ALBERT EDWARDS: 'One Of The Biggest Economic Bubbles Is About To Go Into The Minsky Masher'

Business Insider ^ | 6-12-2013 | Mamta Badkar

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ALBERT EDWARDS: 'One Of The Biggest Economic Bubbles Is About To Go Into The Minsky Masher'

Mamta Badkar
June 12, 2013, 11:44 AM

Australia's GDP growth expanded merely 0.6% in the first quarter. This was after a 0.6% rise in Q4 2012. Meanwhile, there are a lot of people shorting the Australian dollar.

Minus export growth however, Societe Generale's Albert Edwards writes that gross national expenditure (GNE) has fallen for two straight quarters.

"One of the biggest economic bubbles in history is now about to go into the Minsky masher," writes Edwards. This refers to periods of speculation that lead to crisis, and was named after economist Hyman Minsky who wrote about the inherent instability of bull markets.

"Make no mistake - the Australian tide is going to be heading way out as China is about to have what our economist Wei Yao described as its' Minsky moment', or in layman's terms, its day of reckoning! But even before China suffers this 'moment', final demand in the commodity dependent Western Australia (WA) has fallen into recession. The Australian Treasury's preferred measure of activity, State Final Demand (SFD) contracted a striking 3.9% qoq (flat yoy) led by a sharp 10.7% qoq decline in private investment. This follows a 0.9% decline in 2012 Q4 (previously estimated to be 0.5%)."

This isn't the first time the folks at Societe Generale have warned about Australia. Last year, Dylan Grice, who has since moved on to Edelweiss Holdings, published a note in which he described Australia as "a credit bubble built on a commodity market built on an even bigger Chinese credit bubble, Australia looks like leveraged leverage, a CDO squared."

Edward follows on that today:

(snip)

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POP!

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Dr Copper is still not feeling well.

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