Dot-Com Bubble
Visual 1: This represents the Dot-com bubble with all the internet companies and the tack bursting it when the market crashed.
Visual 2: This graph shows when the bubble market peaked and when it crashed.
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The rapid rise in equity markets fueled by investments in internet based companies. During the Dotcom bubble of the late 1990's, the value of equity markets grew exponentially, with the technology-dominated NASDAQ index rising from under 1,000 to 5,000 between 1995 and 2000. Fiscal policy was used after the Dotcom bubble burst to compensate for all the money lost from the failed investors of the internet companies. Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy. In December of 1999, after unsuccessfully trying to depreciate the market with his "irrational exuberance" speech, chairman Greenspan of the Federal Reserve was determined not to follow the path taken by Japan. As the Japanese housing and dotcom bubble overheated, the Bank of Japan did nothing. It watched as the bubble got larger and eventually popped. When bubbles explode they evaporate huge portions of an entire generation's savings. Chairman Greenspan was determined not "do a Japan" and lashed out at the speculative asset price (SAP) bubble from late 1999 through 2000 with four monetary strikes, which pushed very short-term interest rates. Federal Funds rates went up from 5.25% to 6.5%. Monetary Policy is the process by which the monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.
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Housing Bubble
Economic bubble that affected the U.S. housing market. Housing prices peaked in late 2006-2007 and reached new lows in 2012. The credit crisis from the bursting bubble caused a recession in the U.S. from 2007-2009. Increasing foreclosure rates in 2006-2007 led to a crisis in 2008 for multiple markets. In October of 2007, U.S. secretary called it the most significant risk to our economy. Economists have developed a number of financial ratios and economic indicators that can be used to evaluate whether homes in a given area are fairly valued. An economic indicator is a statistic about an economic activity. This allows for there too be proper analysis of economic performance and future performances.
Visual 3: This bubble represents the housing market
and how this led to a crisis in multiple markets and
called it a big risk to our economy.
and how this led to a crisis in multiple markets and
called it a big risk to our economy.