Until he calms down let's not mention I forgot to mark the 9th anniversary of the (second) greatest market call of all time.*
Albert Edwards: "Citizen Rage" Will Soon Be Directed At "Schizophrenic" Central Banks
Perhaps having grown tired of fighting windmills, it was several weeks since Albert Edwards' latest rant against central banks. However, we were confident that recent developments out of the Fed and BOE were sure to stir the bearish strategist out of hibernation, and he did not disappoint, lashing out this morning with his latest scathing critique of "monetary schizophrenia", slamming all central banks but the Fed and Bank of England most of all, who are again "asleep at the wheel, building a most precarious pyramid of prosperity upon the shifting sands of rampant credit growth and illusory housing wealth."
Follows pure anger from the SocGen strategist:
First, some recent context with this handy central bank holdings chart courtesy of Deutsche Bank's Jim Reid which alone is sufficient to make one's blood boil.These of all the major central banks were the most culpable in their incompetence and most prepared with disingenuous excuses. And 10 years on, not much has changed. The Fed and BoE are once again presiding over a credit bubble, with the BoE in particular suffering a painful episode of cognitive dissonance in an effort to shift the blame elsewhere. The credit bubble is everyone’s fault but theirs.
For those familiar with Edwards' writings over the years, the gist of his note will come as no surprise: after all, how many different ways can you say that central banks have broken the market, have caused a credit bubble, and will be responsible for the crash when they finally run out of cans to kick.
In any event, the focus of Edwards' latest note is the resurgent growth in unsecured household credit....MORE
Edwards points out the increasingly easy terms offered on unsecured consumer debt, i.e., credit cards and notes that he has "heard stories of credit card loan search engines spewing out money on 4 year, 0% teaser loans. What really shocked me is that after having been offered a credit card loan facility via a search engine, one is able to make multiple further self-certified applications and be offered similarly large amounts! Amazingly there was no question about existing debts!"...We have written on this topic before in the context of US and UK economic growth only being sustained by sharp declines in household saving ratios. But though I must revisit the issue after the UK?s Guardian newspaper (for non-UK clients it is similar to The New York Times) ran a huge feature on the desperate situation many of the JAMs (just about managing) now find themselves in - see article here.
*The greatest market call was Robert Rhea in the summer of 1932 but Albert is damn close on the leaderboard. as recounted in 2011's "*****Alert***** Société Générale's Albert Edwards Bearish *****Alert***** (Sept. 6, 2011)":
On September 5, 2008 we posted "Meltdown"-Société Générale" which linked to Albert's research note of a couple days earlier:And I forgot.
***Alert****Economic and equity market meltdown imminent****Alert***
A good call.
On September 7, 2008 Fannie Mae and Freddie Mac were placed into conservatorship.
On September 14, 2008 Merrill Lynch agreed to be acquired by Bank of America.
On September 15 Lehman filed their bankruptcy petition.
On September 16 AIG became a 79.9% subsidiary of the U.S. Treasury.
Within 10 more days the Nation's largest thrift, WaMu was seized and five days later Wachovia gobbled up.
Good times, good times....