Rant against the Toronto Star; Albert Edwards chimes in on China’s “freak economy” and deflation

Mainstream media censorship

You may recall that I recently wrote a rather scathing rebuke of an article posted over at MoneyVille, a site associated with the Toronto Star.  You’ll recall that the article was written by a certain real estate lawyer who included some blatantly false information to support his claim that Canada’s real estate market is not in bubble territory.

After writing my response to the article, I posted a respectfully worded comment in the comment section of the story page, where I pointed out that the article contained some factual errors.  I used my real name as my screen name and included a link to my rebuttal.

The interesting thing is that immediately after I posted my comment, the comments were closed on the article in question.  Funny!

Not to be dissuaded, I again tried to post a comment under a different but equally misleading article from the same author.  I pointed out the questionable logic of the statement he made in the article: “If you’re sitting on the fence wondering when or whether to buy a home in 2011, remember there’s never been a better time to buy a home than right now, with interest rates continuing at historic lows”.  And I once again asked for a response to my rebuttal of his previous piece.

Once again my comment was censored out.  Evidently we live in a society where our mainstream media allows ‘news stories’ from those set to benefit from the propagation of such ‘news’ while censoring strong criticisms of the factual content of their articles.

I’ve written about the inherent media bias before and about the fact that they must cater to their advertisers.  Our mainstream media continues to lose credibility as people continue to turn to the uncensored thoughts of those in the blogosphere.  It’s a sad state of affairs.

Also of note, I await a response from one Jay Bryan after I sent him the following email:

Dear Mr. Bryan
Your recent article, ‘No solid basis for scary speculation’, is riddled with
inaccuracies and very misleading and dangerous information.  As a journalist,
you owe it to yourself and your readers to become more acquainted with the
topics you write about.  I’ve highlighted a number of these factual errors in a
recent post on my website.


I trust your future articles will be more in line with the standards of your
profession rather than leaning heavily on hyperbole and anecdotes.

I’ll post any response I get.  I don’t expect one.


China’s “freak economy”

Another tidbit about the biggest potential Black Swan out there.  SocGen’s chief strategist Albert Edwards has once again issued a strong warning about the prospects of a China hard landing and persistent deflationary forces.

Albert Edwards, SocGen bear, takes a bite out of China

(Edwards) thinks there may still be another Japanese-style economic “lost decade” to endure. “Big structural bear markets take 19 years on average and have four recessions,” he says. “We’ve had two.”

Edwards is thus sticking to two eye-catching predictions. Stock markets will revisit their March 2009 lows (3512 for the FTSE 100). And, despite the hints in recent months of a return of inflation, gilt yields will fall below 2% (from 3.5% today) as deflationary forces reassert themselves. Oh, and for good measure, prepare for the hard landing in China and the crash in commodity prices.

Ridiculous? Well, remember that Edwards’ Ice Age call in 1996 has proved to be a winner: even if you include the stock market’s dotcom bubble years at the end of the 1990s, equities are still a long way behind bonds since 1996.

Remember, too, that Edwards’ forecasts were generally rubbished at the time. His dismissing of the supposed Asian Miracle in the mid-1990s as “Noddynomics” was resented – until the Asian currency crisis of 1998.

“The biggest risk to market valuations and to sentiment generally is a China hard landing,” he says. “In reality, China is a much more potentially volatile economy than people think.”

China is a “freak economy”; its investment-to-GDP ratio is off the scale in terms of size and endurance. “In development history, Korea is the only one that got close. It then collapsed. China is basing a growth model on the most unstable part of GDP.

But even the US, where monetary and fiscal stimuli have been greater, is “spewing money out but just kicking the can down the road for a bit”. He expects the public appetite for retrenchment to fade when recessions return. The middle classes have been “totally shafted” by a house price bubble that created the illusion of prosperity. “In the US, one in eight are on food stamps. Japan was a cohesive society that shared its pain collectively. That is not how it stacks up in the US, UK, Spain, Greece etc. You have a much more fractious environment to have a lost decade in. The ructions for society will be far worse.”

For some insight on how a slowdown in China would affect Canada, check out these posts:

More red lights in China

China raises rates: More thoughts on the China-Commodity connection

New signs of slowing global trade: What are the implications for Canada?

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9 Responses to Rant against the Toronto Star; Albert Edwards chimes in on China’s “freak economy” and deflation

  1. Sam says:

    This is going to get interesting…

  2. Severus says:

    The thing is: Have you taken the blue pill or the red pill?

  3. debunking says:

    Edwards of SocGen has been predicting apocalypse for 5 years now, you can say safely ignore his predictions. He is worse than our Garth Turner.
    As for the censure thing, they all do it, Garth for instance censures regulary all coments that are not congratulory to his writtings.
    I tried to inform readers about how wrong this guy has been by posting the following but as expected Garth censured it and even VCI voted it down into foreclosure, one has to wonder if the bears arent living in their own bubble rather…

    Lets see what Garth Turner has predicted over time:


    On November 24, 2010 Garth Turner posted: “I have consistently suggested there will be a correction of up to 20%, followed by a slow and painful decline in prices. Where it ends is anyone’s guess. I do not expect a drop of 40-70% as in Phoenix, and never suggested that would be the case — Garth”

    This is where some of his “blog dogs” have taken issue, as some are still wistfully holding onto the promise of 50% declines in Canadian real estate values for years now. But wherever would they have gotten such an idea? Surely not from Garth himself, right?

    December 2008
    Don’t be surprised if these things happen
    * Real estate prices in Calgary, Edmonton, Fort Mac at 50% of 2006 levels
    Expect these things to happen
    * Falling house values until at least 2010

    September 2008
    The explosion in resale listings across Canada is but the first phase of a market meltdown which will soon move into widespread price reductions in all markets. Those price drops will be between 15% and 50% (as I previously forecast), based on local conditions. My numbers may well be revised in early 2009, and it won’t be for the better.

    July 2008
    We are in the early stages of this correction, and price reductions will be much more dramatic by October. Year-over-year, I am sticking with my prediction of a 15% national dive by this time next year, with some markets off twice that amount.

    July 2008
    I expect all major Canadian markets will correct by an average of 10-15%, and some areas will be clobbered with 30% declines by the end of 2008, or the early Spring of 2009. Does everyone agree? Of course not…Especially if you are a greater fool.

    August 2008
    Home values will be lower next year by between 15% and 50%, depending on the community

    August 2008
    The next on the hit list (in this order, I would say), are Vancouver, Toronto, Victoria, Regina, Winnipeg and Saskatoon. In those last three cities, the reduction in home values could look more like Armageddon, with drops of up to 50%. In Vancouver, it will be about 30% by this time next year, and in Torontopolis, 15% with more pain to come after that.

    September 2008
    The Canadian market is doing exactly what I forecast. This will continue. Declines in prices of 10% or 12% in Alberta will become 20% and 25%. Vancouver ultimately will be even harder hit, and Toronto values will drift lower at the end of 2009 by about 15%. Some neighbourhoods, far more.

    …and those are just some of the forecasts I quickly found while browsing his blog. Ironically, today when a local bubble blogger posted on Greaterfool that “Calgary will become Phoenix and see a 60% plunge,” Garth responded by saying, “Helping people rests on credibility, not hyperbole.” Whoa, talk about a policy shift.

    What’s even more tragic about his forecasts is that Canadian real estate prices actually went UP 20% between 2008 and 2009. So to “continue” predicting a drop of 20% followed by a slow melt means what about his previous forecasts exactly?

    On November 2008 he posted an artists rendition of the Bow tower, with his comments underneath stating: “This is what the future looked like. Remember it well.”

    No reason to “remember it well.” The future is here, and guess what, I see the Bow Tower rising proudly above the Calgary skyline.

    • DBFA says:

      Re: Edwards’ predictions

      Were you in a coma in 2008 and 2009? I don’t know of too many analysts who were more apt in their predictions of the credit crunch than Edwards.
      His suggested portfolio has outperformed the vast majority of portfolios out there.

    • LS says:

      Bingo. While I agree with Garth’s general sentiment (housing bad in the next while), he does not tolerate pointing out inconsistencies in his own blog. I stopped bothering commenting on there because more than half were getting deleted. And I wasn’t attacking him personally, just pointing out where things didn’t add up, just like you did above.

      It was also a revelation to me once I put together his biases. He loves to point out how he is unbiased and just helping the people, but that’s not really true. He’s an investment adviser, and thus he trashes anything that is not an active investment in the markets. Then he trashes mutual funds or anything you can buy from the bank. Then he trashes investing yourself, and claims only the professionals can do it right. Then he praises fee based advisors. When anyone asks where one might find such an advisor he asks them to email him directly for advice. What happens when you email him? Well, asking about fee-based advisors in Vancouver, he claims not to know any (laughable) and then suggests himself as an advisor.

      Bing! We’ve come full circle.

  4. mac says:

    The media is obviously out to get you, Ben.

  5. buff_butler says:

    heres your guy: http://www2.canada.com/montrealgazette/columnists/jay_bryan.html

    Its funny that these business analysts reference each others garbage articles as proof.

  6. Tim Barrett says:

    My recent experiences with comments made about articles in the Toronto Star have been, to say the least, frustrating. I have made comments about stories involving our current PM. No name calling, profanity, ‘trolling’ etc. I know the rules. My comments haven’t been posted. The comments were anti-Harper but civilised. It seems that the Star only wants certain viewpoints to be read. There seems to be no rational or logical reason for keeping me silent.

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