Winds of change blowing for 2011 as we bury annus maximus horribilis
The worst weather, beyond blame, resulted in abortive travel plans and domestic misery without water. January can’t come quick enough. We can put behind us a year, truly memorable for all the wrong reasons. Survivors can tell their grandchildren whatever future befalls them, “t’was nothing like 2010”.
Historic events of the IMF/EU bailout, bleakest budget and ever worsening bank losses have been so well documented as to not require repetition. It would be wrong to assume that a calendar change will avert the course, causes or depth of our ongoing problems. Beneath the surface fundamental shifts are occurring in the economy and society. The postal service won’t reverse the advantages of email for efficiency, speed and cost.
Transformation of personal and corporate communication is profound. Twitter, Facebook and Google are displacing our previous sense of community. Identity and interaction have moved from the parish pump to online social networks. This will radically and fundamentally shift behavioural patterns of consumers. Ultimate losers will be different forms of conventional media and the high street retail sector. Viral campaigns will transform orthodox marketing.
In business, the fallout of the recession will result in new configurations. In each sub-sector of the economy the top two operators will grow market share at the expense of independent and family businesses. This tyranny of the plc will be increasingly evident in 2011. Enterprises that are too big to fail are identifiable by the depth of their pockets. This allows them adequate capital and resources to ride out downturns and have sufficient funds for innovative products and process technology. Consolidation of business will be evident by more mergers and acquisitions on the economic recovery road.
The financial tsunami that hit the country has provided us with new adages. Hackneyed phrases of last year were “going forward” and “we are where we are”. New favourites hail from our burgeoning insolvency practitioners: “it is what it is” and “necessity knows no law”. These mantras may remain, but new features of Ireland 2011 will undoubtedly be ground breaking — most obvious being political with a likely general election on March 11 and a shiny new government.
My political predictions? Fine Gael and Labour will form a new government with a double-digit Dáil majority. Guaranteed players in the new cabinet for FG are Enda Kenny, James Reilly, Phil Hogan (director of elections), Richard Bruton, Michael Noonan and Frances Fitzgerald — providing a gender balance and geographic representation. Alan Shatter is a probable Attorney General. Other full ministers from the blue corner may ensure a presence from Cork and Ulster/border counties. The assured cabinet contingent from Labour includes Eamon Gilmore, Pat Rabbitte (putative Minister for Finance), Joan Burton and Ruairi Quinn (director of elections). Brendan Howlin, Emmet Stagg and Sean Sherlock have a serious shout for inclusion.
The timing of the presidential election (autumn 2011) means any appetite for a contest will have abated. Labour’s internal dilemma between Michael D Higgins and Fergus Finlay could be resolved by an all party agreed candidate. Fianna Fáil’s Brian Crowley and Fine Gael duo of John Bruton and& Mairead McGuinness may be sacrificed for political consensus and party cost savings. A possible winner could come from Emily O’Reilly, Mary Davis, David Norris or A.N. Other (retired statesman, diplomat or judge).
Cornerstones of the new Government will be a stark break from 13 years of FF rule and public service reform, through renegotiation of the Croke Park Agreement. Wholesale changes of personnel in the senior echelons of public services, semi-state boards and other political appointees will give a palpable sense of regime change. NAMA and nationalised banks will see cultural adjustments, with new faces and a crackdown on bankrupt developers and bankers. State quangos will be dismembered and merged. The months of April, May and June will be critical for confidence and momentum of the new administration. Expect different attitudes to burning bondholders and equivocation about sovereign debt default, leading up to a restructuring of the euro in 2013.
Continued losses and creeping nationalisation of Allied Irish Bank and Bank of Ireland will materialise in 2011. AIB will resemble Anglo Irish Bank, as recapitalisation exceeds €13bn. Only crystallised property-related impairments have been accounted for to date. Yet to be encountered are the waves of write-offs from SME and corporate lending. A few years of negative equity pain will convert to mortgage default. Temporary solutions of interest holidays and averted repossessions cannot camouflage underlying asset depreciation and repayment un-affordability.
These coping classes of families, with rising child care costs are arguably the most devastated cohort to carry the burden of the crash. Their January pay packet will be the first instalment of four years of reduced and subdued living standards. As they journey through life, the goal posts of entitlement will shift. Public pension provision will be deferred to older entitlement dates. Private pensions will contract to defined contributions rather than benefits. The big fear is that interest and inflation rate rises will start to recur. Historic minimum levels of both are unsustainable.
The worst victims may be those aged in their sixties and seventies. Current senior citizen flag bearers are Bill Cullen, Fergal Quinn and George Hook. Their Peter Pan approach belies representation of a group who are on a fixed income and have had the value of their nest egg wiped. Stocks and shares have tumbled. Safe havens of their lifetime savings have been decimated. The general rule of thumb of adjustment over the past three years is halving of your assets and a reduction of a quarter of one’s income. Many seniors exceed this average. They have no future bounce back factor of earnings or opportunities.
The greatest antidote to daily depression is sport. My crystal ball musings? Cork senior footballers can retain Sam Maguire and dominate the decade — having the largest, best and most youthful panel. Brian Cody can summon one more special performance out of the Kilkenny Cats to regain the Liam MacCarthy Cup. France can retain their Six Nations rugby crown, despite a poor autumn campaign, revised team selection can restore glory. New Zealand are assured of victory in the Rugby World Cup. The All Blacks are streets ahead of every other nation.
Perennial winners to continue business as usual? Phil Power Taylor to dominate world darts; Rafa Nadal should stay on top of Federer. Alberto Contador can reign supreme in the Tour de France. Comeback kids of 2011 could include Tiger Woods (top golf earner) and Alonso as Formula One World Champion. Rory McIlroy can secure the big breakthrough. Further dreams are the retirement of Alex Ferguson as Red Devils’ boss and the arrival of Man City as champions. Top tips for the turf are both Big Bucks (Stayers Hurdles) and Frankel on the flat (2000 guineas) to remain unbeaten. This investment portfolio will at least out-perform bank shares. On the entertainment front, the reunited D’Unbelievables and Mary Byrne will prosper. Happy New Year.
