Thursday, August 12, 2010

NYT: Economic Pessimists Gain Cachet

Hmmm, apparently once you detach from the matrix, you are labeled a pessimist.  While some of these fellas predictions are a tad extreme, much of what they are basing their predictions on, I find quite factual.

The problem for these folk is timing - most likely a lot of things they will say will "one day" be correct, but you are fighting desperate politicians and central bankers at every turn.  Greenspan alone kicked the can for a good 2 decades, and Ben is like Terminator 2 - faster, stronger, and able to shower us with free money at many times the rate of Greenspan 1.0.  Regular ZeroHedge readers will know these guys like the back of your hand... Edwards, Janjuah, TraderMark, tigers. lions... oh my.

[Jun 9, 2010: [Video] Look for a Global $10-$15 Trillion Quantitative Easing Program as Governments Become Desperate - Bob Janjuah]
[May 11, 2010: [Video] 'Permabear" Bob Janjuah in the Flesh on Bloomberg]
[Nov 10, 2009: Albert Edwards Remains Firmly in Bear Camp, Calls for New Lows in 2010]

Via NYT:
  • The central question dividing economists these days is whether Western governments should spend more to ward off a potential second recession or retrench to hold down their ballooning debts to restore confidence among investors.  
  • But Albert Edwards, an investment strategist in London for the French bank Société Générale, considers the debate a waste of time. To be specific, he forecasts a “bloody, deep recession” that produces a stock market collapse of at least 60 percent, followed by years of inflation of 20 percent to 30 percent as the persistent printing of money by central banks desperate to improve the situation sends prices soaring.   
  • Mr. Edwards’s sandals and chuckling demeanor belie his reputation as perhaps the City of London’s best-known permabear — a species that has long flourished on the outer margins of the financial industry but rarely inside mainstream banks.  That is no longer true. 
  • In many smart-money circles, listening to bears has become fashionable, especially now that doubts remain about the sustainability of the euro zone, concerns grow that the United States may slip back into recession and that even the Chinese growth engine may seize up. But to some, the popularization of extremely dire forecasts suggests that the pendulum may have swung too far
  • “Nothing is ridiculous anymore,” said Philippe Jabre, a hedge fund executive in Geneva. “There is no doubt that these days extremely negative research is being tolerated more.”  “These guys are reinforcing a conviction among many who invest in hedge funds that they should remain scared,” he said. 
  • Mr. Edwards’s newfound popularity reflects the trend. Once frequently shown the door by disbelieving clients, Mr. Edwards recently drew 600 investors to a conference in London.
  • Similarly, Bob Janjuah, the one strategist in London whose prognostications are seen by some as even more dire than those of Mr. Edwards — “even I get depressed reading his stuff,” Mr. Edwards remarked — said he was courted by half a dozen investment banks this summer before deciding to leave his post at Royal Bank of Scotland to join Nomura.  
  • “Clients are more receptive to hearing polar ends of an investment view,” said Mr. Janjuah, who expects economic growth for the top developed economies to average little better than 1 percent a year over the next five years.

Disclosure: I have been offered zero investment banking positions despite some relatively good "doomsday" predictions that went against conventional wisdom... i.e. most of the investment banking strategists ;)  Ah, toiling in obscurity!

Now this guy Mr. Pal (who I had never heard of) has it right, offer a high value subscription service talking doom (not this foolish free blogging!) 
  • Further afield, Raoul Pal, a former Goldman Sachs derivatives expert and hedge fund manager, has attracted a growing following with his monthly research note that, most recently, predicted a depression in the United States similar to that of the 1930s and eventual bankruptcy for Britain.
  • Mr. Pal writes The Global Macro Investor from a holiday village in Valencia. a province in Spain. He said that demand was so great now that he has the luxury of doling out his high-price annual subscriptions only to clients he considers sophisticated enough to pass muster or who come recommended by people he trusts. Others must join a waiting list, Mr. Pal said, although he declined to say how large the group is.
  • In the tradition of the great macro hedge fund investors like George Soros and Julian H. Robertson Jr., Mr. Pal, whose last job was as a portfolio manager at GLG, a hedge fund based in London, likes to pick a theme that may take years to pan out and run with it.  His big bet is that the United States economy is not just about to enter a double-dip recession but that it will be far worse than anything experienced in the lifetime of anyone younger than 70. 

I too screen my readers (little known fact)... only those with a pulse may read this website.  Those without one, must close their browser and leave immediately.

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