Dim economic outlook!

Prieur du Plessis who I read every day and have come to respect, extensively quotes today from a report from Albert Edwards, strategist for Societé Generale. You can read the full report if you click on the title of this post. 

Prieur´s blog, Investment Postcards is accessible from my Blog roll on the sidebar next to this post as always.

And it certainly makes for interesting reading! 

Edwards’s “Global Strategy” report is sub-titled “Technicals say it is time to bail out. Cut exposure and prepare for rout. US depression looking likely. China’s 2009 implosion could get ugly.” 

What has really impressed me of his views is the mention to the possibility of China imploding and the internal situation turning into chaos. Their exports have been so drastically reduced that they could be tempted, to avoid internal violence and riots, to devalue the yuan, thus starting a 1930s style Trade War.

There are, however, still indications that Chinese officials are prepared to go along doing the " right thing". They have too much invested in our markets to want to go it alone. But China is also a political dictatorship and one has to wonder the extent they might be prepared to go to to maintain the regime in place if things start going very wrong....