Articles By: 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

How to look at the Greece bailout deal

Yesterday, Greece received an agreement in principal to extend its existing bailout program for another four months from the institutions administering that program. I believe this deal is a good basis for further work down the line. But Greece has a lot of work ahead of it, if it is to move to a new program. Moreover, Syriza will have to sell this deal as a bridge to the sustainable economic outcome it sold to its electorate in the January elections. At the same time, the Germans and the Finns at a minimum will have to sell this deal to their parliaments for it to work. Some thoughts below

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Negotiating strategies and political constraints regarding Greece

I am going to leave my market-based analysis and enter the murky waters of the political economy. I don’t like the uncertainty of the political economy, given how it is based on the quixotic and unpredictable actions of individuals. But the political economy is important in crisis situations and one cannot analyze an outcome properly without taking the politics into consideration. I was a diplomat at one point in time and hope that experience will aid me here. I have been good at understanding some of the political constraints in Europe so far and intend to discuss them here.

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A decision-tree framework for thinking about the Greek – Troika negotiations

This is a short post to update you on Greece. I continue to believe a deal can get done. Recent events demonstrate this is so. Nevertheless, the potential for policy error remains high. Brief thoughts below using a decision tree model framework

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Why quantitative easing and negative interest rates will fail

Why quantitative easing and negative interest rates will fail

This is going to be a short thought piece. But the takeaway should be that the convergence to zero will continue unabated as the threat of inflation is muted given the combination of excess capacity, high private debt and unfavourable demographics. The subject is monetary policy.

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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.

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The convergence of safe asset yields toward zero

The convergence of safe asset yields toward zero

As low nominal GDP growth takes hold, we should expect short-term interest rates to remain low and for the yield curve to flatten. There are three main reasons this is so. First, low nominal growth rates imply low inflation. Second, to the degree market volatility produces risk-off sentiment, the bid for safe assets will further suppress yields. And third and most importantly, the natural rate of interest on a zero-day fiat currency liability is zero. I expect that the safe asset class in lowflation currency areas will be dominated by these trends, causing yields to stay low or even shrink. This convergence to zero makes the highest yielding safe assets attractive and thus favours New Zealand and Australia, as well as the the US, UK and Canada to some degree. Comments below

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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.

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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.

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Banks, Japanese trade, the currency wars and deflation

Banks, Japanese trade, the currency wars and deflation

There are no big themes dominating the news today. So it is a perfect time to hit a couple of themes with an economic and market theme approach. Let’s talk banks, Japanese trade, the currency wars and deflation.

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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 […]

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Are we in a global financial crisis?

With financial markets tanking across the board, there is a whiff of panic and some people might be thinking that the next global financial crisis is already upon us. I don’t think this is the case. Certainly, the European sovereign debt crisis has entered round two but this can easily be overcome. Turbulence and a simmering crisis in Europe, yes. An acute crisis, no.

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The German view of the Euro crisis

This is an abbreviated version of a post first published at Credit Writedowns Pro on 15 Oct. The Germans got into the eurozone out of a desire to increase European integration and to strengthen Europe as an economic area that rivalled the United States. Yet, now we are in a period where the Germans are being blamed for everything that’s […]

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