On the 3rd February,The Entrepreneurship Development Cell conducted the E-Talk at Shorbagh from 5:30 PM. The talk began with the one of the members explaining what an economic bubble is and the various factors leading to the economic bubble in China. There were relevant facts and figures to support the same.
An economic bubble is basically a surge in the market caused by speculation regarding a commodity which results in an explosion of activity in that market segment causing vastly over inflated prices. The prices are not sustainable and the bubble is usually followed by a crash in prices in the affected sector.
There were around 15 participants in the workshop.Following this , one of the members explained in detail about the sun prime mortgage which is an important example of the economic bubble. “NEW MONEY ENTERS ECONOMY , BUT THIS SOMETIMES LEADS TO DEVALUATION OF EXISTING CURRENCY.”
Considering the housing bubble of China, it led to low interest rates and increased bank lending. Local government relied on land sales for income and limited access to foreign investments for Chinese citizens increased the appeal of domestic investments such as property. These people also faced cultural pressures encouraging home ownership, particularly for men seeking a wife.
China’s bubble has created a “Luxury Bubble”. Clearly having learned nothing from the disastrous, US housing bubble, real estate speculators or ‘flippers’ have taken China by storm, buying “real estate as if they were buying vegetables”. A full of 60% of China’s wealthiest citizens are looking to emigrate out of China.
After a detailed discussion on economic bubble of China, its causes and impacts, the members discussed about the possibilities of an economic bubble taking place in India. Finally the talk concluded with various methods that should be implemented during a financial emergency. Thus, it was a great learning experience. The talk was really informative and a lot of new and interesting facts were passed on to all.
Reported By– Bhavya Raj
Editor– Nandini Biswas