Financial Speculation and Its Implication -part 4-
Another important factor for the formation of the bubble was an excess of appropriations. This was what actually occurred in the late 80s. Between 1987 and 1989 the amount of money in circulation experienced an average increase of 10.8% annually and exceeded the growth of gross national product (GNP) rated an average of 4.5 points.
Excessive growth of liquidity used for asset transactions or in other words, to inflate the speculative bubble. Between 1985 and 1990 financial deregulation that accompanied the total monetary issue which grew an average of 10% voids resulted from the second half of 1988, excessive speculative boom that led to the purchase of land, stocks, paintings and articles of luxury. [3] Continue reading
Financial Speculation and Its Implication -part 3-
A very significant negative impact that has had the world’s economic history is the financial crisis of 1929-1933. This crisis starkly reflected the deep contradictions of the capitalist system. The failure of the U.S. economy was so alarming.
In the four years of the 5761 banking crisis broke. Exports declined significantly from 5157 million in 1929 to only 1647 million in 1933. The crisis manifested itself in industry, agriculture, commerce, banking, since all sectors were affected.
The crisis spread worldwide and as the country’s economic fundamentals were sound, the Wall Street crash occurred in the United States a period of economic stagnation known as the Great Depression. The first effect of the crash was the failure of numerous banks consequently resulting in a weak financial system. Continue reading
Financial Speculation and Its Implication -part 2-
We must also bear in mind that the stock exchanges, economic thermometers are true: if the economy is doing well, the prices go up, when it goes wrong or a company has problems, the values fall, as their owners want to sell all costs before fall more.
In recent years, financial systems have been undergoing momentous changes and institutional innovations have appeared in the money and capital markets have a decisive influence in its operation. Untying the international monetary system on gold, the development of unregulated offshore markets credit and securities, derivatives trading, etc., have greatly increased the liquidity of financial markets, forcing central banks to change their strategies to achieve the objectives of monetary policy and even changing the scale of priorities of these goals [1]. Continue reading
Financial Speculation and Its Implication -part 1-
The financial market is characterized by four key elements that characterize it:
1 – Universality
2 – Stay
3 – Immaterialisation
4 – Immediacy
With the development of technologies in the field of telecommunications, today all major stock markets are interconnected, affecting all of them quickly in any variation that occurs in one of its members. Continue reading