Tag: Societe General

Look Out Below! Economic News Worsens

As the media and the blogosphere focus on the dangers in the Paulson putsch proposal and the war of maneuver between the campaigns, stuff is happening that may render it all insignificant.

You may have seen a short news clip of the huge lines outside of Bank of East Asia offices in Hong Kong. Already it’s the biggest bank run since the one that resulted in the nationalization of Northern Rock in the UK last year, a lot earlier in this mess.

But did you read that Société Générale has told its customers to dump their stock holdings in China-related firms, pronto?

So what, I hear you ask. Why is this any worse than the rest of the economic bad news rattling our way?

A bit of background may help–SocGen is the sixth largest publicly-traded company in France by market capitalization and the third largest bank/financial services company in the whole Eurozone. They swing a big butt in world finance.

Their main global strategist, a dude named Albert Edwards, argues that most Western observers are counting on Asia, and China in particular to remain resilient and help keep the global economy perking. He argues that

The collapse of emerging market economies will shake investors to the core. The great unwind has only just begun.

In essence he is predicting a massive recession–a decline in global GDP. He points out that a liquidity squeeze could hit financial companies that are heavily exposed in Latin America as well as Asia, vastly intensifying the ongoing downward spiral of the credit crisis.

A good short summary of his argument can be found in this Telegraph article–and in the closing prices in the world’s stock markets.

crossposted at DKos