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An Boilgeog April 22 2009 Michael O’Sullivan  Author of ‘Ireland and the Global Question’ (Cork University Press, 2006) Phone: +44 20 7883 8228 Email: michael.o’sullivan@credit-suisse.com
Ireland and the Credit Crisis   ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
We will never learn from bubbles  MacKay, C.,  Extraordinary Popular Delusions and the Madness of Crowds, 1841   Source:  Prof Larry Neal.
Bubbles - UK Railway share index, 1845-1849  Source:  Global Financial Data Source:  Global Data Inc.
This one was extraordinary in size and interdependence Source: Federal Reserve, The Statistical History of the US, Morgan Stanley, Credit Suisse Last data point: Q3 2008
Where are we now? - US payrolls peak to trough Source: Bloomberg, Credit Suisse Last data point: February 2008
Global IP Contraction vs. Major US Contractions Credit Suisse; the BLOOMBERG PROFESSIONAL™ service; DataStream
Length of US recessions Source: Datastream, National Bureau of Economic Research, Credit Suisse
IMF on Crashes and Bubbles  ,[object Object],[object Object],[object Object],[object Object],From Claessens, S., Kose, M.A.& Terrones, M.E., ‘What Happens during Recessions, Crunches and Busts?, IMF Research Paper
Pain is where the leverage is  Source: Bloomberg, Credit Suisse / IDC House price to income, rel. to long-term averages
From Phoenix to Tiger  Source:  Angus Maddison
Ireland’s economy: 4 broad stages  Source:  Datastream Globalization Underperformance  ‘ Free money’ Now –’Coming of age’
Ireland: mortgage rates & residential loans Source:  Angus Maddison
Source:  Bloomberg Construction as a % GDP, 2006
Source:  Nikkei Hubris indicator - Japanese golf club membership prices
Source:  GUI Similar bubble appears in Irish golf club growth
Source:  Bloomberg A further similarity between Ireland and Japan – property
Equities as a measure of ‘pain’ - how bad have things been comparatively? Source:  Credit Suisse,  Dimson, Marsh & Staunton
Source:  DataStream, Credit Suisse Casino economies – banks and market crises
What did we do right?   ,[object Object],[object Object],[object Object],[object Object],[object Object]
New Economies (USA in 19 th  & 21 st  century) driven by innovation   Source:  US Patent and Trademark Office, US Census Bureau Toward a real ‘growth’ model – intangible infrastructure
World post the Credit Crisis   ,[object Object],[object Object],[object Object],[object Object],[object Object]
The World Economy – EM’s look to regain former glory Source: Angus Maddison, IMF, Credit Suisse Share of Global GDP (%) Years: 1700, 1820, 1890, 1952, 2007, 2030F Note: 2007 figures at current exchange rates
EM‘s have rebuilt their balance sheets post 1998  Source: Bloomberg, Credit Suisse Emerging Market countries have learnt the lessons of 1998 and have built currency reserves – spawning SWF‘s
China buys more cars than the US now Note: China’s January automobile sales is estimated to be 790,000 Sources: CEIC , Bloomberg, Credit Suisse
Lessons so far for academia   ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
What problems do we face in Ireland?   ,[object Object],[object Object],[object Object],[object Object],[object Object]
Government rescue plans: credit risk transfer from banks to sovereigns Source: Bloomberg, Credit Suisse
Source:  Economist, FT Prices (e.g. labour) are still too high (leaders salaries in euros)
Ireland’s economy: What to do?   ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
The Bigger Picture – ‘The Second Republic’  (IT, 14/04/2008)   ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Global Disclaimer / Important Information For further information, including disclosures with respect to any other issuers, please refer to the Credit Suisse Global Research Disclosure site at:  https://www.credit-suisse.com/research/disclaimer     The information and opinions expressed in this report were produced by the Global Research department of the Private Banking division at Credit Suisse as of the date of writing and are subject to change without notice. Views expressed in respect of a particular stock in this report may be different from, or inconsistent with, the observations and views of the Credit Suisse Research department of Investment Banking division due to the differences in evaluation criteria. The report is published solely for information purposes and does not constitute an offer or an invitation by, or on behalf of, Credit Suisse to buy or sell any securities or related financial instruments or to participate in any particular trading strategy in any jurisdiction. It has been prepared without taking account of the objectives, financial situation or needs of any particular investor. Although the information has been obtained from and is based upon sources that Credit Suisse believes to be reliable, no representation is made that the information is accurate or complete. Credit Suisse does not accept liability for any loss arising from the use of this report. The price and value of investments mentioned and any income that might accrue may fluctuate and may rise or fall. Nothing in this report constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate to individual circumstances, or otherwise constitutes a personal recommendation to any specific investor. Any reference to past performance is not necessarily indicative of future results. Foreign currency rates of exchange may adversely affect the value, price or income of any products mentioned in this document. Alternative investments, derivative or structured products are complex instruments, typically involve a high degree of risk and are intended for sale only to investors who are capable of understanding and assuming all the risks involved. Investments in emerging markets are speculative and considerably more volatile than investments in established markets. Risks include but are not necessarily limited to: political risks; economic risks; credit risks; currency risks; and market risks. An investment in the funds described in this document should be made only after careful study of the most recent prospectus and other fund information and basic legal information contained therein. Prospectuses and other fund information may be obtained from the fund management companies and/or from their agents. Before entering into any transaction, investors should consider the suitability of the transaction to individual circumstances and objectives. Credit Suisse recommends that investors independently assess, with a professional financial advisor, the specific financial risks as well as legal, regulatory, credit, tax and accounting consequences. A Credit Suisse company may, to the extent permitted by law, participate or invest in other financing transactions with the issuer of the securities referred to herein, perform services or solicit business from such issuers, and/or have a position or effect transactions in the securities or options thereof.     
Global Disclaimer / Important Information For further information, including disclosures with respect to any other issuers, please refer to the Credit Suisse Global Research Disclosure site at:  https://www.credit-suisse.com/research/disclaimer     Distribution of research reports Except as otherwise specified herein, this report is distributed by Credit Suisse, a Swiss bank, authorized and regulated by the Swiss Federal Banking Commission.  Australia : This report is distributed in Australia by Credit Suisse, Sydney Branch (CSSB) (ABN 17 061 700 712 AFSL 226896) only to "Wholesale" clients as defined by s761G of the Corporations Act 2001.  CSSB does not guarantee the performance of, nor makes any assurances with respect to the performance of any financial product referred herein.  Bahamas:  This report was prepared by Credit Suisse, the Swiss bank, and is distributed on behalf of Credit Suisse, Nassau Branch, a branch of the Swiss bank, registered as a broker-dealer by the Securities Commission of the Bahamas.  Bahrain:  This report is distributed by Credit Suisse, Bahrain Branch, authorized and regulated by the Central Bank of Bahrain (CBB) as an Investment Firm Category 2.  Dubai:  This information is distributed by Credit Suisse Dubai branch, duly licensed and regulated by the Dubai Financial Services Authority (DFSA). Related financial products or services are only available to wholesale customers with liquid assets of over USD 1 million who have sufficient financial experience and understanding to participate in financial markets in a wholesale jurisdiction and satisfy the regulatory criteria to be a client.  France:  This report is distributed by Credit Suisse (France), authorized by the Comité des Etablissements de Crédit et des Entreprises d’Investissements (CECEI) as an investment service provider. Credit Suisse (France) is supervised and regulated by the Commission Bancaire and the Autorité des Marchés Financiers.  Germany:   Credit Suisse (Deutschland) AG, authorized and regulated by the Bundesanstalt fuer Finanzdienstleistungsaufsicht (BaFin), disseminates research to its clients that has been prepared by one of its affiliates.  Gibraltar:  This report is distributed by Credit Suisse (Gibraltar) Limited. Credit Suisse (Gibraltar) Limited is an independent legal entity wholly owned by Credit Suisse and is regulated by the Gibraltar Financial Services Commission.  Guernsey:  This report is distributed by Credit Suisse (Guernsey) Limited. Credit Suisse (Guernsey) Limited is an independent legal entity wholly owned by Credit Suisse and is regulated by the Guernsey Financial Services Commission. Copies of annual accounts are available on request.  Hong Kong:   This report is issued in Hong Kong by Credit Suisse Hong Kong branch, an Authorized Institution regulated by the Hong Kong Monetary Authority and a Registered Institution regulated by the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).  India:  This report is distributed by Credit Suisse Securities (India) Private Limited ("Credit Suisse India"), regulated by the Securities and Exchange Board of India (SEBI).  Italy:  This report is distributed in Italy by Credit Suisse (Italy) S.p.A., a bank incorporated and registered under Italian law subject to the supervision and control of Banca d’Italia and CONSOB.   Luxembourg:  This report is distributed by Credit Suisse (Luxembourg) S.A., a Luxembourg bank, authorized and regulated by the Commission de Surveillance du Secteur Financier (CSSF).   Mexico:  The information contained herein does not constitute a public offer of securities as defined in the Mexican Securities Law. This report will not be advertised in any mass media in Mexico. This report does not contain any advertisement regarding intermediation or providing of banking or investment advisory services in Mexico or to Mexican citizens.   Qatar:  This information has been distributed by Credit Suisse Financial Services (Qatar) L.L.C, which has been authorized and is regulated by the Qatar Financial Centre Regulatory Authority (QFCRA) under QFC No. 00005.  All related financial products or services will only be available to Business Customers or Market Counterparties (as defined by the Qatar Financial Centre Regulatory Authority (QFCRA)), including individuals, who have opted to be classified as a Business Customer, with liquid assets in excess of USD 1 million, and who have sufficient financial knowledge, experience and understanding to participate in such products and/or services.  Russia:  The research contained in this report does not constitute any sort of advertisement or promotion for specific securities, or related financial instruments. This research report does not represent a valuation in the meaning of the Federal Law On Valuation Activities in the Russian Federation and is produced using Credit Suisse valuation models and methodology.  Singapore:  Distributed by Credit Suisse Singapore branch, regulated by the Monetary Authority of Singapore.  Spain:  This report is distributed in Spain by Credit Suisse Spain branch, authorized under number 146 0  in the Register by the Banco de España .  United Kingdom:   This report is issued by Credit Suisse (UK) Limited and Credit Suisse Securities (Europe) Limited. Credit Suisse Securities (Europe) Limited and Credit Suisse (UK) Limited, both authorized and regulated by the Financial Services Authority, are associated but independent legal entities within Credit Suisse. The protections made available by the Financial Services Authority for retail clients do not apply to investments or services provided by a person outside the UK, nor will the Financial Services Compensation Scheme be available if the issuer of the investment fails to meet its obligations. UNITED STATES:  NEITHER THIS REPORT NOR ANY COPY THEROF MAY BE SENT, TAKEN INTO OR DISTRIBUTED IN THE UNITED STATES OR TO ANY US PERSON. Japan:  Neither this report nor any copy thereof may be sent, taken or distributed in Japan.     Local law or regulation may restrict the distribution of research reports into certain jurisdictions. This report may not be reproduced either in whole or in part, without the written permission of Credit Suisse.  Copyright © 2009 Credit Suisse Group AG and/or its affiliates. All rights reserved.      9C014A
‘ Helicopter Ben’    ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: Board of Governors of Federal Reserve
Ireland’s economy: 3 broad stages  Source:  Bloomberg

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Michael O'Sullivan 22-04-09

  • 1. An Boilgeog April 22 2009 Michael O’Sullivan Author of ‘Ireland and the Global Question’ (Cork University Press, 2006) Phone: +44 20 7883 8228 Email: michael.o’sullivan@credit-suisse.com
  • 2.
  • 3. We will never learn from bubbles MacKay, C., Extraordinary Popular Delusions and the Madness of Crowds, 1841 Source: Prof Larry Neal.
  • 4. Bubbles - UK Railway share index, 1845-1849 Source: Global Financial Data Source: Global Data Inc.
  • 5. This one was extraordinary in size and interdependence Source: Federal Reserve, The Statistical History of the US, Morgan Stanley, Credit Suisse Last data point: Q3 2008
  • 6. Where are we now? - US payrolls peak to trough Source: Bloomberg, Credit Suisse Last data point: February 2008
  • 7. Global IP Contraction vs. Major US Contractions Credit Suisse; the BLOOMBERG PROFESSIONAL™ service; DataStream
  • 8. Length of US recessions Source: Datastream, National Bureau of Economic Research, Credit Suisse
  • 9.
  • 10. Pain is where the leverage is Source: Bloomberg, Credit Suisse / IDC House price to income, rel. to long-term averages
  • 11. From Phoenix to Tiger Source: Angus Maddison
  • 12. Ireland’s economy: 4 broad stages Source: Datastream Globalization Underperformance ‘ Free money’ Now –’Coming of age’
  • 13. Ireland: mortgage rates & residential loans Source: Angus Maddison
  • 14. Source: Bloomberg Construction as a % GDP, 2006
  • 15. Source: Nikkei Hubris indicator - Japanese golf club membership prices
  • 16. Source: GUI Similar bubble appears in Irish golf club growth
  • 17. Source: Bloomberg A further similarity between Ireland and Japan – property
  • 18. Equities as a measure of ‘pain’ - how bad have things been comparatively? Source: Credit Suisse, Dimson, Marsh & Staunton
  • 19. Source: DataStream, Credit Suisse Casino economies – banks and market crises
  • 20.
  • 21. New Economies (USA in 19 th & 21 st century) driven by innovation Source: US Patent and Trademark Office, US Census Bureau Toward a real ‘growth’ model – intangible infrastructure
  • 22.
  • 23. The World Economy – EM’s look to regain former glory Source: Angus Maddison, IMF, Credit Suisse Share of Global GDP (%) Years: 1700, 1820, 1890, 1952, 2007, 2030F Note: 2007 figures at current exchange rates
  • 24. EM‘s have rebuilt their balance sheets post 1998 Source: Bloomberg, Credit Suisse Emerging Market countries have learnt the lessons of 1998 and have built currency reserves – spawning SWF‘s
  • 25. China buys more cars than the US now Note: China’s January automobile sales is estimated to be 790,000 Sources: CEIC , Bloomberg, Credit Suisse
  • 26.
  • 27.
  • 28. Government rescue plans: credit risk transfer from banks to sovereigns Source: Bloomberg, Credit Suisse
  • 29. Source: Economist, FT Prices (e.g. labour) are still too high (leaders salaries in euros)
  • 30.
  • 31.
  • 32. Global Disclaimer / Important Information For further information, including disclosures with respect to any other issuers, please refer to the Credit Suisse Global Research Disclosure site at: https://www.credit-suisse.com/research/disclaimer   The information and opinions expressed in this report were produced by the Global Research department of the Private Banking division at Credit Suisse as of the date of writing and are subject to change without notice. Views expressed in respect of a particular stock in this report may be different from, or inconsistent with, the observations and views of the Credit Suisse Research department of Investment Banking division due to the differences in evaluation criteria. The report is published solely for information purposes and does not constitute an offer or an invitation by, or on behalf of, Credit Suisse to buy or sell any securities or related financial instruments or to participate in any particular trading strategy in any jurisdiction. It has been prepared without taking account of the objectives, financial situation or needs of any particular investor. Although the information has been obtained from and is based upon sources that Credit Suisse believes to be reliable, no representation is made that the information is accurate or complete. Credit Suisse does not accept liability for any loss arising from the use of this report. The price and value of investments mentioned and any income that might accrue may fluctuate and may rise or fall. Nothing in this report constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate to individual circumstances, or otherwise constitutes a personal recommendation to any specific investor. Any reference to past performance is not necessarily indicative of future results. Foreign currency rates of exchange may adversely affect the value, price or income of any products mentioned in this document. Alternative investments, derivative or structured products are complex instruments, typically involve a high degree of risk and are intended for sale only to investors who are capable of understanding and assuming all the risks involved. Investments in emerging markets are speculative and considerably more volatile than investments in established markets. Risks include but are not necessarily limited to: political risks; economic risks; credit risks; currency risks; and market risks. An investment in the funds described in this document should be made only after careful study of the most recent prospectus and other fund information and basic legal information contained therein. Prospectuses and other fund information may be obtained from the fund management companies and/or from their agents. Before entering into any transaction, investors should consider the suitability of the transaction to individual circumstances and objectives. Credit Suisse recommends that investors independently assess, with a professional financial advisor, the specific financial risks as well as legal, regulatory, credit, tax and accounting consequences. A Credit Suisse company may, to the extent permitted by law, participate or invest in other financing transactions with the issuer of the securities referred to herein, perform services or solicit business from such issuers, and/or have a position or effect transactions in the securities or options thereof.     
  • 33. Global Disclaimer / Important Information For further information, including disclosures with respect to any other issuers, please refer to the Credit Suisse Global Research Disclosure site at: https://www.credit-suisse.com/research/disclaimer   Distribution of research reports Except as otherwise specified herein, this report is distributed by Credit Suisse, a Swiss bank, authorized and regulated by the Swiss Federal Banking Commission. Australia : This report is distributed in Australia by Credit Suisse, Sydney Branch (CSSB) (ABN 17 061 700 712 AFSL 226896) only to "Wholesale" clients as defined by s761G of the Corporations Act 2001. CSSB does not guarantee the performance of, nor makes any assurances with respect to the performance of any financial product referred herein. Bahamas: This report was prepared by Credit Suisse, the Swiss bank, and is distributed on behalf of Credit Suisse, Nassau Branch, a branch of the Swiss bank, registered as a broker-dealer by the Securities Commission of the Bahamas. Bahrain: This report is distributed by Credit Suisse, Bahrain Branch, authorized and regulated by the Central Bank of Bahrain (CBB) as an Investment Firm Category 2. Dubai: This information is distributed by Credit Suisse Dubai branch, duly licensed and regulated by the Dubai Financial Services Authority (DFSA). Related financial products or services are only available to wholesale customers with liquid assets of over USD 1 million who have sufficient financial experience and understanding to participate in financial markets in a wholesale jurisdiction and satisfy the regulatory criteria to be a client. 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Copies of annual accounts are available on request. Hong Kong: This report is issued in Hong Kong by Credit Suisse Hong Kong branch, an Authorized Institution regulated by the Hong Kong Monetary Authority and a Registered Institution regulated by the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). India: This report is distributed by Credit Suisse Securities (India) Private Limited ("Credit Suisse India"), regulated by the Securities and Exchange Board of India (SEBI). Italy: This report is distributed in Italy by Credit Suisse (Italy) S.p.A., a bank incorporated and registered under Italian law subject to the supervision and control of Banca d’Italia and CONSOB. Luxembourg: This report is distributed by Credit Suisse (Luxembourg) S.A., a Luxembourg bank, authorized and regulated by the Commission de Surveillance du Secteur Financier (CSSF). 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All related financial products or services will only be available to Business Customers or Market Counterparties (as defined by the Qatar Financial Centre Regulatory Authority (QFCRA)), including individuals, who have opted to be classified as a Business Customer, with liquid assets in excess of USD 1 million, and who have sufficient financial knowledge, experience and understanding to participate in such products and/or services. Russia: The research contained in this report does not constitute any sort of advertisement or promotion for specific securities, or related financial instruments. This research report does not represent a valuation in the meaning of the Federal Law On Valuation Activities in the Russian Federation and is produced using Credit Suisse valuation models and methodology. Singapore: Distributed by Credit Suisse Singapore branch, regulated by the Monetary Authority of Singapore. Spain: This report is distributed in Spain by Credit Suisse Spain branch, authorized under number 146 0 in the Register by the Banco de España . United Kingdom: This report is issued by Credit Suisse (UK) Limited and Credit Suisse Securities (Europe) Limited. Credit Suisse Securities (Europe) Limited and Credit Suisse (UK) Limited, both authorized and regulated by the Financial Services Authority, are associated but independent legal entities within Credit Suisse. The protections made available by the Financial Services Authority for retail clients do not apply to investments or services provided by a person outside the UK, nor will the Financial Services Compensation Scheme be available if the issuer of the investment fails to meet its obligations. UNITED STATES: NEITHER THIS REPORT NOR ANY COPY THEROF MAY BE SENT, TAKEN INTO OR DISTRIBUTED IN THE UNITED STATES OR TO ANY US PERSON. 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  • 34.
  • 35. Ireland’s economy: 3 broad stages Source: Bloomberg