The global economic crisis

WHO PAYS?

What happened to this phrase?What happened to this phrase?

Caveat

Emptor

Where it all beganWhere it all began

September 30, 1999

“In a move that could help increase home ownership among minorities and low –income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.”

Economic Stimulus PackagesEconomic Stimulus Packages

$1,730,000,000,000… so far

Too big to fail?Too big to fail?

Fannie Mae, Freddie Mac, AIG, Merrill Lynch, Citigroup, Wachovia, Washington Mutual, Goldman Sachs, Wells Fargo, Bank of America, Northern Rock, Royal Bank of Scotland, Lloyds TSB, HBOS, Barclays, Bradfrod & Bingley, Fortis, Dexia, Hypo Real Estate, UBS, ING, Commerzbank, Iceland, Ukraine, Pakistan, GM, Ford, Chrysler, GMAC

More debtMore debt==

higher taxes?higher taxes?

The blame game. The blame game. Who can we sue?Who can we sue?

The boom industry of 21 C?The boom industry of 21 C?

CLASS ACTIONS

$1 BILLION OF CLAIMS IN AUSTRALIA

RIGHT NOW …

WITHOUT THE BIG ONES!!!

ABC Learning Centres Air Cargo (inc Qantas)Allco Finance Group

AM CorporationAWB Ltd

BeconwoodCentaur Mining

CentroChallenger

Octavier (formerly MFS)Opes Prime (ANZ Bank)

OzMineralsPan Pharmaceuticals

Reynolds WinesSons of Gwalia

Westpoint

Who would do that job?Who would do that job?

In 2007, the average base fee for chairmen of the ASX top 50

companies rose to $409,000 a year.

Would you want that job?Would you want that job?

Source: The Age

Who would do that job?Who would do that job?

Directors' fees in ASX top 50 companies rose 12 per cent to a median of $140,000.

That job?That job?

Directors in the top 51-100 companies, on average, earned $106,300 … the average male salary is now around $60,000

Who would do that job?Who would do that job?

This job?This job?

Source SMH

… two years ago just 10% of FTSE 250 companies were buying

directors’ insurance to protect the personal assets of their directors …

Defensive BoardsDefensive Boards

Defensive BoardsDefensive Boards

… today, that number

is closer to 50%

Corporate RiskCorporate Risk

While much attention is paid to corporate salaries … the financial risk of being a CEO or director has

increased exponentially

Insurers, shareholders, Insurers, shareholders, government, taxpayers government, taxpayers … all share the liability … all share the liability

burdenburden

pendingpendingonon umerumerSSCC

05

10152025303540

Percent

WHERE THE MONEY WENT 1982

Food Retailing

DepartmentStoresClothing

Recreation

HouseholdGoodsHospitality

Other

05

10152025303540

Percent

WHAT WE SPEND TODAY 2007

Food Retailing

DepartmentStoresClothing

Recreation

HouseholdGoodsHospitality

Other

20092009ustraliaustraliaAA

$5 billion

$26.3 billion

$82.9 billion

source: Federal Budget

THE PROJECT PIPELINETHE PROJECT PIPELINE

THE FUTURE FUNDS …THE FUTURE FUNDS …JAM JARS, STICKY FINGERSJAM JARS, STICKY FINGERS

$60bn

$4bn

$6bn

$5bn $20bn$10bn

Govt unfundedsuper

EducationInvestment

Fund

BAF -Infrastructure

Health

SwanCostello

$40bn from 07/08 and 08/09 surpluses

Future Fund managing $105bn….

Red bars not quite the same as blue as can spend capital

More of a macro stabilisation fund rather than inter-

generational device

source: nabCapital

TODAY’S BABY BOOMTODAY’S BABY BOOM

source: ABS

0

50000

100000

150000

200000

250000

300000

350000

1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96 101

BABY BOOM - 2028BABY BOOM - 2028

source: ABS

0

50000

100000

150000

200000

250000

300000

350000

400000

1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96 101

100 YEARS YOUNG100 YEARS YOUNG

source: ABS

twice as many women compared with men !!

0

100000

200000

300000

400000

500000

600000