3 Ingredients of Market Bubbles
"Innovation, speculation, and delusion have come together in bubble after bubble", says Financial Analysts Journal editor Rodney Sullivan. March 7, 2011 Text Version or Morningstar Video (7:19min):
http://www.morningstar.fr/fr/news/article.aspx?articleid=96355&categoryid=13 

My note: with respect to Canadian real estate we have a long history of central government risk suppression policies (via CMHC and the BoC) as prime manufacturer's of "innovation", and we have the resulting unbridled "speculation" via leverage (debt) as prices rise, and we have mass delusion in the form of the greater fool who will come along and pay an even higher price. BR  

30-YEAR Buy vs Rent Chart (theeconomicanalyst.com & housingbubble.jparsons.net) 

There is a time to own and a time to rent. 

In Canada, it's Time to Rent through the inevitable mean reversion. 

Keep building up cash, it will one day have value again. 

Gold is actually outperforming real estate and all other commodities by a wide margin.

This chart of U.S. Housing since WWII is the same old CyclePro forecast for the US residential housing bust. 

We are still on target for a rubber band snap down from the 2006 peak that should take the Case-Shiller index well below the historical low price channel trend line. Despite the Fed's multiple interventions to prop up housing prices, my forecast really does not need much adjustment. Steven J. Williams January 2, 2011 
www.cycleprooutlook.com/Charts/SP500/Outlook.htm 

Following the Path of Japan and the Madness of Bernanke Fighting Just That 

"I have been saying for 5 years the US would follow the path of Japan. An interesting chart in the New York Times shows this is indeed what has happened." by Mike 'Mish' Shedlock November 21, 2010

1997 Hong Kong Housing Blowout 

Prices plunged 60% in 6 years. Chart by Gus Lubin  October 29, 2010 

The current Hong Kong housing bubble worries were renewed this week when prices passed the 1997 peak, and you can see what happened after the 1997 peak. 
www.businessinsider.com/hong-kong-housing-bubble-chart-2010-10  

Hyperinflation is very poorly understood by modern economists.  

Cullen Roche's research has shown that this is likely due to the lack of evidence showing direct connections between economic environments and consistency in prior cases of hyperinflation. 

The widely held belief is that government debt and deficits (aka, “money printing”) lead to hyperinflation. But Cullen's research shows that hyperinflation is not merely the result of “money printing” or an expansion of the money supply and in fact tends to occur around very specific and severe exogenous economic circumstances which lead to an increase in the money supply ultimately leading to hyperinflation.

Hyperinflation is not merely high inflation or a collapse in confidence, but is actually due to severe exogenous shocks with very real and provable transmission mechanisms. Historically, these events tend to be:

• Collapse in productivity or lack of economic stability due to lack of productivity.
  
• Rampant government corruption.
  
• Loss of a war.
  
• Regime change or regime collapse.
  
• Ceding of monetary sovereignty generally via a pegged currency or foreign denominated debt.
  

For more on this subject please refer to Cullen Roche's research at:  http://pragcap.com/resources/understanding-hyperinflation

A Business Cycle Primer  by Bob Hoye  August 4, 2010

"In so many words, Main Stream Economics will be ground between the millstones of Wall Street and Main Street."

The Cultural Upheaval of Loose Money

Mises Video (31:38min) by Jeffrey A. Tucker  April 10 2010 

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of the voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved." 

Ludwig von Mises, Human Action, A Treatise of Economics, Yale University Press, 1949. 

The Most Important Chart of the Century by Nathan Martin March 20, 2010

"The latest U.S. Treasury Z1 Flow of Funds report was released on March 11, 2010, bringing the data current through the end of 2009.

What follows is the most important chart of your lifetime. It relegates almost all modern economists and economic theory to the dustbin of history. Any economic theory, formula, or relationship that does not consider this non-linear relationship of DEBT and phase transition is destined to fail. It explains the “jobless” recoveries of the past and how each recent economic cycle produces higher money figures, yet lower employment. It explains why we are seeing debt driven events that circle the globe. It explains the psychological uneasiness that underpins this point in history, the elephant in the room that nobody sees or can describe." 

CMHC has become a Tax Payer Liability  by Mike 'Mish' Shedlock November 6, 2009 

"I have certainly been wrong about when Canada's housing bubble would burst for good. 

However, burst it will and when it does the pain will be no less than what has happened in the US."

"The largest sub-prime lender in the world is now the Canadian government."  by Murray Dobbin  October 22, 2009 

"CMHC primary deliverables is mortgage insurance and mortgage backed securities." by Jonathan Tonge July 20, 2009 Think Fannie and Freddie.