This essay reconsiders the interaction between the development of economic theories and economic reality since the 1920ies.
I begin with the systemic cause of the financial crisis, the coincidence of three "bear markets" (stocks, real estate, commodities)
which followed three parallel "bull markets". I then sketch the macroeconomic effects of the "manic-depressive" fluctuations
of asset prices and show how they paved the road into the present crisis. As next step, I explain how "bulls" and "bears"
are brought about. Then I sketch how the treatment of financial markets in economic theory and policy has shaped the long
cycle from the financial boom of the 1920ies, the Great Depression, the post-war prosperity under "realcapitalistic" framework
conditions to the "finance-capitalistic" regime since the 1970ies. The paper concludes with proposals how Europe could find
roads to new prosperity. After the upcoming financial crisis there will be a window of opportunity to implement these proposals.
JEL-Codes:B20, E44, F34, G12, O11
Keywords:Asset price dynamics
Forschungsbereich:Industrieökonomie, Innovation und internationaler Wettbewerb