Unexpected and violent rash on the financial market, usually a sudden sharp drop in share prices. Triggers (as past experience clearly shows) do not necessarily have to be special events (e.g. natural catastrophe, sovereign default). Rather, financial markets also react to changes in basic economic data and (economic) policy changes (such as the neglect of the stability targets agreed in the Stability and Growth Pact), initially hesitantly, but then very quickly in a domino effect due to corresponding expectations of market participants. – See selling panic, bear market, bubble, speculative, stock market crash, crash, Elizabeth question, euphoria phase, financial market stress, financial stability, flash crash, headline hysteria, massive selling, Murphy’s law, panic selling, risk-bearing capacity, feedback mechanism, stability fund, European, sovereign debt, effects, stress test, subprime crisis, too big to save principle, worst case scenario. – Cf. ECB Annual Report 2003, pp. 116 ff.), ECB Monthly Bulletin of April 2008, pp. 95 ff. (principles adopted by the Ecofin Council in October 2007), Deutsche Bundesbank Monthly Bulletin of May 2009, p. 25 (contingent liabilities of sovereigns must be taken into account), Deutsche Bundesbank Monthly Bulletin of March 2012, pp. 35 ff. (financial market shocks since 1970 and their impact on the real economy; many overviews; references).
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
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