Posted on 01/15/2009 5:53:26 AM PST by Red in Blue PA
LONDON (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.
He predicted that the S&P 500 index of U.S. stocks could be set for a fall of around 40 percent from recent levels.
Edwards also raised the danger of a global trade war with China.
"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."
(Excerpt) Read more at cnbc.com ...
Take this with a grain of salt:
But he called in October for clients to increase their exposure to equities, which he said were due a rebound.
“Free trade” propaganda.
The DOW will likely bottom out at 6000 and 6500. If we are lucky that could 6500 to 7000. It will stay in the 6000 to 7000 range for 12 to 18 months.
I believe if it breaks 5940 we will see 3780. And it could happen.
Our Treasury and Fed have lied to us since the subprime crisis began in July 2007. First they said that the crisis was contained, then that there was a 30,40,50% chance of a mild recession, then a short recession with a rebound in the second half of 2008, next that the financial system was sound and we shouldn’t worry, then that if we didn’t pass the TARP, the financial system would fail, etc.
Meanwhile, the people who have been telling us the truth all along(e.g., Jim Rogers, Faber, Schiff) predicted where we are now and are telling us we’re headed for a depression.
Who do you think is worthy of more trust?
http://www.cnbc.com/id/28671755
Probably won’t be this bad - but it will be a rocky ride...
Problem is that Rogers, Faber, Schiff etc. were wrong for many many years (including Rogers on the dollar after he was right for awhile).
They were right and then they were wrong and now they are right again.
And they may be right in the near future, or not.
That’s the problem.
If I had to bet I would say their forecast seems plausible maybe even likely. So I am not disagreeing with you.
What I see from the ground and have said for months now is that banks are hoarding cash and not lending. Many have said the same thing but I see it up close.
There are qualified borrowers everywhere but the banks are not making the markets as they should.
Until lending resumes the Roger’s of the world will have their day.
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