In this episode we discuss the idea that societies, and economies, are governed by both short and very long cycles of social mood and sentiment. If this theory of cycles (like those proposed by Kondratieff) are correct, then there is very little policy makers can do one way or the other to change economic outcomes. The grandiose visions laid out by the US President’s state of the union address are irrelevant to the economic and psychological prosperity of the nation. The ideas offered by the President’s political opponents are likewise irrelevant for improving the economy. These generational cycles also imply that the cause of the recession and “financial crisis” is deeper than a lack of regulations or risky investment behavior. It was the general bullish attitude of society which inevitably led to lax regulation and excessive risk taking. The next time there is broad bullish sentiment throughout society (80 or 90 years hence) then regulation will inevitably become lax and risk taking will again reach excesses. We talk about how NO political leaders are championing the idea of state or municipal bankruptcies as a method to cure long-term budget problems. There are NO political leaders suggesting that the major financial institutions like CityGroup should just go bust and that bond-holders and depositors should lose their money. Instead, policy makers whine about deficits, stimulus, education and social safety nets. Lastly, we explore the fact the Bitcoin is now reaching a new high, in alignment with other markets, with bearish implications.

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This Week on Bear radio: Cycles and Pre-destination

In this episode Steve Keen shares his knowledge of economics to not only debunk the reverence paid to economists by policy makers but to explain that the titans of the economic theory are misunderstood. Keynes wasn’t the advocate for stimulus spending as many assume and Karl Marx actually had a lot of great insights that are conveniently swept under the carpet. Steve goes on to provide a tutorial on the life and ideas of his hero Hyman Minsky, explaining how this was one of the few who understood the sheer unpredictability that underlies all economics. We also discuss the how there is nothing special about the Australian, Canadian, or Chinese economies other than the fact that they have been able to breathe new life into their economies by blowing bigger bubbles. The end result is inevitable: global deflation. You can read about Steve’s book “Debunking Economics” here: http://debunkingeconomics.com/ You can read Steve’s blog posts on economics here: http://www.debtdeflation.com/blogs/

This Week on Bear radio: A moment of Minsky

In this episode we discuss how Iceland’s decision to simply allow its banks to go bust may have been the wiser choice. Iceland’s economy is now growing again and the economy is re-setting itself. By contrast, nations like Ireland and Greece are taking on even MORE debt (in the form of bail-outs) to prop up their economies yet there is no end in sight to their economic demise. Sometimes it is better to just let the dead wood die and get started with a clean slate. We also discuss how currencies would function in a truly free market and what role, if any, central banks should have in such an environment.

This Week on Bear radio: Iceland as the model for economic recovery

In this episode Robert Gignac offers advice on financial planning. Be careful to choose financial advisors who don’t have an vested interest in selling particular products. It is also important to find advice from people who really explain the various products and options without assuming that consumers understand the different between annuities, dividends or tax-free retirement funds. Robert explores how your goals and state of mind are the key to real happiness. Just having a lot of cash doesn’t inevitably make one happier. We also discuss the differences in health care systems and investment options for Canada and the US, sharing our own experiences with each system.

This Week on Bear radio: Being rich is a state of mind

In this episode Patrick Killelea joins us to do some crystal ball gazing for 2011. Tune in to hear predictions for rising interest rates, a declining Euro, and crashing stock prices in Asia and America. Patrick predicts that affluent areas will see significant price erosion for 2011 and that the National Association of Realtors will declare that it is a great time to buy. The Optimistic Bear posits that America is embarking on a lengthy odyssey with deflation, much the same as Japan has experienced, and that 2011 will be one of the down years taking asset prices to new lows. Europe will experience a bail-out too far, where the political will to arrange yet a bail-out for another distressed state falters. You can check out Patrick’s economic news site here (as well as his great forums for discussing real-estate and the economy): http://patrick.net If you are interested in deflation, check out the Deflation Study Group on LinkedIn (open to all LinkedIn members): http://linkd.in/deflationsg You can also listen to my in-depth Deflation 101 podcast. http://bit.ly/deflation101

This Week on Bear radio: Bearish predictions for 2011

In this episode housing blogger Patrick Killelea explains why real-estate prices still have a long ways to fall in the tonier communities. Prices fell faster in poor areas where people live paycheque to paycheque. The more well heeled home-owner has assets to burn through, and it takes them longer to get desperate enough to take losses. Patrick also talks about how the primary problem is the masses of bad debt, out of relation to incomes, which still hasn’t been written down throughout the economy. In Patrick’s view, the cozy relationships between banks and government have made the financial crisis what it is. The only thing government efforts to subsidize housing (or anything else, like education) accomplish is to drive up prices. You can check out Patrick’s economic news site here (as well as his great forums for discussing real-estate and the economy): http://patrick.net If you are interested in deflation, check out the Deflation Study Group on LinkedIn (open to all LinkedIn members): http://linkd.in/deflationsg You can also listen to my in-depth Deflation 101 podcast. http://bit.ly/deflation101

This Week on Bear radio: Posh neighborhoods beware – the housing bust is heading your way

In this episode special guest Jim Mosquera explains how the financial crisis has barely even begun and that massive deflation lies ahead. By explaining how money and credit work Jim outlines what caused the financial crisis and why policy makers are powerless to prevent even greater collapses in asset values. When looking for a bottom in stocks start thinking about returning to 1982.

This Week on Bear radio: Deflation – You aint seen nothin yet!

In this episode we talk about how government subsidies have created a bubble in education that is eerily similar to what happened with housing. Prices are rising and unscrupulous lenders are pushing government backed loans for dubious educations. We also ask whether the financial statements of CitiGroup can be trusted.

This Week on Bear radio: The bubble in student loans

The Irish bailout by European nations and the IMF is following the same pattern we’ve seen throughout the entire financial crisis. In this episode we discuss the fact that whether it is consumer mortgages or sovereign debt issues, the response has been the same over the last few years – do anything and everything to avoid making lenders take a loss. Banks will lower monthly mortgage payments for struggling borrowers for a year but actually tack the difference with what is actually owed to increase the over-all loan balance. Governments will bail-out corporations so that bond-holders don’t have to suffer the indignity of a loss. Who cares if the borrowers will re-default later down the road, just so long as no one has to recognize the loss in the here and now.

This Week on Bear radio: The message from Ireland is clear – debt write-downs must be avoid

In this week’s episode we discuss how investing can be difficult even with the benefit of a time machine and perfect hindsight. We also discuss the jitters in the European debt markets, Irish political instability and the recent volatility in municipal bonds. As if any more proof were needed, our commentators point out that the recent run on deposits with Allied Irish Banks despite the fact it had been given a clean bill of health by regulators earlier this year underscores the fact that policy makers lie.

This Week on Bear radio: Investment advice for time travellers – hindsight isn’t everything

In this episode we discuss whether market perceptions of weakness in Ireland (or other nations) can force defaults. We also discuss how Quantitative Easing by the Federal Reserve is already backfiring with rising interest rates and a falling dollar. The show closes with a chat about the re-emergence of debtors prison in the United States.

This Week on Bear radio: Is perception really reality when it comes to economics?

In this episode of the Optimistic Bear show, marking our first anniversary, we discuss the recent collapse of the Bitcoin bubble, the “prosperity certificates” of Canada’s William Aberhart and the history of failed currencies. We also delve into the psychology of bubble investing, and propose some theories as to why investors seem so willing to get burnt with the same bad investments again and again. Lastly, we explore Harry Brown’s 16 golden rules of financial safety.

This Week on Bear radio: The recent Bitcoin bubble and the psychology of jumping back into high risk

With election results coming in from across America today, we discuss what impact change in congressional leadership will have on the economy. We also ponder whether the Republicans will regret their victory if the Great Recession has a double dip. Politicians may have relatively little impact on the economy, one way or the other, but they get the blame when things go wrong as well as acclaim when there is prosperity.

This Week on Bear radio: What does the rise of Republican power in congress mean for the economy?

Stories of abuses in the American medical system are egregious, and shockingly easy to find. However, such atrocities of over-billing and fraud are actually a symptom of a deeper problem: the lack of a free market with responsible customers.

This Week on Bear radio: The US health-care dog wagging the tale

In this episode we discuss how even the best investment strategies, founded on the most exhaustive historical data sets, can still go horribly wrong. No trend lasts forever. Even theoretically reliable seasonal cycles can throw investors for a loop.

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