North's answer to Davos focuses on global crisis

BELFAST BRIEFING:Key business people and politicians met in Newry last week to discuss the recession

FORGET DAVOS. When it comes to economic summits that really mean something to people in Northern Ireland, it appears the Border city of Newry is calling all the shots. Or rather one of its best-known sons, Dr Gerald O’Hare, who owns the international property development company ParkerGreen.

Just as the 2009 World Economic Forum was getting under way in the Swiss mountain resort, Dr O’Hare was busy hosting his own version of Davos against the backdrop of the Newry mountains.

He convinced more than 200 key business people, politicians, financiers, government Ministers and religious representatives to attend a dinner to discuss the global economic crisis and to share their own personal thoughts on it.

The mood of the evening was grim – not because of the company or the food – but because of the underlying theme of the night: Responding to the Global Credit Crunch.

A number of key speakers for the evening came from ParkerGreen’s advisory board and included a venture capitalist, a leading banker, the vice-chairman of one of the world’s largest commercial real estate firms, and a former taoiseach.

If you had any doubts about the severity of the downturn by the main course, you would have been left under no illusion that regardless of whoever you are and wherever you are, you won’t escape the reality of this recession.

Take for example the message from Michael Gibbons, a director of BNP Paribas, the European banking and financial group. According to Gibbons, the global banking system in certain countries and states may be implicitly insolvent.

Gibbons believes that the “quantum of losses” that global financial institutions are exposed to runs into billions and billions of dollars, euro and pounds.

He estimates that financial institutions in the US may have toxic debts totalling $2 trillion, while UK banks may have exposure of £400–£500 billion of bad debt. In Ireland, Gibbons believes that financial institutions could be exposed to as much as €50 billion of toxic debt.

In his opinion “banks which are too big to fail could be too big to rescue”.

He said it was time for global governments to get “ahead of the curve” if they stand any chance of coming up with a solution to deal with the crisis.

He told the Newry audience that if bailing out any bank threatened the solvency of a state or a country, then the government in question “must be prepared to let that bank go”.

By the time Gregory Tosko, the vice-chairman of CB Richard Ellis, New York, stood up to address the guests, the economic crisis had helped bring on more than one case of indigestion in the room.

Tosko described in detail the impact the economic downturn had wrought on commercial real estate in New York and the overwhelming amount of office space that is now available to rent at much lower prices.

Demand for office accommodation has disappeared regardless of location and no one in either Northern Ireland or the US knows when it is going to come back.

Former taoiseach Bertie Ahern, vice-chairman of ParkerGreen’s advisory board, was one of the evening’s big draws.

When his time came to address the Newry audience, Ahern made his way slowly to the front of the room.

As he got to the podium, he paused briefly and then said: “I’m sorry about the crutches, but I was trying to kickstart the economy in the South”.

He may have got the biggest laugh of the night initially, but there was nothing funny about his overall message. Ahern said no recession could stop the drive of creative and well-educated people but that there was also no doubt that “we are in a hole”.

“It is only by working together that we can get ourselves out of it. Now is the time for everyone to work together to come up with ways to stimulate the economy.

Dr O’Hare intends to host more of his unique Davos-style forumsin various global locations that are “strategic” to ParkerGreen’s business.

He firmly believes that politicians “cannot be expected to become economists overnight and bankers cannot be expected to look beyond their own difficulties at this time”.

“Leadership comes from a cohesive approach from the wider community,” Dr O’Hare said.

He for one appears to have taken the lead.

Just a word of advice though – if you do get invited to one of Dr O’Hare’s Davos dinners be sure to take the indigestion pills. Economic turbulence does not sit easy on the stomach in any location.