Financial crisis: they saw it coming . . . Irish brigade

The Lehman Legacy

Morgan Kelly
Hailed now as the first economist in Ireland to sound an alarm about an impending financial crisis, Morgan Kelly was ridiculed for his articles in The Irish Times which began in 2006 predicting that house prices could fall by up to 50 per cent. "We have spent the last five years learning to believe that exports and competitiveness do not matter and that we can get rich by selling houses to each other. We are likely to spend a painful few years as we unlearn that lesson."

The UCD economist, who usually wrote papers on medieval population theory, was dismissed as an eccentric scare-mongerer,
and prompted former taoiseach Bertie Ahern's much-quoted quip: "I don't know how people [engaged in talking down the economy] don't commit suicide . . ."

Kelly was one of the biggest critics of the government’s bank guarantee in September 2008, saying in another newspaper article that the €1.5 billion provided to Anglo “might as well be piled up in St Stephen’s Green and incinerated”.

Between 2008 and 2011, Kelly foresaw an EU-IMF bailout, a national debt of €70 million and a mortgage crisis as tens of thousands of homeowners defaulted on their repayments. Government ministers called him irresponsible and warned about the dangers of self-fulfilling prophecies, but his predictions have been frighteningly accurate.

He has avoided the media spotlight since his last article in 2011, which concluded Ireland was headed for bankruptcy.

Philip Ingram
A relatively unknown research analyst at Merrill Lynch, the US investment bank which had been the lead underwriter of Anglo bonds and corporate broker to AIB, he wrote a scathing report in March 2008 of aggressive commercial real estate lending practices at Irish banks. After incensed Anglo executives threatened to withdraw business, Merrill Lynch retracted the most damaging details of Ingram's report and a sanitised version was reissued. A government-commissioned report by Merrill Lynch later that year found "all of the Irish banks are profitable and well capitalised". Anglo was nationalised just six months after his predictions first came to light. He continued to publish research criticising the Irish bank ing system but was gone from Merrill Lynch by December 2008.

David McWilliams
David McWilliams claims to be "the first economist to see that the Irish boom was nothing more than a credit bubble". His 2007 book The Generation Game presented Ireland as a country on the eve of a downturn, where a new class of "accidental millionaires" would win out over a younger generation of "cash- strapped jugglers" left badly exposed as credit dried up. Then minister for finance Brian Lenihan accused McWilliams of "dangerous talk" when he warned that Irish banks were in danger of going bust in early September 2008. After Lehman's, McWilliams advised Lenihan when he arrived on his doorstep on September 16th to issue a limited bank guarantee similar to the Swedish model which prevented a crisis in the early 1990s.
He has since said he regrets answering the door to Lenihan that night, as the plan for the guarantee was "hijacked by the very bankers who had brought the country to ruin".