DEVS 230 Lecture Notes - Lecture 10: Crony Capitalism, Herd Behavior, Root Mean Square
8 Dec 2017
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Document Summary
Four east- asian countries grew rapidly between 1960 and 1997: korea, taiwan, hong kong, singapore. Tiger economies" also grew rapidly in the 1980s and early 90s: thailand, malaysia and indonesia. Irrational exuberance: the price of something will keep going up. Speculative bubbles: (the housing crisis) prices get in ated irrationally and then someone gures it out and the bubble" bursts (ie. cool christmas toy but there isn"t enough so someone goes and buys a bunch to sell ) Speculative trading based on the view that price will go up. Essential value is what people will pay and people will pay more and more if they think prices will keep rising (feedback loop) 1. take out a loan in the currency: convert it to us $ 3. let the currency devalue buy back the amount needed to pay back the loan: keep the difference, back to step 1. Due to nancial liberalization there are no controls on this act city.
