A Curious Call from Societe Generale 21 comments
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It's one thing to call for a depression - you don't have to look very far in the "alternate news" section of the internet to find forecasts like this and they've been a constant for many, many years - but to hear an analyst at a major firm predict a depression, that's a little different.
When this same analyst also recommended buying stocks two months ago, then it become something of a curiosity. The details are in this report from Reuters.
Societe Generale said on Thursday that the United States' economy looks likely to enter a depression and China's could implode.
In a highly bearish note, veteran cross asset strategist Albert Edwards said investors should now cut equity exposure after a turn-of-the-year rally and prepare for a rout.
..."While economic data in developed economies increasingly reflects depression rather than a deep recession, the real surprise in 2009 may lie elsewhere," Edwards wrote.
"It is becoming clear that the Chinese economy is imploding and this raises the possibility of regime change. To prevent this, the authorities would likely devalue the yuan. A subsequent trade war could see a re-run of the Great Depression."
Edwards has long been one of the most bearish analysts in London, first with Dresdner Kleinwort and then with SocGen.
But he called in October for clients to increase their exposure to equities, which he said were due a rebound.
A target of 500 for the S&P 500 was cited - this represents a decline of another 40 percent from current levels, down almost 70 percent from the 2007 highs.
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And just because they have been calling it for years didn't mean they were wrong. It's just you mainstream types believed the bullsh!t for so long and kept the whole mess afloat for years until it collapsed under its own putrid weight.
And now finally...reality bites hard even at SocGen.
"In economics, a depression is a sustained, long downturn in one or more economies. It is more severe than a recession, which is seen as a normal downturn in the business cycle.
Considered a rare but extreme form of recession, a depression is characterized by abnormal increases in unemployment, restriction of credit, shrinking output and investment, numerous bankruptcies, reduced amounts of trade and commerce, as well as highly volatile relative currency value fluctuations, mostly devaluations. Price deflation or hyperinflation are also common elements of a depression."
In lieu of the above definition, I agree with Societe Generale assessments. Furthermore I believe we are experiencing the deflationary part soon to be followed by the hyperinflationary end game of the fiat paper monetary systems.
But IF you do call this a depression, then you must at least agree that things move at light speed these days as compared with the 1930s(which by the way is only the last depression, not the only depression)...And much quicker even then the 1990s...So I ask why things would not also pick up again much quicker than in the past?
What I see is things will continue to fall of the cliff for some time. At some point it will turn, you can only fall so far...And the recovery will basically be flat over a LONG LONG time with unemployment more on par with Europes standards, meaning ~10% even in good times.
Of course war, all out chaos, new inventions, US actually taking alternative energy seriously(perfecting it and exporting it), etc, etc, etc...
In conclusion, there is no clear end game to the US, to the $, to the global economy. But silverwood, hopefully you are a sports fan and your guarantees are more like Chad Johnson than Joe Naimeth.
I am wondering how many of the smart guys that Obama has picked to staff his economic team predicted the implosion of the housing market and financial system
On Jan 15 04:05 PM John02144 wrote:
> I agree with Sentinel. Should Mr. Edwards really be subject to strict
> scrutiny for not toe-ing the line with the same group-think that
> allowed this mess to go unchecked for years? Smart people might change
> their minds when presented with new facts.
> I am wondering how many of the smart guys that Obama has picked to
> staff his economic team predicted the implosion of the housing market
> and financial system
You are WRONG
When did timing stop being everything?
On Jan 15 03:10 PM Sentinel wrote:
> Oh...and by the way....the "alternative news" section of the internet
> you spoke of with what seems to be a whiff of disdain, has been more
> right than any of you "mainstream news outlets" have been.
>
> And just because they have been calling it for years didn't mean
> they were wrong. It's just you mainstream types believed the bullsh!t
> for so long and kept the whole mess afloat for years until it collapsed
> under its own putrid weight.
>
> And now finally...reality bites hard even at SocGen.
On Jan 15 06:28 PM AssetReset wrote:
> When you are off by years predicting anything to do with the market
>
> You are WRONG
> When did timing stop being everything?
Granted, that fallacy started with the Clinton years...but Bush did nothing to stop it. In fact he took it and ran. And so did every Tom, Dick and Harriet Home Flipper. And the Wall Street boys looked around and saw there was no money to be made in Money Markets because the interest rates were near 0, the bond market sucked, equities and securities were going in the toilet......I KNOW, LET's GET IN THE MORTGAGE BUSINESS......OH..OH..... YET LET'S EMPLOY A BUNCH OF MIT MATH GRADS TO COOK UP SOME WONDERFULLY COMPLEX DERIVATIVES AND SELL THE SH!T OUT OF THEM TO EVERYBODY ON THE FREAKIN' PLANET!
BESIDES....NOBODY'S HOME AT THE SEC AND BUSH IS DUMBER THAN DIRT AND FANNIE AND FREDDIE ARE CHOCK FULL OF CLINTON LEFTOVERS WHO ORINGINALLY CAME UP WITH THE LAX LENDING STANDARDS.....SO WE'll MAKE OUT LIKE FREAKIN BANDITS!
All the while reality was waiting for its chance to bite everybody stupid enough to enter water so murky that you could not see the alligators that eveybody knew were there but insisted did not exist anymore because....well....aft... all if you can't see them anymore then how can they exist?
That's how we in the hinterland claiming the sky would be falling any minute were right.....we just missed it by years only because of the monumental greed, hubris, stupidity and financial chicanery of the Powers That Be.
On Jan 15 06:28 PM AssetReset wrote:
> When you are off by years predicting anything to do with the market
>
> You are WRONG
> When did timing stop being everything?
A first-time home loan applicant, filling out the paperwork for his mortgage application, asked the loan officer,
"I really want to get this house. What should I put down for my weekly paycheck?"
The loan officer asked,
"How big a loan do you want?...
I'm not sure how many things like that actually happened, but the fact people were writing about them, suggests a disease had infected the system a long time before 2008.
There is no obvious visibility for a while, but that's where opportunity comes. The illusion of visibility is always precisely that in markets. Crude oil at 147, inflation, and record commodities demand were the offering of 'visibility' early-mid 2008. How deceiving was that...? Take a look at my latest article. It addresses the character of these frequent(ly wrong) paradigm shifts.
- Cut the stock target and move to SELL after it tanked and your target really look really ridiculously high.
- Move the stock target up and move to BUY after the big move up.
If analysts start talking about depression it is time to buy...
Why do people question what is so blazingly obvious?
Hey!..It IS a French bank ;-)