Juggling Dynamite

Yesterday I did my bi-weekly spot with Kerry Lutz out of Greenwich. You can listen to the audio here.

Lakshman Acuthan, Economic Cycle Research Institute, says a recession could begin by the middle of 2012. “It takes six months after a recession begins for people even to recognize [it],” he tells “Squawk Box.”  Here is a direct link.

This clip is a wonderful study (albeit embarrassing to watch) of how infantile the mainstream CNBC-esque understanding is of market cycles. Joe Kernan and company are representative of almost all business commentator/hosts today. They understand next to nothing and yet they are looked to as “experts” in this field. They rail against the idea that we are entering the next recession because they think of recessions as unfortunate anomalies–like a 100-year flood. In fact recessions are a normal part of a full business cycle and during secular bear periods, recessions come on average every 3 years. We are now due for the next one.

The truth is that the seeds of the incoming cyclical recession were sown in the reckless excess of the stock boom period of the 90’s, and the credit orgy to 2006 (to 2011 in Canada). The economy is not about to blow up. It already did. We are now just moving through the rationalization, deflation and clean up phase. Central banks may continue to intervene, but the weight of the downturn has a gravity born of the dizzying heights of the bubbles before it. No governments or central banks can stop the process of mean reversion. And that is a good thing. The next organic secular boom period can only start after asset prices have been fully wrung out and capital can be efficiently redeployed in productive business ventures rather than extractive financial shell games. Wise investors will get out of harm’s way and let this process unfold in its due course.

Although many fight the progress and change needed in the world, I see a lot of very exciting things happening in science and innovation which I know can help to solve the major hurdles presently facing humanity. As much as I am defensive of capital during the present credit crisis, I also can’t help but be longer-term optimistic about opportunities ahead. A couple of examples of important new thinking are below.

Last night on Piers Morgan Tonight, Suzanne Somers explained that she was recently able to grow her breast back after a mastectomy with an innovative new process that injects one’s own stem cells into the chest. The ramifications of what this can mean for the future of stem cells to heal and rejuvenate the human body is mind-boggling. She explains the remarkable process here.

Separately in the field of alternative energy, the evolution of ideas is also exciting. My 12 year old son wants to be an engineer so he can help develop efficient new technologies for the future. This is the type of thinking that inspires him (and me). Here is the direct link.