I certainly know that the jargon "Bubbles" has become daily using word since the financial crisis 2008. And I am also sure that many scholars have been trying explaining what causes bubbles. One of many explanations, I say: Gorvernment purposely created Bubbles The announcement may provoked a storm of protest, I know. But before raising any voice, you may want to have a look at Hickson and Thompson (2006) working paper. Their perpective's so interesting: investor-deceiving frauds. Here the brief summary from the paper: Goverments creates bubbles or allow them to happen in respone to: 1) the threat of imminent revolution 2) a diminished concern for the middle class. Firstly, the threat of imminent revolution: HT argue that that prime motive for a revolution is that the new ruling elite can default on the national debt. And the counter-revolutionary strategy is to induce rebels to increase their holding of the country's national debt. So, to achieve this end, the ruling elite can create a series of positive shocks (announcements) in a company that ends up holding a large part of the national debt. They can hype up the company so much so that rebels invest in the shares, and the boom causes them to delay their revolution. :-" Once a significant proportion of potential rebels have invested in the company, the informed ruling elite sell their shares. The positve announcements will then stop. After the crash, the goverment as the bankrupt company's main creditor, will own almost of its own debt. Also, potential rebels will have lost some of their own wealth in the crash: decrease finances available to fund the imminent revolution. But I think, the goverment now control over any revolution by political repression, national-debt-holding central bank or strong military For example, one T54 tank will shut up any noisy mouth. hehe. Secondly and finally, a diminished concern for the middle class. This might arise because ruling elite no longer have to compete for factors of production (i.e labour). And, the middle classes not only have financial assets, but their principal asset is real estate. The real-estate bubbles could be manufactured by the ruling elite through legal reforms. You can see, as financial-asset and real-estate bubbles cannot be expected to distribute the assets of the middle classes to the ruling elite in one go, there will be frequent events. :-bd Let see what is happening in our current real estate bubbles in Vietnam: Bad ruling or too good ruling?