bubble state, and the price, output and profit rise more gently. In the future, it may be accompanied by a crisis in the form of a plunge (or panic), or it may end in the gradual decline of prosperity without a crisis. "
It can be said that it is quite appropriate to describe an economic entity after a period of rapid prosperity and then a sharp decline. Bubbles in nature occur quickly and burst quickly. A drop of soapy water can blow out a dazzle in one breath.
Brilliant foam. But it didn't last long. The bigger the foam, the faster it will burst. Generally speaking, people regard the bubble economy as a synonym for false prosperity. Like soap bubbles, it looks colorful, but there is nothing in it. Once the bubble bursts, prosperity disappears like a dream.
First of all, what is a bubble economy?
It can be said that it is quite appropriate to describe an economic entity after a period of rapid prosperity and then a sharp decline. Bubbles in nature occur quickly and burst quickly. A drop of soapy water can blow out dazzling bubbles in one breath. But it didn't last long. The bigger the foam, the faster it will burst. Generally speaking, people regard the bubble economy as a synonym for false prosperity. Like soap bubbles, it looks colorful, but there is nothing in it. Once the bubble burst, the prosperity disappeared like a dream.
In the palgrave English Dictionary published by 1926, the bubble economy is defined as "any highly speculative bad business behavior". This statement seems not clear enough. Therefore, in the 1987 edition of the palgrave Dictionary of Economics, C.Kindleberger, a famous economist and former chairman of the American Economic Association, was quoted to redefine the bubble economy: "The word bubble state, in a word, is that one or a series of assets suddenly increase in price in a continuous process. The initial price increase will make people expect to increase in price, thus attracting new buyers. The price rise is often accompanied by the expected reversal, followed by the price collapse, and finally ended in the financial crisis. Generally, the "boom" lasts longer than the bubble state, and the price, output and profit rise more gently. In the future, it may be accompanied by a crisis in the form of a plunge (or panic), or it may end in the gradual decline of prosperity without a crisis. " [ 1]
In modern economy, people exchange far fewer specific commodities than some symbols, such as currency, stocks, bonds, foreign exchange, futures, option contracts, checks, bills of exchange and so on. Peter drucker pointed out: "The symbolic economy such as capital movement, currency exchange and finance is completely independent of the real economy such as products and services." "This is the most amazing and difficult change to understand." [2] Because there are fewer investment opportunities in industry, the return on investment is relatively low, while the return on investment in financial assets is relatively high. Under the temptation of false high yield, a large amount of funds are idle in the symbolic economy, which does not constitute real growth. In areas that are not directly related to the real economy, funds are flooding, while the physical production sector is gradually declining due to lack of funds. This is what people usually call economic bubble or industrial hollowing out.
Second, the economic bubble is not equal to the bubble economy.
The rapid development of economy will inevitably produce some bubbles. Just like a mountain stream, the water flow is very fast, which will inevitably arouse some bubbles, but this cannot judge what has happened to the water quality of the stream. The foam in the stream is quite different from the foam blown by soapy water. Stream water can be drunk, but soapy water can't. Different water quality requires completely different treatment methods.
Economic bubble refers to the unbalanced phenomenon that often occurs in the process of economic development. The concrete manifestation of these imbalances is the ups and downs of the economic cycle. Bubble economy refers to the phenomenon that market prices fluctuate greatly due to economic speculation. Because of their different causes, hazards and countermeasures, it is not a simple word game to distinguish bubble economy from economic bubble. If the difference between the two is not clear, it is easy to confuse the real bubble economy with the economic bubble that people often say, which is not conducive to identifying the bubble economy and taking corresponding countermeasures.
Judging from the relationship between supply and demand, under the normal market mechanism, price increase will inevitably lead to demand decline. But when the bubble economy broke out, on the contrary, the higher the price, the stronger the demand, and the more you buy, the less you buy. This is an important indicator to judge whether there is a bubble economy.
Of course, the bubble economy will cause the prices of some commodities to fluctuate greatly, but the opposite proposition may not be correct. We can't judge that it is a bubble economy based on the skyrocketing prices of some commodities. There are many reasons for price changes, and the bubble economy is just one of them.
The main difference between economic bubble and bubble economy is that market mechanism will play a balancing role in economic bubble. No matter how fast the bubble grows, there will always be an equilibrium point under the action of the market mechanism, but the market mechanism can do nothing about the bubble economy, because there is no such equilibrium point in the bubble economy.
Third, economic cycle and bubble economy.
No matter in any economic system, economic operation will have ups and downs. In some periods, the speed of economic growth accelerated and there was a scene of prosperity. Other periods of economic depression, stagnation or decline, cycle after cycle. This is what people often call the economic cycle. The periodic fluctuation of macro-economy is the basic law of social development.
The root of periodic fluctuation is the contradictory unity of the two opposites of total social supply and total demand. Due to the expansion of market or government plan, social demand increases, which promotes the expansion of large-scale industrial production. Due to the close input-output relationship between various departments of modern large-scale industry, the growth of demand is amplified step by step in the form of multiplier. This kind of expansion is often manifested as sudden and leaping expansion, which leads to the peak of large-scale investment. Large-scale investment, in turn, led to a more rapid expansion of large-scale industries. The economy is like a locomotive that has started, running faster and faster. [3]
In the process of economic development, the balance between supply and demand is temporary and relative; Imbalance is constant and absolute. Economic development is a movement process from one unbalanced state to another. In Dialectics of Nature, it is called the law of "wave advance". [4] Periodic fluctuation reflects the self-regulation process of the unity of opposites between supply and demand within the system. It is impossible and unnecessary to completely eliminate the cyclical fluctuations of the economy. If the fluctuation amplitude or frequency is too large, it will cause relatively large economic losses. The ups and downs of the economy are not conducive to making long-term investment plans, and a considerable part of the means of production are not fully utilized, which is not conducive to improving the efficiency of labor production and resource allocation. Many products are in short supply for a while, unsalable for a while, and the waste is serious. Severe economic oscillation will also affect political stability and people's lives, resulting in a series of social problems. Therefore, governments all over the world regard macroeconomic stability as an important goal of their policies.
Overinvestment will distort the economic structure to some extent, but eventually the market mechanism will play a role in correcting these distortions. In this way, economic adjustment will naturally occur after a period of time, which is usually called the economic cycle. Judging from the image of the economic cycle, the economic growth rate fluctuates from economic recovery to prosperity, then from prosperity to recession, and then from recession to depression. In the period of recession and depression, it gradually tends to recover through adjustment inside and outside the economic system. This cycle is a cycle in a few years. If the economic bubble is serious, the fluctuation range of the economic cycle is relatively large. Taking appropriate measures can weaken the impact of the economic bubble and limit the scope of the economic cycle. Generally speaking, economic bubble is inevitable, and economic cycle is the inevitable law of macroeconomic movement.
The track of bubble economy is different from economic cycle. The economic cycle movement is a continuous process that is repeated, but the bubble economy suddenly falls back after reaching its peak, and this ups and downs phenomenon will not be repeated for a long time.
Four, two different thinking logics
From the perspective of information theory, when considering an investment, it is necessary to predict the price and market demand of the investment object in each future period. There is a time difference from investment to product. When the product goes on the market, the demand and price in the market may be different from the forecast. Especially in modern industrial and financial markets, the uncertainty of market movement trend is very high. People can't have complete information when making investment decisions. It is precisely because of the incomplete market information that many investment mistakes have been made. In the period of rapid economic growth, it is particularly prone to excessive investment, which leads to the distortion of economic structure. In terms of incomplete investment information, there is no essential difference between economic bubble and bubble economy. One of the main differences between the two is the logical way of thinking when people expect future prices.
For example, in the early 1980s, the sales of washing machines in Chinese mainland market were very good and the profits were relatively high, so many manufacturers rushed to set up factories and prepare to produce washing machines. No matter how these investors predict the market demand, there are only two possibilities for them to predict the future price of washing machines: smarter investors will consider that once their products are put into the market, local demand will be alleviated and the price of washing machines will drop by a large margin. Whether it is profitable or not depends on the extent of this price decline. People who lack market knowledge will simply estimate the profit after production according to the current market price of washing machines. If the function and quality of washing machines are not obviously improved, no one will make such an estimate anyway, and the market price of washing machines in our factory will rise after they are put into the market. At the same time, there has been an upsurge in Shanghai and Shenzhen stock markets. Almost all investors expect that their share price will rise again after their investment, and they can profit from it. Although there are incomplete information problems in investing in washing machines and stocks, investors are quite blind, but their estimation methods of future prices are completely different. In washing machine investment, people unconsciously admit the market mechanism, but in stock investment, people obviously deviate from the fundamental principles of the market mechanism. Finally, the market mechanism will correct the mistakes in washing machine investment, but it can do nothing about the problems in stock investment. This formed the watershed between economic bubble and bubble economy.
Five, Zhang Guan Dai Li delayed the diagnosis.
Sometimes the supply of a certain commodity exceeds demand, resulting in a serious backlog; In some places, investment decisions were wrong, repeated construction, and many shops and high-end hotels were opened at once, resulting in closure. Some people criticize these phenomena as bubble economy. In fact, the wording of this criticism is not exact. When the market is unbalanced, both the supply and demand sides will adjust their behaviors according to the information transmitted by the market price. If the price rises, the demand side will reduce the demand appropriately, while the producers will increase the supply when they see that it is profitable, and the market mechanism will guide the market to a new equilibrium state.
Some people call the false prosperity caused by a large amount of borrowing for investment a bubble economy. This formulation is not very accurate either. Borrowing is a way of financing. Whether it is a bubble economy or not depends on which areas these loans are invested in. If these loans are put into the production field, especially the development of competitive emerging industries, the comprehensive strength of the country will be improved because of the investment, which is definitely not a bubble economy. If there is a financial crisis, it will be difficult to repay the loan for a period of time. Even if the economic effect of investment is not good, in any case, a considerable part of the assets transformed by investment can be found. Obviously, this is very different from what happened after the bubble burst. However, if the loan is used to speculate in real estate, securities and stocks, it is vigorous on the surface, but it has not actually increased the comprehensive strength of the country; Once the bubble bursts, there is nothing but a lot of bad debts. This is of course a bubble economy.
Some people criticize that some statistics are inaccurate, exaggerating achievements and covering up shortcomings. This is a bubble economy. Others criticize that some officials are corrupt and some businessmen eat and drink after making money. This is also a bubble economy. There is no doubt that these are all wrong behaviors, but there is no reason to classify them as bubble economy.
Sixth, the role of market mechanism.
Because of the different operating mechanisms of economic bubble and bubble economy, the countermeasures that should be taken are also different.
Excessive investment leads to the distortion of economic structure, and the resulting economic bubble is inevitable. The emergence of economic bubble shows that the market is not omnipotent, but this does not mean that the market is out of order. Promoting fair competition, promoting information circulation and reducing investment decision-making mistakes can effectively curb and weaken the economic bubble. Strengthening market mechanism is the fundamental way to reduce the harm of economic bubble. In the period of economic transformation, some government officials don't understand the economic laws, use their power to command blindly and interfere with economic activities too much, which is an important reason for many economic bubbles. Therefore, separating government from enterprises and promoting the modern enterprise system can effectively reduce the economic bubble.
In the bubble economy, the price rises and the demand also rises, which shows that the bubble economy does not follow the basic operating laws of the market economy. Bubble economy is a very special mode of market failure. Strengthening the market mechanism cannot solve a series of problems brought about by the bubble economy. So once it is confirmed that some problems are the consequences of the bubble economy, some special measures need to be taken. If we still think that the market mechanism can finally solve the problem at this time, it will be more primitive, and it is likely to lose opportunities and delay the overall situation.