Thursday, December 02, 2021 | Rabi' ath-thani 26, 1443 H
clear sky
21°C / 21°C

Blowing bubbles: Boom and bust from bulbs to bitcoin

Virtual currency Bitcoin — or “digital gold” to its fans — has enjoyed a gravity-defying rise along with wild price swings, sparking fears it could be the latest financial market “bubble.” Bitcoin was worth just a few US cents when it began life in 2009 and last week changed hands for a staggering $17,000 despite having no central bank backing and no legal exchange rate. Here are some of the most wild speculative bubbles in history:

Dutch ‘Tulipmania’

At the beginning of the 17th century, exotic tulips became the ultimate luxury accessory and status symbol for rich and poor alike. People mortgaged houses and sold businesses just to buy a bulb. At one point, a single tulip bulb fetched up to $150,000 at today’s prices.

With prices rising to more than 100 times the average annual income, bulbs were being traded for land, livestock and houses — a rare bulb was even considered an acceptable dowry for a bride.

Japanese asset bubble

In the mid-1980s, the Japanese economy ruled the world. Its high-quality, technologically advanced products dominated export markets and everything seemed to be “made in Japan.”

Fuelled by this success — and ultra-loose monetary policy — Japan’s Nikkei index tripled between 1985 and 1989 and Japanese firms were worth nearly half of the entire world’s corporate sector.

With all this money sloshing around and credit cheap and easy to obtain, speculators piled into real estate and prices exploded.

At the height of the boom, it was said the Imperial Palace in central Tokyo was worth the same as the whole of California.

Government policies aimed at deflating the bubble ended up pricking it violently. The stock market plummeted and house prices went through the floor, ruining millions. madness

The Internet and tech boom of the late 1990s resulted in some “” companies being valued at billions of dollars despite not having made a cent in profits.

Young Internet tycoons became millionaires overnight as investors piled into any company with a domain name in the belief the web had upended the rules of business.

At the height of the boom came the AOL-Time Warner merger, at the time the biggest in corporate history.

The boom prompted then Federal Reserve Chairman Alan Greenspan to warn about “irrational exuberance” in asset prices, widely seen as a warning about the bubble. — Reuters

Most Read
The UK, Japan and Singapore are among those rushing in stricter quarantine measures or banning flights from South Africa, Lesotho, Botswana, Zimbabwe,Mozambique, Namibia and Eswatini.
Countries shuts borders over new Covid variant Fuel prices for December announced in Oman Alert: Heavy rains likely in coming hours Air Bubble to continue as India extends ban on international flights
arrow up
home icon