Skip to main content

These 12 slides from Albert Edwards predict a high chance of global financial collapse

On a cold Tuesday afternoon on January 12, about 950 financial professionals gathered in a hotel basement to hear terrifying theories on how the next financial collapse would come about.
It was hosted by Albert Edwards, an economist at Societe Generale who is the voice of market bears, or people who think imbalances in the financial system will lead to a collapse.
In a little over 100 slides, Edwards and speakers Russell Napier and Andrew Lapthorne took apart the global economy and monetary system.
One big theme formed the backbone of the presentations: Global growth is no longer enough to service global debt. Creditors will have to take losses. Translated, this means the banks that lent the most money with the least amount of reserves may go bust.
Worst hit are the emerging-market economies, many of which are dependent on China to stoke demand for the commodities they produce. This plan worked well for many years after the 2008 financial crash, and emerging markets loaded up on debt.
But as the world shifts from buying more goods to buying more services, China is shifting its economy away from manufacturing and industry. Commodities prices have plunged as a result, along with the currencies of the countries that invested in them.
This makes it more expensive to pay off debt denominated in dollars. Unlike debt denominated in emerging-market economies' own currency, they can't just print more.
It's not just emerging markets that are in trouble. US companies have also loaded up on debt after central banks around the world lowered interest rates to record lows.
How will it play out? In the words of Albert Edwards, "It will turn very ugly indeed."
Chinese companies are rushing to pay off their US debt before the dollar strengthens anymore to become too expensive.  
US corporations aren't being prudent in their spending.  They're borrowing to buy back shares to keep their share prices high. 
They're borrowing to buy back shares in order to keep their share prices high.
------
Their debts are increasing dangerously far above EBITDA


For other charts and slides for above , visit reference link below

Comments

Post a Comment

Popular posts from this blog

LIC Buys Double as Prices Dive - 10 Aug 2011

http://licreddy.com/Content/information/insurancenews_details.asp?NewsCode=4872 LIC Buys Double as Prices Dive 10-Aug-2011 Life Insurance Corp of India, the government's institution of choice to stabilise the stock market whenever it gets wobbly, has more than doubled stock purchases in the past three days as the global debt worry-triggered selloff made valuations attractive. LIC, the country's biggest investor with stakes in L&T, Axis Bank and Grasim, will raise its secondary market purchases this fiscal as IPOs dry up with promoters not keen to sell shares at lower valuations. "We have been buying in the past few days,'' said a LIC executive involved in decisionmaking. "With the market correcting and not many public issues coming up, we would be investing more in secondary market," said the person who did not want to be identified. LIC to Invest . 50k Cr More LIC, which had been buying stocks for an average of . 120 crore in the first four...
Post a Comment
Read more

Best IELTS and English language training institutions in Hyderabad

IELTS stands for International English Language Testing System. As the name implies it is basically an English test for testing the proficiency of the language in an individual.  Training for IELTS can be taken to pass the IELTS exam or to develop good english language skills. I am giving the training institute addresses for Hyderabad. The test system is jointly managed by the British Council,IDP education ltd and University of Cambridge ESOL Examinations and more than 1 million candidates are taking the exam all over the world. The test has two versions : 1. Academic 2. General training Academic  version is for people who plan to continue their higher education by enrolling in universities in countries like US,UK,Australia,Canada,New Zealand etc.The academic institutions in these countries consider the IELTS score as a criteria for the admission process. General training is mostly for immigration purposes in countries like Australia,New Zealand,Canada etc. It may ...
9 comments
Read more

How to use home loans most effectively for tax benefits

1) Deduction on interest: If you are paying EMIs for a home loan you took to buy a house, the interest component in the EMI can be claimed as deduction. You must be both an owner and a co-borrower (in the loan) to claim tax benefits. This deduction can be claimed starting the year in which the construction of the house is completed. Suppose the construction of your house was completed on August 30, 2014, you can claim deduction for interest for the entire 12 months in financial year 2014-15. So every year a maximum of Rs. 2 lakh can be claimed for a house that you use for your own residence. If your house is rented, the entire interest for the year can be claimed as deduction. The interest payments for the year shall result in a loss under the head 'income from house property'. This loss can be adjusted against in the same year against other heads of income in your income tax return including salary. Therefore, it reduces your total taxable income and the tax you pay thereon. A...
2 comments
Read more