Albert Edwards, London-based strategist of Société Générale, has always been a firm favourite among Investment Postcards’ readers. His latest research report appeared earlier this week and saw him remaining firmly in the bearish camp.

Edwards’s “Global Strategy” report is subtitled “Money makes the world go round down” and argues that monetary stimulus will have only a limited impact in reviving the global economy. “Massive quantitative easing (QE) around the world has undoubtedly melted the clots of some of the most clogged arteries of the global financial system. That has made things less worse, which is not the same as better,” said Andrews.

Edwards highlights that debt aversion is causing bank lending and the money supply to slump (outside of China) and he has difficulty to see a

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Further evidence on the decline in bank lending.

Last week I highlighted the debate over the degree of the contraction in bank lending. Another issue that I neglected to mention is that the series on bank lending used by Chari, Christiano and Kehoe referred only to lending by commercial banks. When assets of failed thrifts are acquired by commercial banks, the result is that the measured loans by commercial banks go up even though aggregate lending may have gone down.

Zach Pandl of Nomura Securities calls my attention to their analysis which constructs a series that tries to correct for these reclassifications. Nomura found that these corrections eliminate the increase in bank lending that one would otherwise see in the original commercial bank lending data.

Source: Global Weekly Economic Monitor, courtesy of Nomura Research. ...