PARIS, France (PNN) - August 12, 2015 - Sociéte Generale strategist Albert Edwards may have finally out-beared himself. He warns the China devaluation is a step toward "a financial-market rout every bit as large as 2008."

In his new note, Edwards says the Chinese currency devaluation is the beginning of a period of serious foreign-exchange weaknesses in Asia.

This will force down import prices into the Fascist Police States of Amerika and EU economies, aggravating a deflationary cycle that hits corporate profits and ending in a Lehman-style crisis.

We expect the acceleration of EM devaluations to send waves of deflation to the West to overwhelm already struggling corporate profitability and take us back into outright recession. As investors realize yet another recession beckons, without any normalization of either interest rates or fiscal imbalances in this cycle, expect a financial market rout every bit as large as 2008.

There are already signs a strong dollar relative to other currencies is pushing a tidal wave of deflation toward the FPSA shore.

Edwards sees no easy way out of a deflation-led FPSA recession, culminating in a financial-market collapse.

While investors have already talked about the eurozone looking similar to Japan, a deflationary recession also beckons for the FPSA. Core inflation on the Fed’s preferred measure is hovering around the 1% level and a new round in the currency war will see a move in core inflation below zero to accompany the headline rate. Prepare for sub-1% 10y Treasury yields and another financial crisis as policy impotence is soon revealed to all.

So hold on to your soon-to-be-much-cheaper hats.