Author: Edward Harrison

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.

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Here are my most recent posts

Yanis Varoufakis on fiscal waterboarding and Ponzi austerity

Yanis Varoufakis had a long interview on RT’s Boom Bust yesterday going into detail behind his political candidacy and what he expects SYRIZA to do regarding the unsustainable debt burden that the Greek government now has. Overall, despite his problems with the eurozone’s institutional structure, Yanis believes Greece leaving the eurozone would be a catastrophe for the simple fact that it does not have a currency and any attempt to leave would be seen as a prelude to a massive devaluation, inviting capital flight on a grand scale. This would be a catastrophe for the Greek banking system and wider economy.

Consumption taxes, inflation and low wage growth in Japan lead to recession

Consumption taxes, inflation and low wage growth in Japan lead to recession

If wages in Japan are stagnant, how is increasing inflation going to help wage earners afford a better stream of good and services? It won’t. Ultimately, what we need to see are policies which maintain wages for median and lower-income wage earners with the greatest marginal propensity to spend. Without this, in a demographically challenged and indebted private sector, so-called secular stagnation is almost a certainty.

Central banks, inflation, currency wars and the Japanese experiment

Central banks, inflation, currency wars and the Japanese experiment

This is going to be a relatively short note focused on what is going on in Japan because of the news that Japan has ramped up its program of quantitative easing to new heights. Coming on the heels of the US Federal Reserve’s announcement that it would stop expanding its balance sheet with large scale asset purchases, the Bank of Japan’s announcement was music to the ears of Japanese equities investors. And shares in Japan promptly rose 4.8% on the news. The larger question, however, is whether QE is effective either at shaping future inflation or inflation expectations or at increasing nominal and real GDP. The evidence is equivocal. And so Japan presents a unique opportunity to see the limits of monetary policy tested.

Zero rates, resource misallocation, and shale oil

Zero rates, resource misallocation, and shale oil

The following is an abbreviated excerpt of a post from 16 Oct from Credit Writedowns Pro The nexus of zero rates, resource misallocation, and risk on has favoured shale oil. But the drop in oil prices will call many of these projects into question precipitating a high yield energy funding crisis and a panic dash for the exits. There will […]

Rising global debt levels will trigger the next crisis

Rising global debt levels will trigger the next crisis

The conclusion of the recently released Geneva report is that debt is the Achilles heel of this cyclical recovery. The Geneva economists warn that, despite the widespread belief that a general deleveraging has occurred due to the Great Financial crisis, in reality debt levels are higher today on a global basis than they were when the crisis began. They, rightly, worry that this debt will precipitate another global economic crisis. Some thoughts below

Private credit overhangs and the business cycle

Private credit overhangs and the business cycle

Back in 2012, three economists published a paper via the San Francisco Fed that looked at nearly every advanced economy business cycle from 1870 forward with the object of understanding the role of credit in the business cycle. Matthew Klein at the Financial Times alerted me of the paper.Now, what the economists found, not surprisingly, was that “financial-crisis recessions are more costly than normal recessions in terms of lost output; and for both types of recession, more credit-intensive expansions tend to be followed by deeper recessions and slower recoveries”. I want to discuss this both in terms of endogenous money and in terms of its implications for the present recovery and proposed recovery solutions. What follows is pretty wonky but very important as a thought piece for framing the economic environment.

Country by country macro update, September 2014

This is the first time I am doing this, so let’s see how much value it adds. I thought I would quickly run through a number of countries in the news and give my perspective on the macro picture in each. I am just going to give a summary here of the key points of interest and will do a deep dive on some at a later date. Let’s start with the US.

Some thoughts on Scottish secession from the UK

Some thoughts on Scottish secession from the UK

Britain faces a crisis of monumental proportions as the Scottish electorate decides whether to leave the Union and make Scotland a fully independent country for the first time since 1707 when it first entered into political union with England. This vote has all sorts of ramifications for the currency, monetary policy, fiscal policy and the banking system within the UK and Scotland. But it also has far-reaching implications for the whole of the EU. I have a few thoughts on how to frame the issue below as well as a model for how to secede if it comes to that.

Divergence in ECB and Fed rate regimes will drive portfolio shifts

Divergence in ECB and Fed rate regimes will drive portfolio shifts

The big news today was the ECB’s decision to lower interest rates 10 basis points to 0.05% and its simultaneous decision to engage in a form of quantitative easing using the asset-backed market as a vehicle. While these measures are welcome, they will almost certainly not be enough on their own. But it will give some respite to a euro area on the brink of outright deflation.I have a few brief comments below.