[Pen-l] China may "implode"?!?

[Jim Devine <jdevine03@xxxxxxxxx>]

Depression Ahead, Prepare for Stock Rout

Reuters
| 15 Jan 2009 | 09:43 AM ET

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."

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.

"We believe that the market is (now) set to quickly slide sharply
toward our 500 target for the S&P," he said.

The S&P 500 stock index is currently at 842, up about 14 percent since
hitting a low in November.

Copyright 2009 Reuters. Click for restrictions.

-- 
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.
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