Reviews of “Back from the Brink”

“First class analysis and full of original thinking on the way forward. A ‘must read’ for policy makers and decision takers alike.

                                                           EU Commissioner Charlie McCreevy “A savvy essay on how Ireland got into such a set of fiscal and financial messes in the

last seven years. What is particularly refreshing is its essential optimism”.                                                           Professor Tom Garvin, former Head of Politics UCD “Against the odds, Coleman stayed faithful to Ireland’s future when other

commentators gave up on it. Right on time, he has now written an outstanding book that restores Ireland’s self-belief.” Jody Corcoran Sunday Independent

   “Marc Coleman's book is a welcome and long overdue antidote to the relentless

gloom with which have been bombarded for the past year. ”                                                               Dan White, Evening Herald and Sunday

Independent  “Marc Coleman applies a capacious mind to pondering the condition of Ireland today.

He not  only etches sharply what has gone wrong, but even more importantly looks beyond the immediate crisis to signpost a route to national recovery.”

Joe Lee, Glucksman Professor, New York University

What I predicted in September 2008

GNP & GDP bang on

Employment; bang on

• ESRI Autumn 2009 QEC:– End 2010 employment: 1.85 million

(2005)

• Live Register fell for first time in 2 years in October.

• Unemployment level is not “422,000 and climbing to “500,000” but actually 264,000 and about to fall below 250,000

Trade: Best performance in EU

Retail sales: Except motor trade, also back to 2005

What’s going on ?

• Autumn 2005:

– House price growth goes from 5% to double digit growth

– From 15% overvaluation – manageable – credit growth of 25%+ per annum drives housing market over edge

– Economy now returning to pre-2005 credit boom activity levels

Preliminary conclusions• Celtic Tiger not “collapsed”.

• Rather 2005-2007 phase “Inchidoney” years revealed as 3 wasted years

• Now toxins are leaving system

• Credit should contract back to late 2006..a natural & healthy process

•August 18th 2009: IMF declares an end to the world recession

•September 10th 2009: Ben Bernanke US Fed chairman says US recession is over

•September 24th 2009: Irish GDP and GNP stops falling quarter-on-quarter and returns to levels last seen in first quarter of 2005

•SO MORE AND MORE EVIDENCE SUPPORTS CONTENTION OF RETURN TO 2005

Take a longer-term view

One step backwards, but after three steps forward

Ireland’s long-term performance remains stunningEU GDP statistics, 2009

•1973 - 2007, Ireland grew by 413 per cent

•Next highest over period was Spain, 214 per cent

•EU average over period was 189 per cent.

7 POSITIVES• Number 1: Employment

– Unemployment is 264,000 and falling NOT 422,000 and rising

– End recession employment will be 1.85 million, back to 2005 levels and half a million above 1997 levels

7 POSITIVES• Number 2: National Debt

– EU Spring forecasts say EU average debt will be 83.8% GDP by 2010

– Provided government takes corrective action Ireland’s debt level will be 79.7% of GDP in the same year.

– Average age of Irish citizen is about 34 compared to 39 for average EU citizen.

– This is a good position to be in, even if pace of debt rise was rapid.

– Caveat: Lenihan must

7 POSITIVES• Number 3: Fiscal crisis

– 27 billion euro gap between revenue and taxation

– But 9 is Infrastructure; not a problem

– Another 9 is cyclical; will correct provided recommendations of Commission on Taxation are implemented it’s not a problem

– 9 is structural PROVIDED BRIAN LENIHAN GRASPS NETTLE ON WEDNESDAY half of this will be dealt with by January, the other half by December 2010

7 POSITIVES• Number 4: Export performance best in

Europe– Only Ireland has maintained exports

– Traded services export growth 2000-2007 was almost 300%

– Ireland is a bicycle in a traffic jam.

– Asian economies already growing by 8% p.a. And will 2 billion people a small slice of this market will keep Ireland going for a long time

7 POSITIVES• Number 5: “NAMA-Queens” are

wrong– Maximum cost of NAMA to taxpayer is 7 billion

– This is equivalent to around 1 year’s spend on NDP.

– 2.7 billion of this is in form of subordinated debt which to some degree protects the taxpayer against failure to recoup loans

– “Breakeven” assumes 10 per cent growth in prices between now and 2016.

– This is a realistic if not cautious assumption

7 POSITIVES• Number 6: Population

– In “The Best is Yet to Come” I predicted growth in population from 4.2 million in 2006 to 5 million 2020

– I was laughed out of court

• “There is no way population can grow in a recession”• “Coleman has been at the sherry cabinet again!”• “Population will decline, not grow”

– September 2009 latest CSO population estimates:

– Population has grown from 4.2 million in 2006 to 4.5 million in January 2009!!!!!

– 5 million 2020 easily on target. Growth puts housing overhang in perspective

7 POSITIVES• Number 7: Housing

– Average house price now 235,000 euro or back to January 2004 levels

– But mortgage affordability has improved by over 40% in last 12 months

– Falling general inflation has protected real incomes, even though nominal after tax incomes have fallen due to pay cuts and tax rises

– Market can, I believe recover and start growing as has happened in the UK

– But as has happened in UK stamp duty must be abolished.

– Stamp duty yields only 85million and its removal should not await introduction of a property tax

Now look further forwardHuge implications for healthcare in Ireland

CSO Population projections, Dec. 4th 2008:

•Current Population is 4.5 million•Lowest 2026 pop. will be 4.9 million•Highest 2026 pop. will be 5.7 million

EU Commission, Dec 2008: 6.7 million in Republic by 2058 and 9 million on island of Ireland

Ireland: A longer term view...

Back to the Future: Ireland's Historic Population U-Turn

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The Density Dividend

• 2002 – 2006: State’s population up 8%• 2002 – 2006: Urban population only 4%

•With such rapid population growth overall, urban population growth should be double national rate, not half. So what happened?

• We need to build up and in rather than out and across.

Problems:

• Ch 5 Denial & The Nile

• Ch 6 Electile dysfunction

• Ch 7 For Whom the Dell Tolls

• Ch 9 Two Tribes Go to War

Solutions:• Ch 9 The Smart Economy

• Ch 10 Country Cute, City Smart

• Ch 11 Goodbye Yellow Brick Road; Banking

• Ch 12 Goodbye Yellow Brick Road; society

• Ch 13 The 2016 agenda; need for a plan

• Ch 14 Civil War RIP