Albert Edwards Gently Warns Of Imminent ‘Collapse,’ ‘Meltdown’

By and large, market commentators now begrudgingly concede that the odds of a US recession occurring over the next 12 to 24 months are very elevated. Generally speaking, though, they stubbornly insist any downturn will be mild. Such wishful thinking is "a spurious landmark we pass at this stage in the cycle before all hell breaks loose and both the economy and markets collapse." That's according to SocGen's Albert Edwards who, on Wednesday, wrote that with both a recession and a market "meltdo

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8 thoughts on “Albert Edwards Gently Warns Of Imminent ‘Collapse,’ ‘Meltdown’

  1. Secular inflation… OK. Where would it come from?

    When we had secular deflation, its sources were relatively well understood. Demography, globalisation, hollowing out of the middle class, de-unionisation, technological progress etc… All kind of factors weighting in on velocity of money and prices.

    Now, if we are to believe we’re moving towards a secular inflation environment (rather than something ‘transitory’ due to COVID disruptions and fiscal free money), what are the medium to long term factors that would support constant inflationary pressures?

    I can think of ESG striking just as the lack of E&P investment bites and thus maintaining oil prices higher for longer. What else?

    1. Demographics, trade frictions, continued supply chain problems, lagged effect of low immigration, regional shooting or trade wars spreading -all could present inflationary tailwinds

      1. Yeah, I’m surprised I don’t see it mentioned more often, but at this juncture, I’d say the odds of an invasion of Taiwan are material. For all the political talk of repercussions for China if they invade Taiwan, the reality is the rest of the world can hardly afford to pile on sanctions against China under current economic conditions. I also have a hard time imagining the west directly confronting China in a hot war.

        1. I don’t see how China would conduct a successful amphibious assault on Taiwan. Even with its large navy and aircraft carriers, China would find it difficult to provide adequate cover for a landing. Secondly, it has not prepared the ground to actually hold the island. Politically, Taiwan is more unified and less China-friendly than ever. I don’t doubt that unifying China would be a much-desired legacy for Xi, and he may prosecute a war. I just don’t believe the political repercussions in the form of sanctions are going to be China’s biggest problem if they do go ahead.

          1. @NS – A full scale invasion of the island is not the only option Xi has.

            The dependence of the US and west on TSMC, thanks to Apple, AMD etc outsourcing all of their logic chip production to Taiwan has given China incredible leverage if the west decides to further sabotage the growth of the Chinese industry. (Note, that goal has been explicitly stated by the Trump and Biden administrations.)

            How about a Stuxnet-type hack of TSMC or the island’s power grid? Or of Taiwan’s air traffic control system? Or interfering with maritime traffic in the Taiwan Straits?

            No doubt the US would try to respond at first. I mean, what lawmaker wants their granddaughter to be the only girl in middle school without the latest iWatch? But how much appetite do Americans have for long, full scale confrontation with China?

  2. H-Man, it is like watching a glacier melt into the sea — suddenly a loud explosion and then a huge chunk falls into the water. When in Alaska watched this happen repeatedly. Not sure when the ice stops melting with this market.

  3. Another threat that would create major problems for the US would be a major drought in the mid-west and southwest. We should be building large desalination plants along the pacific coast, the Gulf of California and the gulf of Mexico to start supplying water to the major cities to take the load off of the rivers. The oceans have an unlimited supply of water. Pipelines to move any excess water inland to help keep rivers from drying up and to supply water to farmers will be badly needed.

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