Societe Generale's Albert Edwards:
Investors now reluctantly accept that this recession is the worst since The Great Depression…Yet beware: outright deflation has already arrived and world trade is collapsing. Korean GDP has just declined a MASSIVE annualized 21% in 2008 Q4! China is now joining the rest of the world in the stinking cesspit of uncontrolled economic slump… The data out of Asia today was truly shocking and removes any lingering doubt in my mind whether we are truly facing a global economic depression. The 20% annualized collapse in South Korean GDP in Q4 last year was not the worst of it. Japanese exports declined at a record annual pace, contracting an incredible 35% yoy!... Strikingly, Japanese exports to the US were down some 37% yoy…But we cannot highlight strongly enough how truly mindboggling Japan’s collapse in exports to China are. Last July they were expanding at a 16% yoy pace. Now they are contracting at a 35% yoy rate! This is a phenomenon throughout the region. Hence despite the notoriously manipulated Chinese GDP data showing a shocking slowdown in GDP growth to 6.8% yoy. I would eat my hat if the Chinese economy was doing anything other than contracting right now. (No need to get out the salt and pepper Al, you are correct sir! - AM)
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