Saturday, January 17, 2009

Super bear Alarms on US, China at risks

U.S. economy may go into a melancholy and the "implosion" of the Chinese economy would have catastrophic consequences for the entire world, Société Générale strategist Albert Edwards said. Advise investors to "bail out" of their existing investments now that Edwards, as a super-bearish position on the global economy proved true last year, which is a 40 percent decline in the S & P 500 index because of the bleak profit reports and poor Trades in the first half of this year. "In 2009, there is no increased risk for depression in the developed economies, which will come as a complete surprise," Edwards wrote in a note to clients, "economic implosion in China and the global and geopolitical threats."

Over a year ago, Edwards had predicted the U.S. would go into a deep slump because of the extreme use of debt, total. Says the latest data point to something far worse than deep recession "Edwards' forecast for the year 2009 marked an even more bearish shift in his outlook for the global economy and further deviations from the general economic strategists, who expect that a U.S. economic recovery in the second half of the year . forecasting method of depression in the United States, Edwards implies that he believes that America will see a peak-to-trough decline in gross domestic product of more than 10 percent.
A depression of the yuan would lead to the rest of the world's economies spirited devalue its currency in response, Edwards said, sparking a 1930's-style trade war "that could see a repeat of the Great Depression." Edwards bases its estimates on an implosion of the Chinese economy in a number of technical factors. He pointed to data showing China's electricity production decreased in the last three months. The data that is normally associated with China's GDP. He also noted the sharp decline in recent months in the Organization for Economic Cooperation and Development's leading indicator for China's growing economy. Edwards said a reasonable explanation for the decline in China's electric power, for example, the effect of switching to oil-based power, belied by the sharp fall in industrial production growth and exports in other Asian economies.

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