Bayley's Big Picture presentation Feb 16 What the Credit Crunch means for New Zealand and where the silver linings are

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

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

US Federal Reserve Chairmen Alan Greenspan and Ben Bernanke Bayley's Big Picture presentation Feb 16

US Federal Reserve Chairmen Alan Greenspan and Ben Bernanke

Bayley's Big Picture presentation Feb 16 US Treasury Secretary Henry Paulson

Lehman CEO Dick Fuld AIG’s Martin Sullivan Bayley's Big Picture presentation Feb 16

Lehman CEO Dick Fuld AIG’s Martin Sullivan

Bayley's Big Picture presentation Feb 16 Rod Petricevic and Mark Bryers

Bayley's Big Picture presentation Feb 16

Bayley's Big Picture presentation Feb 16

Bayley's Big Picture presentation Feb 16

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

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

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

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

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

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

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 Bayley's Big Picture presentation Feb 16

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