Albert Edwards sees doom and gloom ahead. What else is new?

With the yen’s drop this week to a six-year low of 110 versus the dollar, Japan’s currency may once again be the first domino to fall in a chain of events that could be bad for everyone, according to Edwards.

The latest from him covered at Bloomberg:

“What I’ve been saying for a couple of years — and I’ve been a voice in the wilderness — is China will ultimately have to devalue its currency,” Edwards said last week. “The yen will accelerate that.”

“Given China has so much surplus capacity and given, as well, how close the U.S. and Europe are to outright deflation, this could tip the West over the edge and cause a market panic.”

In a report dated yesterday, Edwards wrote that investors are beginning to realize that the U.S. Federal Reserve and European Central Bank “have failed to prevent a dreaded replay of Japan’s deflationary template a decade earlier in the West.” He cited a drop in inflation expectations as measured by U.S. Treasury bond yields.

OK, then.

More at the article

(Whatever you think of Edwards, well worth a read)

Albert Edwards Societe Generale 03 October 2014