History at a glance – “This time, it’s different”

They've shaped and crippled economies, they've had an effect on each and every one of us but how do we know when a bubble exists? Well I’ll tell you, a bubble exists when asset price inflation rises beyond what incomes can sustain. Economic bubbles have been around for generations with the first recorded bubble, Tulip mania, dating back to the 17th century. Although there has only been 6 significant cases pre twentieth century, over the past 100 years, bubbles have arguably become more destructive to the economy. I know you probably don’t remember the Wall Street Crash (1929), but fundamentally, that was the boom and bust of an economic bubble which plunged the world into depression. Now at this point I have to restrain myself from going off in a tangent about the Wall Street Crash being a catalyst for the rise of the Nazi’s, this is neither the time nor the place.

Personal interests aside lets fast forward 71 years to 21st century, home of the real estate bubbles. Now the UK housing bubble burst around 2006/2007, but still today it is a hot topic amongst journalists, academics and the government, and will continue to be until regulations tighten and effective preventative measures are developed and tested.