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Wol

Super Bear Warns On Us, China Risks

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THE US economy is likely to enter into a depression and the "implosion" of the Chinese economy will cause disastrous consequences for the whole world, Societe Generale strategist Albert Edwards said.

Advising investors to "bail out" of their stock investments now, Mr Edwards, whose super-bearish stance on the global economy proved correct last year, predicted another 40 per cent decline in the S&P 500 index caused by dismal profit reports and poor economic data during the first half of this year.

"In 2009 it is not the mounting risk of depression in developed economies that will come as a major surprise," Mr Edwards wrote in a note to clients, "it is economic implosion in China and the global and geopolitical risk thereof."

Super bear warns on US, China Risks

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In China, Mr Edwards expects the worst domestic upheaval since the Tiananmen Square protests in 1989 may cause the Chinese authorities to undertake a "mega-devaluation" of the Chinese currency, the yuan, in an effort to stay in power, as "the very survival of the regime depends on growth".

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I'm not sure they will. History will have taught them how this will end if they do, i.e. other countries will retaliate similarly.

Stupid they are not.

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then again according to some commentators china could revalue upwards to stimulate internal consumption...

interesting times and so forth LOL..

Why would a country whose major customer just died of credit heart-attack revalue its currency upwards??

If the yuan were allowed to float freely at this point, it would drop at least 25%.

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Why would a country whose major customer just died of credit heart-attack revalue its currency upwards??

If the yuan were allowed to float freely at this point, it would drop at least 25%.

eh?

China have been manipulating their currency for years to keep it undervalued to help their exports.

The government has huge reserves of foreign currency. So many dollars they don't know what to do with. I think if it was allowed to float freely it would climb against most currencies.

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Why would a country whose major customer just died of credit heart-attack revalue its currency upwards??

If the yuan were allowed to float freely at this point, it would drop at least 25%.

Why would the yaun drop when China is running such a a massive trade suplus, and what would it fall against - sterling?

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Why would a country whose major customer just died of credit heart-attack revalue its currency upwards??

because then its peoples savings massivley increase in buying power allowing at least some of the production(for export) to go to chinese people thus offsetting the worst of the bust...

If the yuan were allowed to float freely at this point, it would drop at least 25%.

really...evidence ?

all the infomation i have read says the opposite massive reserves and have been holding the yuan down to hold on to export addvantage...until the endgame...read peter schiffs book he pretty much predicted this 2 years ago

it a long game the chinese are playing its called vendor financing...the americans pay for the chinese to indutrialise there country and owe the chinese for there trouble LOL....

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QUOTE (Wol @ Jan 17 2009, 06:51 PM)

Why would a country whose major customer just died of credit heart-attack revalue its currency upwards??

because then its peoples savings massivley increase in buying power allowing at least some of the production(for export) to go to chinese people thus offsetting the worst of the bust...

I don't see how the external value of the yuan would effect internal buying of internally produced products. The yuan in their pocket would be the same yuan. I'm sure China does import, but not on a huge scale.

A rising yuan would mainly effect exports, as the cost would increase.

China has chosen to sell to the west because we have more disposable income to spend on crap. Think most Chinese care to buy Millions of cheap dvd players? Most are still farming and living in poverty.

China should try and use the massive reserves of foreign currency to develop internal markets.

Edited by Ted

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Well, Albert Edwards has one opinion, the United Nations has another. The latter predicts that China's GDP growth this year will be +8.4%.

BEIJING, Jan. 16 (Xinhua) -- China's gross domestic product (GDP) is expected to drop to 8.4 percent this year from last year's 9.1 percent, but the country remains an engine for East Asia and even for global growth, according to a forecast report released by United Nations Development Programme (UNDP) on Friday in Beijing.

The report also made an optimistic forecast of 8.9 percent and a worst-case 7 percent. UN economists said China's economy might slow to 7 percent if the global credit crisis continued to linger, the recession in Europe and the United States deepened and fiscal responses delayed.

Rest of Article

It seems like Mr. Edwards has been an equities bear for the last ten years. Eventually he was right of course.

Mr Edwards has not yet been proved right over the last 10 years. But he has not been proved wrong either. Equities have been de-rating for several years. Who is to say the process has stopped?

Rest of article

Working as an asset allocator, Edwards advises investors how to spread their holdings among stocks, bonds and cash. Alas, markets often move in the opposite direction from his predictions.

"After some 18 years of incontrovertible evidence of human fallibility in timing our asset allocation moves, humility and the ability to prostrate myself in front of clients and beg for their forgiveness, has become an essential part of this job," Edwards wrote in a report from January 2006.

Rest of article

It reminds me of a book called "The Coming Collapse of China" which a few on here like to bring up in discussion from time to time. The title of the book seems to speak volumes, until you discover that the book was written eight years aggo, during which time China has had some of its most explosive growth

Best,

L

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I don't see how the external value of the yuan would effect internal buying of internally produced products. The yuan in their pocket would be the same yuan. I'm sure China does import, but not on a huge scale.

for example oil its gets cheaper in yuan so more chinese people have access to it etc also food imported etc also other raw materiels that end up as a dvd players etc...

A rising yuan would mainly effect exports, as the cost would increase.

yeah but exports are dead anyway mate thus internal consumption becomes the way out plus spending reserves on bridges roads hospitals etc etc...

China has chosen to sell to the west because we have more disposable income to spend on crap. Think most Chinese care to buy Millions of cheap dvd players? Most are still farming and living in poverty.

no they decided to sell us the crap and lent us the money to do it with so they could industrialize there nation at effectively zero cost, most people when there savings increase in buying power and they are living in relative poverty would be tempted to spend to improve there living conditions a little i.e. a fridge, TV ,rice cooker a car etc etc etc..

oh and disposable income actually means debt i.e. our debt that we owe the chinese,whixh they are now using to offset our bust clever eh ?

China should try and use the massive reserves of foreign currency to develop internal markets.

they are,see above.

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A revaluation upwards would force tens of millions of Chinese into unemployment. I think that will happen anyway. Good luck stimulating domestic demand with that policy.

I like Peter Schiff but he's been wrong about two things: "Decoupling" (not to be taken seriously for years) and the demise of the dollar. I don't think he ever really believed that other countries would compete in the race to ZIRP or NIRP. He must have been choking on his cornflakes for months.

Baltic Dry Index is showing "Free delivery!" for goods from the Far East. And yet they still have to inject money because nobody is buying. China' Economic Slowdown is Deepening, Officials Say reports:

Exports fell for the first time in seven years last month, imports plunged and manufacturing contracted by a record as the global recession pushed the world’s fourth-biggest economy into a slump. The slowdown will deepen before a 4 trillion yuan ($585 billion) stimulus package kicks in from the second quarter of next year, Liu He, a senior economic policy official, said at a conference in Beijing.

Mish agrees. See China to Print Money to Combat Slowdown for his take on things.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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