Good article, I browsed the writer's blog and found another article that is especially relevant.

http://samcheekong.blogspot.com/2013/06/gu...rket-crash.html

It's a long article so I'll just quote the best parts here:

In his book "A Short History of Financial Euphoria", J. K. Galbraith looked at significant episodes of speculative boom-bust during the past 400 years, and came to one key conclusion which concerns us today. He found that speculative episodes start with something which grabs the financial world's imagination, driving up a single asset’s price or the price of an entire sector. There is high gain positive feedback - success breeds success, and then excess, always attracting new buyers. Speculation then moves towards the terminal phase, where it builds only on itself. The asset, or a whole sector - and today all major equity markets - simply grow without reason or logic.

Investors "jump on board". Those already on board and not only for their own personal benefit, talk up the cant-lose investment, further building the bubble. One interesting aside, all through Galbraith's book, is that financial regulations designed to protect investors were in his opinion almost certainly not able to markedly change a boom-bust phase, or protect investors.

As Galbraith notes many times in his book, the role of credit and debt, in a speculative bubble, has been either important or critical ever since the 17th century. As we know, debt itself can become a speculative asset, but the surprise is this asset - notably sovereign debt - has been a driver of massively euphoric market frenzy, followed by total wipeout, as far back as the 1720s.

Malaysian debt to GDP ratio is the highest it has ever been, at 83%, and out of the 83%, 55% is housing loans.

This post has been edited by lowyatter: Jul 10 2013, 09:49 AM

Penang and KL are reaching ridiculous levels already.

The latest project next to E&O Hotel in Penang, called Shorefront is RM1500 /sqft.

This post has been edited by lowyatter: Jul 10 2013, 12:24 PM