Future Focus Ronan Lyons Dublin 16 June
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What's Great about the “Great Recession”? Ronan Lyons 06/16/2009 2009 IBM Corporation
Contents ― Four elephants in one room ― The world turns a corner ― The 21st Century creed ― Crisi-tunity
Ronan Lyons – Economist June 11, 2009
2/x
2009 IBM Corporation
Contents ― Four elephants in one room ― The world turns a corner ― The 21st Century creed ― Crisi-tunity
Ronan Lyons – Economist June 11, 2009
3/x
2009 IBM Corporation
Four Irish elephants are trying to hide in the back of the room •
Banking
•
– NAMA or nationalise or ...?
– €25bn hole in revenues – income tax not the problem, wealth taxes are
– Who pays? This generation or the next?
•
Unemployment
•
Property
– Over 230,000 'unexpected unemployed' since 2007
– 15 years property built in the last 7 years... and in the wrong places
– Another 100,000 a possibility
– 1 in 5 face negative equity and 60k households face negative equity AND unemployment
– Commuter belt worst hit Ronan Lyons – Economist June 11, 2009
Budgets
4/x
2009 IBM Corporation
Contents ― Four elephants in one room ― The world turns a corner ― The 21st Century creed ― Crisi-tunity
Turn a different corner And if all that there is is this fear of being used, maybe I should go back to being lonely and confused... George Michael on the fate of small open economies? Ronan Lyons – Economist June 11, 2009
5/x
2009 IBM Corporation
Measured by job losses, recessions up to the 1980s were short and sharp Private sector jobs lost from peak 1%
― US as the bellwether economy for the OECD
0% -1% -2% -3% -4%
― Recessions were frequent in the post-war era up to the 1980s
-5% -6% -7% 2 1
4 3
6 5
7
8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 "1950s"
Ronan Lyons – Economist June 11, 2009
1974/75
1981/82
2000-03
6/x
2009 IBM Corporation
Since then recessions have been getting less frequent, milder... and longer Private sector jobs lost from peak 1%
― Since the 1980s, recessions have become more once-a-decade episodes
0% -1% -2% -3% -4% -5% -6% -7% 2 1
4 3
6 5
7
8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 "1950s"
Ronan Lyons – Economist June 11, 2009
1974/75
1981/82
1990/91
― The early 1990s recession was long – but not severe in terms of job losses
2000-03
7/x
2009 IBM Corporation
The “dot bomb” recession was particularly long, in terms of job recovery Private sector jobs lost from peak 1%
― The dot.com bubble created an unsustainable amount of jobs
0% -1% -2% -3% -4% -5% -6% -7% 2 1
4 3
6 5
7
8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 "1950s"
Ronan Lyons – Economist June 11, 2009
1974/75
1981/82
1990/91
― It took almost five years for private sector employment to recover
2000-03
8/x
2009 IBM Corporation
This recession combines the worst of the different post-war recessions Private sector jobs lost from peak 1%
― Jobs losses have been as intense as any post-war recession
0% -1% -2% -3% -4% -5% -6% -7% 2 1
4 3
6 5
7
8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 "1950s"
Ronan Lyons – Economist June 11, 2009
1974/75
1981/82
1990/91
2000-03
2008/09
― It's likely to be the longest postwar recession, barring rapid employment growth
9/x
2009 IBM Corporation
Globally, trade and output have fallen at least as much as in the 1930s
Source: O'Rourke & Eichengreen, http://bit.ly/korbe Ronan Lyons – Economist June 11, 2009
10 / x
2009 IBM Corporation
The severity of the crisis has led to an unprecedented policy response
Source: O'Rourke & Eichengreen, http://bit.ly/korbe Ronan Lyons – Economist June 11, 2009
11 / x
2009 IBM Corporation
Confidence and activity are returning... slowly US - manuf
UK - manuf
US - services
Eurozone -manuf
UK - services
Eurozone - services
65 60
Growth
55 50 45
Decline
40 35
Ireland: 39.5
Ap r-0 9
Ja n09
-0 8 O ct
8 Ju l-0
Ap r-0 8
Ja n08
-0 7 O ct
Ju l-0 7
Ap r-0 7
Ja n07
-0 6 O ct
Ju l-0 6
Ap r-0 6
Ja n06
30
12 / x
2009 IBM Corporation
Each region faces its own growth challenges and opportunities Where will growth come from?
USA
Europe
Asia
Business
Company balance sheets in good shape pre-recession... vigorous cost cutting since
Business - and consumers particularly dependent on bank lending
Shift towards domestic consumption and welfare systems likely to offset trade's weaker growth contribution
Demographics
Retirement of baby-boomers... USA will need to remain open to migration in the future as it has in the past
Population at work is shrinking... rapidly in some countries
Rapidly growing populations in most countries – China and Japan ageing very fast though
Banking
Major problems remain in banking system but some signs of confidence returning
Concerns over transparency of banks and ability to develop Europe-wide solutions
Lessons from 1980s and 1990s mean financial system in good shape
Government
Significant fiscal boost in short-term... but the shift to bigger government is likely to last
Administrative burden and red-tape an issue for business... being tackled by the EU head-on
A lot of countries are in catch-up, with significant infrastructure programmes
Other
A very flexible economy, close trading links with Asian economies
Huge variety between large and small, rich and poor across the 40+ countries
Major environmental challenges 13 / x
2009 IBM Corporation
Contents ― Four elephants in one room ― The world turns a corner ― The 21st Century creed ― Crisi-tunity
Ronan Lyons – Economist June 11, 2009
14 / x
2009 IBM Corporation
This recession has shattered some myths of the early 21st Century •
•
“The new global financial system does not require a new level of surveillance” –
The recession has made entire models of finance disappear, as well as bringing about a global re-evaluation of risk and widespread nationalization of banks
–
Pervasive crashes in stock and housing markets starting in 2007 have destroyed anything up to 30% of global wealth
“Emerging markets have enough economic strength to decouple from the OECD” –
Ronan Lyons – Economist June 11, 2009
The widespread economic contraction in developed economies has been accompanied by a huge slowdown in growth in emerging markets
15 / x
2009 IBM Corporation
Other beliefs remain firmly in place •
•
Ronan Lyons – Economist June 11, 2009
“There are always opportunities to establish or expand” –
Inc.com identifies almost 20 industies and activites in demand
–
They range from small flexible activities (such as home healthcare, niche consulting and repair services) to large industries (including education and construction)
–
Some are staples – like fast-casual dining and temporary staffing – while others are hi-tech or green-collar, such as cloud computing, education technology and energy
“Technology is a game-changer” –
In the dot.com collapse, belief in the potential of ICT to change our world was shaken
–
In the current recession, faith in ICT is – if anything – stronger, as policymakers and business people see how it can cut costs, inform decisions, and change business models
16 / x
2009 IBM Corporation
Contents ― Four elephants in one room ― The world turns a corner ― The 21st Century creed ― Crisi-tunity
Lisa: Dad, do you know that in China they use the same word for crisis as they do for opportunity? Homer: Yes... Crisi-tunity! Ronan Lyons – Economist June 11, 2009
17 / x
2009 IBM Corporation
Technology really is flattening the business landscape •
Disruptive technologies do not care whether it's boom or bust
•
At the height of the boom, Facebook grew from 14m users in mid-2006 to 27m users by mid-2007
•
At the height of the bust, Twitter grew from 0.5m users to 4.5m users over the course of 2008
Ronan Lyons – Economist June 11, 2009
18 / x
2009 IBM Corporation
Technology means SMEs can focus solely on their core competences •
SMEs can penetrate new markets easier – Websites such as Applied Language can translate your website's 1000 words into Chinese within a week for less than €100 – Sites such as elance match experts with work
•
SMEs can treat ALL non-core competences as utilities – Manufacturing, packaging, warehouses and logistics can all be outsourced – e.g. Amazon Fulfillment Services – There are dedicated online services for accounts, project management and collaboration
•
SMEs can manage their own brand among their audience – Identifying more of their audience, and engaging in more interactive communication, through online social media
Ronan Lyons – Economist June 11, 2009
19 / x
2009 IBM Corporation
Technology creates opportunities for new creative brands •
Sites like Cafepress offer manufacturing and shipping services for a range of consumers goods... ... like my mug!
•
Authors and researchers can sell their work on sites such as Scribd
•
Etsy is an online marketplace for “buying & selling all things handmade”, connecting artists and craftspeople with new markets
Ronan Lyons – Economist June 11, 2009
This is actually for sale online, €9 http://bit.ly/ro-mug 20 / x
2009 IBM Corporation
Some of Ireland's most popular Twitter brands... •
Over 100,000 Irish brands – people and companies – are on Twitter
•
The most popular are dominated by people and SMEs – Some well known brands are there
•
These brands have generated audiences of hundreds – or thousands – for free – The only investment is time
Ronan Lyons – Economist June 11, 2009
21 / x
2009 IBM Corporation
Thank you •
For more, see ronanlyons.com
•
If you're on Twitter: @ronanlyons
•
Happy to connect on LinkedIn too
•
And don't forget to buy your limited edition mug!
Ronan Lyons – Economist June 11, 2009
22 / x
2009 IBM Corporation
Contents ― Four elephants in one room ― The world turns a corner ― The 21st Century creed ― Crisi-tunity
Ronan Lyons – Economist June 11, 2009
2/x
2009 IBM Corporation
Contents ― Four elephants in one room ― The world turns a corner ― The 21st Century creed ― Crisi-tunity
Ronan Lyons – Economist June 11, 2009
3/x
2009 IBM Corporation
Four Irish elephants are trying to hide in the back of the room •
Banking
•
– NAMA or nationalise or ...?
– €25bn hole in revenues – income tax not the problem, wealth taxes are
– Who pays? This generation or the next?
•
Unemployment
•
Property
– Over 230,000 'unexpected unemployed' since 2007
– 15 years property built in the last 7 years... and in the wrong places
– Another 100,000 a possibility
– 1 in 5 face negative equity and 60k households face negative equity AND unemployment
– Commuter belt worst hit Ronan Lyons – Economist June 11, 2009
Budgets
4/x
2009 IBM Corporation
Contents ― Four elephants in one room ― The world turns a corner ― The 21st Century creed ― Crisi-tunity
Turn a different corner And if all that there is is this fear of being used, maybe I should go back to being lonely and confused... George Michael on the fate of small open economies? Ronan Lyons – Economist June 11, 2009
5/x
2009 IBM Corporation
Measured by job losses, recessions up to the 1980s were short and sharp Private sector jobs lost from peak 1%
― US as the bellwether economy for the OECD
0% -1% -2% -3% -4%
― Recessions were frequent in the post-war era up to the 1980s
-5% -6% -7% 2 1
4 3
6 5
7
8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 "1950s"
Ronan Lyons – Economist June 11, 2009
1974/75
1981/82
2000-03
6/x
2009 IBM Corporation
Since then recessions have been getting less frequent, milder... and longer Private sector jobs lost from peak 1%
― Since the 1980s, recessions have become more once-a-decade episodes
0% -1% -2% -3% -4% -5% -6% -7% 2 1
4 3
6 5
7
8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 "1950s"
Ronan Lyons – Economist June 11, 2009
1974/75
1981/82
1990/91
― The early 1990s recession was long – but not severe in terms of job losses
2000-03
7/x
2009 IBM Corporation
The “dot bomb” recession was particularly long, in terms of job recovery Private sector jobs lost from peak 1%
― The dot.com bubble created an unsustainable amount of jobs
0% -1% -2% -3% -4% -5% -6% -7% 2 1
4 3
6 5
7
8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 "1950s"
Ronan Lyons – Economist June 11, 2009
1974/75
1981/82
1990/91
― It took almost five years for private sector employment to recover
2000-03
8/x
2009 IBM Corporation
This recession combines the worst of the different post-war recessions Private sector jobs lost from peak 1%
― Jobs losses have been as intense as any post-war recession
0% -1% -2% -3% -4% -5% -6% -7% 2 1
4 3
6 5
7
8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 "1950s"
Ronan Lyons – Economist June 11, 2009
1974/75
1981/82
1990/91
2000-03
2008/09
― It's likely to be the longest postwar recession, barring rapid employment growth
9/x
2009 IBM Corporation
Globally, trade and output have fallen at least as much as in the 1930s
Source: O'Rourke & Eichengreen, http://bit.ly/korbe Ronan Lyons – Economist June 11, 2009
10 / x
2009 IBM Corporation
The severity of the crisis has led to an unprecedented policy response
Source: O'Rourke & Eichengreen, http://bit.ly/korbe Ronan Lyons – Economist June 11, 2009
11 / x
2009 IBM Corporation
Confidence and activity are returning... slowly US - manuf
UK - manuf
US - services
Eurozone -manuf
UK - services
Eurozone - services
65 60
Growth
55 50 45
Decline
40 35
Ireland: 39.5
Ap r-0 9
Ja n09
-0 8 O ct
8 Ju l-0
Ap r-0 8
Ja n08
-0 7 O ct
Ju l-0 7
Ap r-0 7
Ja n07
-0 6 O ct
Ju l-0 6
Ap r-0 6
Ja n06
30
12 / x
2009 IBM Corporation
Each region faces its own growth challenges and opportunities Where will growth come from?
USA
Europe
Asia
Business
Company balance sheets in good shape pre-recession... vigorous cost cutting since
Business - and consumers particularly dependent on bank lending
Shift towards domestic consumption and welfare systems likely to offset trade's weaker growth contribution
Demographics
Retirement of baby-boomers... USA will need to remain open to migration in the future as it has in the past
Population at work is shrinking... rapidly in some countries
Rapidly growing populations in most countries – China and Japan ageing very fast though
Banking
Major problems remain in banking system but some signs of confidence returning
Concerns over transparency of banks and ability to develop Europe-wide solutions
Lessons from 1980s and 1990s mean financial system in good shape
Government
Significant fiscal boost in short-term... but the shift to bigger government is likely to last
Administrative burden and red-tape an issue for business... being tackled by the EU head-on
A lot of countries are in catch-up, with significant infrastructure programmes
Other
A very flexible economy, close trading links with Asian economies
Huge variety between large and small, rich and poor across the 40+ countries
Major environmental challenges 13 / x
2009 IBM Corporation
Contents ― Four elephants in one room ― The world turns a corner ― The 21st Century creed ― Crisi-tunity
Ronan Lyons – Economist June 11, 2009
14 / x
2009 IBM Corporation
This recession has shattered some myths of the early 21st Century •
•
“The new global financial system does not require a new level of surveillance” –
The recession has made entire models of finance disappear, as well as bringing about a global re-evaluation of risk and widespread nationalization of banks
–
Pervasive crashes in stock and housing markets starting in 2007 have destroyed anything up to 30% of global wealth
“Emerging markets have enough economic strength to decouple from the OECD” –
Ronan Lyons – Economist June 11, 2009
The widespread economic contraction in developed economies has been accompanied by a huge slowdown in growth in emerging markets
15 / x
2009 IBM Corporation
Other beliefs remain firmly in place •
•
Ronan Lyons – Economist June 11, 2009
“There are always opportunities to establish or expand” –
Inc.com identifies almost 20 industies and activites in demand
–
They range from small flexible activities (such as home healthcare, niche consulting and repair services) to large industries (including education and construction)
–
Some are staples – like fast-casual dining and temporary staffing – while others are hi-tech or green-collar, such as cloud computing, education technology and energy
“Technology is a game-changer” –
In the dot.com collapse, belief in the potential of ICT to change our world was shaken
–
In the current recession, faith in ICT is – if anything – stronger, as policymakers and business people see how it can cut costs, inform decisions, and change business models
16 / x
2009 IBM Corporation
Contents ― Four elephants in one room ― The world turns a corner ― The 21st Century creed ― Crisi-tunity
Lisa: Dad, do you know that in China they use the same word for crisis as they do for opportunity? Homer: Yes... Crisi-tunity! Ronan Lyons – Economist June 11, 2009
17 / x
2009 IBM Corporation
Technology really is flattening the business landscape •
Disruptive technologies do not care whether it's boom or bust
•
At the height of the boom, Facebook grew from 14m users in mid-2006 to 27m users by mid-2007
•
At the height of the bust, Twitter grew from 0.5m users to 4.5m users over the course of 2008
Ronan Lyons – Economist June 11, 2009
18 / x
2009 IBM Corporation
Technology means SMEs can focus solely on their core competences •
SMEs can penetrate new markets easier – Websites such as Applied Language can translate your website's 1000 words into Chinese within a week for less than €100 – Sites such as elance match experts with work
•
SMEs can treat ALL non-core competences as utilities – Manufacturing, packaging, warehouses and logistics can all be outsourced – e.g. Amazon Fulfillment Services – There are dedicated online services for accounts, project management and collaboration
•
SMEs can manage their own brand among their audience – Identifying more of their audience, and engaging in more interactive communication, through online social media
Ronan Lyons – Economist June 11, 2009
19 / x
2009 IBM Corporation
Technology creates opportunities for new creative brands •
Sites like Cafepress offer manufacturing and shipping services for a range of consumers goods... ... like my mug!
•
Authors and researchers can sell their work on sites such as Scribd
•
Etsy is an online marketplace for “buying & selling all things handmade”, connecting artists and craftspeople with new markets
Ronan Lyons – Economist June 11, 2009
This is actually for sale online, €9 http://bit.ly/ro-mug 20 / x
2009 IBM Corporation
Some of Ireland's most popular Twitter brands... •
Over 100,000 Irish brands – people and companies – are on Twitter
•
The most popular are dominated by people and SMEs – Some well known brands are there
•
These brands have generated audiences of hundreds – or thousands – for free – The only investment is time
Ronan Lyons – Economist June 11, 2009
21 / x
2009 IBM Corporation
Thank you •
For more, see ronanlyons.com
•
If you're on Twitter: @ronanlyons
•
Happy to connect on LinkedIn too
•
And don't forget to buy your limited edition mug!
Ronan Lyons – Economist June 11, 2009
22 / x
2009 IBM Corporation
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