The best actors in a very unpopular blockbuster...

Wednesday 17 February 2010

By Richard Ramsey,
Ulster Bank Chief Economist

There are perhaps not many in the economic world who have covered themselves in glory during recent times. However, in economic terms, the past couple of years have no doubt been blockbusters with regard to their significance and impact (though of course not popularity). Therefore, with the world of film and cinematography celebrating the 82nd Annual Academy Awards in March, we've decided to suggest some potential winners of a hypothetical Economic Oscars.

The Credit Crunch 2007/8 and The Great Recession of 2009 would be shoo-ins to dominate proceedings for their respective years. But what are the economies, sectors, personalities and organisations in contention for the various categories?

At the start of the last decade, while martial arts film Crouching Tiger, Hidden Dragon was winning four gongs at the Oscars, the Celtic Tiger was being feted by the economic critics for its continuing strong growth, and China's economy was the 'hidden dragon', not yet hitting the high notes we've seen in recent years. In 2009 however, these roles, in some respects, were reversed, with the Irish economy having fallen from grace and the Chinese economy the star of the show. China would therefore be a sure-fire winner of this category, ahead of a nomination list dominated by other Asian economies such as India.

For this category, it would be hard to disagree with TIME magazine, who nominated Ben Bernanke as Person of the Year. In his capacity as Chairman of the Federal Reserve, Bernanke did more than most to prevent a collapse in the global financial system. So significant was his role that a Best Economic Director accolade would also be a strong possibility. With regard to 2008, the rapid intervention and equity injections into British banks would have earned Gordon Brown and Alistair Darling the awards of Best Economic Actor and Best Supporting Economic Actor respectively in that year. Their 'original screenplay', which was adapted by others around the world, would also be a strong contender in its category.

In Northern Ireland, whilst no one individual or organisation has really stood out in the recession, we would at least have one strong contender for the Best Sector gong. Whilst other local sectors such as construction and services have suffered badly in 2009, the local food and drink sector's performance has continued to be outstanding, with 'box office receipts' from international markets boosted by a favourable exchange rate.

In terms of organisations, the central banks would be the nominees in this category, with the Federal Reserve, the European Central Bank and the Bank of England the main contenders. Their role in helping avert an economic catastrophe - in particular they have had to clear up the mess caused by a lack of effective regulation - deserves recognition. It is disappointing that the regulators had only cameo roles in recent years as opposed to the lead parts that they deserve.

Without the continued support of the central banks' monetary policies, such as record low interest rates, some economists believe the global economy could experience a Weekend at Bernie's style recovery - a reference to the 1980s comedy in which the characters try to make their dead boss appear alive, by putting on a pair of sunglasses and propping him up so that they could party at his beach house.

In terms of individuals, while many commentators have criticised the Irish government's handling of the economy in the run up to the credit crunch, international praise has been heaped upon the Irish Finance Minister for his determination to implement tough and unpopular policies. Indeed, if Brian Lenihan's latest budget was a film it would have been directed by Quentin Tarantino, given the fiscal carnage that it contained. In budgetary terms, it was equivalent to a drive-by shooting, with the public and private sectors both hit, alongside those on welfare benefits.

By comparison, the UK's Pre- Budget Report was more of a Walt Disney production with its determination to address the public finances lacking credibility. Unlike the RoI, the UK Government decided to do another lap around the block until after the next general election, when the more trigger-happy George Osborne could replace Alistair Darling as the financial hit-man to mark his 'production debut' under the direction of David Cameron. Either way, if future UK Budgets take a leaf out of Lenihan's book, they could be in the running for Best Adapted Screenplay in the years to come.

If Brian Lenihan's latest budget was a film it would have been directed by Quentin Tarantino, given the fiscal carnage that it contained.

Greek themed films have featured in the Academy Awards over the years: Zorba the Greek picked up three Oscars in 1964 and My Big Fat Greek Wedding was nominated in 2002. In the economic world, Greece concealed the scale of its annual fiscal deficit for most of last year before October's staggering Government announcement that its projected deficit for 2009 was double the previous estimate. For this reason, My Big Fat Greek Deficit secures the lesser known award of Best Makeup for 2009. This follows Bernie Madoff's success in recent years where he was able to pull off the largest investor fraud by an individual in history. Mr Madoff clearly had an ability for Special Effects.

Whilst there is cause to celebrate the actions of some of 2009's key economic players, many economies are still in rehab and some (e.g. Dubai), who let their success go to their heads, now remain reliant on handouts from their still rich friends, so the champagne will stay on ice and the after-show parties won't begin for some time. The stars will certainly have to continue their big performances during 2010, whilst others must rise to the occasion. The show must go on!