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Bayley's Big Picture presentation Feb 16

What the Credit Crunch means for New Zealand and where the silver linings are

Bayley's Big Picture presentation Feb 16 2

September 15 – the day the neutron bomb went off and what almost happened

How the global banking system imploded Why the debt mountain is so large Why deleveraging is so powerful The New Zealand connection We’re not immune, but our world won’t end What might happen next Insolvency, nationalisation, deleveraging The silver linings to this big cloud

Bayley's Big Picture presentation Feb 16 3

US Federal Reserve Chairmen Alan Greenspan and Ben Bernanke

Bayley's Big Picture presentation Feb 16 4

US Treasury Secretary Henry Paulson

Bayley's Big Picture presentation Feb 16 5

Lehman CEO Dick Fuld AIG’s Martin Sullivan

Bayley's Big Picture presentation Feb 16 6

Rod Petricevic and Mark Bryers

Bayley's Big Picture presentation Feb 16 7

Bayley's Big Picture presentation Feb 16 8

Bayley's Big Picture presentation Feb 16 9

Bayley's Big Picture presentation Feb 16 10

Recession lasting well into 2010 Global recession driven by de-leveraging Unemployment rising past 8% by end 2010 Median NZ house price to fall 30% from end

2007 peak by end 2010 Prices won’t return to 2007 levels until 2018 Consumption must drop NZ$1.5 bln/month Non-essential retail and importers to suffer The boom of the “roaring noughties” is over

Bayley's Big Picture presentation Feb 16 11

Trade restrictions Financial nationalism Rising long term interest rates Stresses in the China-US nexus Eurozone political and monetary instability Very weak demand for exports Strong demand for infrastructure Weaker borrowing, consuming economy Stronger savings and investing economy Strong focus on efficiency, cost reduction

Bayley's Big Picture presentation Feb 16 12

Cheaper borrowing for homeowners OCR to hit 2%, variable mortgage in low 5s Lower fuel and food prices… But not that much cheaper Lower NZ dollar Could got to 40 USc Bargain hunters paradise Cars, houses, farms, clothes, anything Housing becomes more affordable 40% single income to pay median mortgage

Bayley's Big Picture presentation Feb 16 13

Flexible currencies and interest rates Helicopter Ben and his money men Fiscal stimuli the world over We won’t repeat the mistakes of Smoot

Hawley and shut down global trade This was the recession we needed to have Focus on infrastructure investment Boost productivity and real incomes Political stability in the wealthy west