Marshall Auerback here. This will be short, but I felt compelled to post with my views on China.

There was clearly a bubble in exports in the past four years, with exports serving to cover capital inflow (overinvoicing must have been a big part of that). So this is just part of the overall collapse of speculative capital flows, and not so much a decline in real effective demand. China can handle this, the population is not constrained by either income or debt.

I am going to post a BBC article here that gives an anecdote about western Canada and how the boom in oil and commodities is causing economic problems there. Make of it what you will, but my bottom line is that Canada is neither immune from global pressures or from the commodities savaging. This type of thing will com to an end.

Stephanie Pomboy is an economist who specializes in macroeconomic forecasting and their implications for investors and she has some very bad news for those looking for a quick recovery: it’s not going to happen. In Barron’s latest issue, Pomboy makes the case for an extended downturn (hat tip Scott) and that makes for a challenging investment climate. However, all is not lost, as Pomboy sees the potential for a rally in high yield assets and even equities.

This is the absurd thinking of economists. Australia has a 40% chance of recession next year. What does that even mean? If you asked me, I would say the chances of recession in Australia are 100%. You have a slowing property market, financial sector turmoil, a falling currency, plunging commodity prices and [...]

Despite the plethora of data that has come out recently, one thing that has occasioned very little comment is the outlook for US exports. Exports are generally not a big factor in the subset of companies involved in the ISM survey, but the plunge in export orders to 34.5 suggests that US exports, hitherto a support in an otherwise collapsing economy, could be in big trouble as well.

The U.S. Dollar has been holding up quite nicely during this credit crisis. In fact, it rallied significantly from deeply oversold levels against the Euro and British Pound (remember Dollar-Euro at 1.60 and Dollar-Pound at 2.10?). However, America has a number of structural problems which will inhibit further appreciation. Moreover, former buyers of U.S. Treasuries in the Middle East and Asia are going to have domestic economic worries of their own very shortly and will not be supporting U.S. assets. This means that the Dollar will be a weak currency in the not too distant future.

Yesterday morning, I heard Louise Yamada on Tom Keene’s show on Bloomberg Radio giving her assessment that stocks may break below 2002 lows. I mentioned this in yesterday’s news round-up. But, now I have the audio for you as well.
Yamada is a much followed technical analyst so her opinion has weight. Since at least [...]

I have been tied up with other activities all day today. But, I just had to send this post on Peter Schiff. My brother-in-law sent me this video a second ago of Schiff predicting doom and gloom on YouTube. And it’s actually kind of funny to look back and see what he was saying in 2006 and 2007 and how he was pilloried. His calls were uncannily right on the money.

Last night an article by Niels Jensen of Absolute Return Partners caught my eye. In it, he made a very strong case for worrying about European bank exposure to emerging markets and its potential for creating systemic risk. I would like to share some highlights from this well-written piece and add a few [...]

In July, I made my ten predictions for the markets and global economy for the rest of the year. Some of my predictions were pretty pedestrians, and some were fairly bold. Let’s take a look and see how I’m doing.
Here’s what I originally said:

Oil prices will dip below $100 before year-end. Let’s [...]