Albert Edwards: Latest data raises red flags likely to burst China’s bubble

A little more than an hour after arriving on a flight from London, Albert Edwards cheerfully launches into the bleak vision he has encapsulated in a chart book handed out to a rapt investment audience in mid-town Toronto. The headline on page 2 reads: The Ice Age is Back.

It’s a term the notoriously bearish British economist has used for some time to describe a period of little or no inflation, accompanied by a wide-ranging reduction of financial leverage, sliding bond yields and more volatile and vulnerable markets and economies. If you think times are tough now, they are about to get worse, as China’s “classic credit bubble” bursts, the euro zone comes unglued and the U.S. slides back into recession. And if that isn’t enough reason to lock up the sharp objects, double-digit inflation lurks down the road.

Nothing should worry market players or policy makers more – or seems to bother them less – than China, says Mr. Edwards, who has 20 per cent of his personal assets in gold, “not to get rich … just to make sure I don’t get poor.”