From my latest at BlownMortage:
Société Générale expects the United States’ economy to enter a depression and that China’s economy in in danger of imploding. Albert Edwards, an analyst for the European financial services giant, wrote:
While economic data in developed economies increasingly reflects depression rather than a deep recession, the real surprise in 2009 may lie elsewhere. 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.
If this sounds apocalyptic it is at the very least a needed antidote to the incessant whistling-past-the-graveyard we are hearing from so many other official sources. My current favorite comes from Philly Fed Chairman Charles Plosser:
I expect the housing sector will finally hit bottom in 2009 and the financial markets will gradually return to some semblance of normalcy.
Plosser also says he doesn’t expect uneployment to hit double digits. While I am not certain Mr. Edwards is right, I would happily bet my next mortgage payment Mr. Plosser is wrong.
One of these is certainly to be a nominee for the worst prediction of the year awards.
If you find someone to take your bet, let me know: I’ll wager the same amount as you on this anytime.