Europe's GDP numbers have just been released today and they are miserable. They show the Netherlands and France in recession along with the rest of the periphery. And even outside the euro zone, we got some pretty dire numbers out of the Czech Republic as well. A: What's going on? and B: why I am still bullish despite this?
Since this is supposed to be one of those daily short commentaries, I am not going to get into a long-winded piece on the ins and outs of austerity. Suffice it to say that the problem is that fiscal multipliers are higher than one when private debt is high. In the periphery and also in France and the Netherlands, there is generally high levels of private debt. Italy is one notable exception here. So when the public sector imposes austerity, the result is debt distress ...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. 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.