When Albert Edwards rubbished the economic miracle of the Tiger economies in a briefing note in January 1996 and warned its bubble was about to burst, he was hardly thanked for his prescience.
Mr Edwards' employers at Dresdner Kleinwort Benson (DKB) were besieged with acid reactions from politicians in South-east Asia. He received hate mail from Asian financiers convinced he was conducting a vendetta on the region.
He had described the macroeconomic views of Dr Mahathir Mohamad, the Malaysian Prime Minister, as "Noddynomics". He coined the term in a briefing note to South-east Asian clients of DKB, which predicted precisely the collapse that Malaysia, South Korea, Thailand and Indonesia have suffered.
Mr Edwards warned that Malaysia in particular was ignoring its yawning current account deficit and dwindling foreign exchange reserves. Attempts to keep currencies stable were "stretching the patience of international investors to breaking point", he warned.
When the "Noddynomics" label was publicised, Dr Mahathir was furious. DKB, which stood in danger of losing its brokerage licence in Malaysia, immediately apologised for any offence. It also pulped Mr Edwards' report.
Mr Edwards now believes that Europe is in danger of developing an economic bubble very similar to Asia's.
"Germany and France are making headway. As EMU goes ahead, Italian and Spanish interest rates will go down. In the Euro-bubble, interest rates will be set for the laggards, inflation will soar in the other countries but the European Central Bank will not be able to address it because France would go back into recession. EMU would be over in two years."
The only difference, Mr Edwards said, is "exchange rates [in Europe] are irrevocably fixed, so this bubble will not burst, it just deflates".Reuse content