Albert Edwards: China Is A “Freak Economy” And It Will Crash, And Take Down The Rest Of The World
Jan. 2, 2011
The new year hasn’t changed the outlook of SocGen’s famous bear Albert Edwards.
In a new profile up at The Guardian, Edwards takes aim at China, where he predicts a collapse that will take down markets around the world.
To him the country is a “freak economy” with a ridiculously high and persistent investment-to-GDP ration, and he fears that everyone is just taking Chinese growth for granted in forecasting strong demand helping the rest of the world’s economies.
This part is interesting, though mainly anecdotally:
For statistical support, he points to the OECD’s leading indicator of economic activity, which measures factors such as electricity production, freight activity and money supply. In China, it is slowing rapidly, even though commodity prices are as elevated as they were in early 2008 (prices then plunged). Something has to give – and probably sooner than most people assume. The degree of “push-back” from clients to his view on China reminds him of the resistance to his bearish calls on the dotcom and east Asian bubbles.