The current economic crisis reflected in media

• Author: Titus Suciu
• Position: Department of Finance, Accounting and Economic Theory, Transilvania University of Brasov.
• Pages: 95-102

Bulletin of the Transilvania University of Braşov • Vol. 3 (52) - 2010

Series V: Economic Sciences

THE CURRENT ECONOMIC CRISIS

REFLECTED IN MEDIA

Titus SUCIU1

Abstract: This pa per deals – in its former part – with three concepts:

speculative bull, stock market cr ash and stock market corr ection. As a rule,

the bulls a re consider ed to be the cause and the stock market crashes the

effect of the bulls. In Romania, the financial crisis is the consequence of the

overrated consume genera te by credits. As any other thing generated by

credits, consume must be paid a s well. Unfortuna tely, the payment must be

done in the conditions of the intern ational crisis, so it will cost more. The

payment deadline is an inevitable thing, a nyhow.

Key words: speculative bull, cra sh, stock market cor rection, leverage,

‘Ninja’ loans.

1 Department of Finance, Accounting and Economic Theory, Transilvania Un iversity of Braşov.

1. Introduction

The financial crisis is a phenomenon of

long-time interest for the author of this

article, because the market economy holds

within itself this specific mode of

manifestation which is the stock market

crash. This has been the subject of the

following articles, published between 2002

and 2005: „The Financial Crisis in Asia‟,

„The Crisis of the American Securities‟,

„The Stock Market Crash from the 19

October 1987‟, „Famous Speculators‟.

2. From Bull Market to Crash

The bull market is considered a

temporary period when, on the economic

market, a span of time of extensive

demand is followed by an unfounded raise

of the prices. Sensing a rising trend on the

market, the investors place high pressure

on buying, in order to participate to the

profitability of the market. As a rule, these

bulls are followed by even faster selling

when the prices start to fall.

The economic theory says that the value

of an asset is equal to the sum of the

actualized current and future gains. We

call this value “the fundamental value”. Or,

we can often find that the market value of

an asset is constantly moving away from

this fundamental value: we qualify a

phenomenon of this type as a “bull

market”. And yet, its existence, as a rule, is

provisory: it ends with a brutal and

unpredictable crash of the market prices,

which brings the value of the asset to its

fundamental level. (Jessua, Labrousse,

Vitry, Gaumont, 2006, p.76).

Generally, bull markets develop quite

slow, reaching the higher point gradually,

during several years. The traders on the

market continue to buy, despite of the fact

that they are able, at some point, to

perceive that the growth of the stocks is

false, as it is not based on a firm economic

ground. The reason: the allurement of