The Anatomy of Financial Crises: Euphoria, Credibility, and Consequences

This article provides an in-depth analysis of financial cycles, deconstructing the mechanism of speculative bubble formation. Drawing on Linda Yueh's concepts, the author identifies euphoria as a moment when rationality gives way to uncritical extrapolation of growth trends. A key element of stabilization is the credibility phase, in which the actions of central banks and state institutions determine the depth of the coming recession. The text discusses in detail the deleveraging process and the negative effects of excessive financial leverage and securitization. The reader will learn how the shadow banking system and moral hazard impact global market liquidity and stability. The analysis concludes with a reflection on macroprudential instruments and the long-term consequences of economic stagnation, offering a comprehensive perspective on the doomsday loop connecting the financial sector with the real economy.