Eddie isn't the most wiley man in Ireland as the 11890 ads suggest but he has given the parody his blessing. Each time you use the 11890 Directory enquiry service two things happen; firstly the children's charity, The Jack & Jill Foundation for whom Eddie acts is patron gets a contribution from 11890 which is a 100% Irish owned company and secondly you'll get a text reminder to get your old mobile phones off to The Jack & Jill Foundation, which is a mainstay of its funding. The Jack & Jill Foundation has an annual fund raising need of €2.5 million and operates a team of highly skilled pediatric nurses that provide respite support to over 240 Irish families that have infants and young children that require special care.

The open nature of the Irish economy means that what happens elsewhere matters a great deal to us. The weather vane to watch is the financial markets because, generally, these will flag a global economic recovery about six months in advance of it happening on the ground.  In every crisis a catalyst changes the mood which has become a self-fulfilling the prophecy as, fearful for the future, people are delaying spending leading to a worsening economic outlook, leading to further spending cutbacks. We're smack in that cycle now but so too are the Yanks, the Brits and just about everyone else. But I think change is near and here's why;

• People are desperate for good news and want a reason to feel confident again
• Obama may be the rallying point with a plan to inject a huge stimulus into the US.
• Obama's Head of the National Economic Council is set on overreaction rather than risk under-reaction. That means over a trillion dollars in injection.
• The build up of raw cash worldwide is staggering yet interest rates are plummeting.
• In the US alone there's over $4.5trillion in cash funds.
• Bank deposits have soared way past the cash build up before World War II
• Assets are at insanely cheap prices so when a sustained rally starts there will be an unprecedented surge out of cash.

Last week you could get an income from Intel shares four times greater than leaving cash in US dollar deposits. Intel is not the only sector-dominant global giant that is at these prices. Investors aren't stupid, as soon as they sense an economic upturn perhaps as early as mid next year they'll pile into risky assets including property.

But lurking in the long grass when we get of his mess is inflation. Governments worldwide are creating money at huge levels to pump into economies. Ultimately that leads to devaluation of money and rising prices. Then there's oil. Lost in the melee of the credit crunch is the latest report from the International Energy Agency. Long bullish on plenty of cheap oil, the IEA is changing its tune. The age of cheap oil is over and the age of scarcity begins. The global upturn will trigger increased energy demand. The best case scenario is an oil crunch until 2015 followed by a bailout as investment in energy infrastructure catches up. The worst case scenario is oil shooting back up past previous highs, that's over $150 per barrel.

That's why any home grown economic stimulus for Ireland must give the Irish energy efficiency sector a massive injection. The savvy thing to do would be to;

• Provide at least two billion Euros a year in grants of 10k per house to be match by 10k from householders.
• Interest relief on term loans for retrofitting over 1 million houses over the next ten years
• Widespread upgrading of homes to Scandinavian levels of energy efficiency
• Stimulate a huge volume of work for skilled, plumbers, electricians and trades people
• Get a healthy return to the Exchequer as Irish costs for imported fossil fuels fall, tax revenues grow from income tax and vat on the work done and we avoid the huge costs of CO2 emissions ahead.

Eddie's Recession Tip

Be ready to get the hell out of cash deposits as the upturn kicks in because high inflation when it takes hold will mean losses on the spending power of your cash. Prepare to invest in risky assets again. Invest in energy efficiency now for your home.

The bank guarantee was never going to be enough. Inevitably hard cash would be needed to recapitalise the banks. Add that to the budget deficit and Irish taxpayers will end up having borrowed over EUR20 billion in the space of a few months. That money has to be repaid even if part of it comes from the National Pensions Reserve Fund. Investors in Irish Government debt aren't stupid and will charge a lot more for the risk they're taking on. Talk of recouping our investment through bank dividends, a recovery in their share price and an economic bounce replenishing State coffers in 2010 is wishful thinking. Until property prices stop falling, jobs stop imploding and credit markets normalise we simply won't know the scale of the bad debt write offs the taxpayer is expected to underwrite. It's much more likely that we'll be saddled with these extraordinary national borrowing costs through taxes and lower Government spending for many years to come and next year's budget is likely to add more pain.

So far the big banks have played the Government like a salmon. They've got the guarantee but have continued to starve businesses of the lifeblood of normal credit. Worse still are the comments from banking dinosaurs that it's business as usual and they don't need fresh capital. That's coded language for;

-Get stuffed we'll manage this by setting up credit soup kitchens and doling out the thinnest loans possible to protect our capital, prestige and bonuses.

The Government needs to start kicking butts. Fresh capital must come with a clean out of the dinosaurs and a replacement with bankers prepared to turn on the taps again and set up special lending units to support businesses. But, remember even if everything is done right,  proper recapitalisation, European interest rate cuts and stimulus packages throughout leading economies, two big problems remain;

Firstly the Irish Government is still afraid to confront public sector unions with the truth.

- The truth is we can't afford the pay bill or the recent hike.

-Pay will have to be cut for higher earners otherwise we're off the hell in a hand basket.

Secondly consumer confidence is shot to pieces from the shock of the banking crisis. Cheaper borrowing rates will not be enough to avoid the natural instinct to save and not spend. That will need;

-Time to heal

-An Irish economic stimulus package to replace the incompetent budget

-Restoration of belief in our Government leadership.

Fianna Fail need to seriously consider the earliest possible leadership change if they want to avoid a wipe out in next year's local and European elections. Trust and confidence has to be restored if consumers are expected to come back out spending. There is no confidence in the triumvirate running this Government and the longer remedial action is not taken the worse it's simply going to get. Just ask anyone running a small business including Fianna Fail supporters aghast at how out of touch the party elite became.

Eddie's Recession tip

No need to rush into booking next year's hols. Travel firms will be busting a gut to sell holiday packages into a recessionary minded market. Expect once in a lifetime offers and super weekends away from top Irish hotels and spas, desperate for footfall. So if you've a romantic weekend planned you'll be spoiled for choice.

• Banks will try to snaffle most of the cuts for themselves by not passing through all of it including on term loans, overdrafts etc.
  
• Banks always use interest rate falls to widen their profit margins paying slightly less on deposits and charging slightly more for loans.
• Banks who've sold tracker mortgages will be desperate to substitute them with fixed rate mortgages with hidden higher profits.
• If you've got a pricey variable rate mortgage or a high interest rate loan hold on until well into next year before fixing because the harder the Europe recession gets, the greater the rate cuts. The ECB base rate once hit 2% but, this time it could go lower. The Japanese base rate is an anorexic 0.3%. If you've got cash on deposit that you don't need on call go for a fixed rate now before any further falls.

• Obama plans to end tax breaks for US companies that create jobs here
• Obama's favourite Patriot Employer Act 2007 gives tax credit to US companies that keep jobs at home
• While promoting free trade Obama is committed to stopping job losses overseas. That means the days of relying on more US foreign investment are coming to a close.

Selected parts of an extensive article in You & Your Money magazine, Jan issue, "When Is The Best Time To Have Children?" by Lucy Taylor, saw their way into the general media and, taken outside of Lucy's piece, were out of context.  My comments were related to the facts that women continue to be discriminated against both at work in terms of relative pay, by flexibility and by sub-standard State policy particularly for working mothers.  When asked about when was the best time financially to have children I used the opportunity to stress that there isn't a best time because of the huge challenges women face.  Here's the backdrop:

There is substantial evidence to indicate continuing discrimination against women in the workforce and womens organisations exist in many countries to tackle it.  In the magazine article I am simply stating the truth in response to an economic question about when is the best time to have children.  I said "the hard facts are that the economic value of women in the workforce goes down when they have children".  I don't believe this is fair or equitable, but it is a fact and not stating it as a fact would simply reinforce the myth that somehow women can have it all.  I further said "the media, magazines and TV are giving women the message that they can have it all - a family, a driving career and a body like Cindy Crawford.  There are a small minority that can do this, but they tend to be quite wealthy and have a massive support system.  Men couldn't do it either.  It is making women try to achieve the impossible.  Trying to keep up the pace and do everything means some women end up wrecking themselves with the best intentions."

Until there is universal childcare for under fives, or a huge moderation in creche costs, and a substantial acceleration in the equality reform agenda for women, it will simply remain the case that women, who are already discriminated against anyway at work, will be further discriminated against when they choose career breaks to have children.  This discrimination is, of course, illegal.  It is not in plain sight.  It is subtle, but it does exist and, in my view, it is pervasive.  To state that women are not economically disadvantaged when they take career breaks to have children would be the diplomatic and more politically correct thing to say except it would be untrue.  I hope my comments reinvogorate some more public debate on this long running matter for women.

Northern Rock has Stg113bn in loan assets principally mortgages.  This is what it owns.  It has Stg24bn in deposits.  This is what it owes.  Consequently, its liabilities are 4 times covered by its assets.  This means it is a sound bank from a solvency perspective and has little chance of going bust.  Instead it has a liquidity problem as a fallout from the U.S. sub-prime debacle.  It cannot raise money on the wholesale market between banks.  It has consequently sought money from the lender of last resort, i.e. the Bank of England.  This is much like seeking a business seeking an overdraft from a bank to cover a short-term cash flow problem. 

My guess is that Northern Rock is now a take-over target and will be bought for its juicy assets, if its share price does not recover.  Logically, therefore, there is nothing unsound about the bank based on the information currently available as of Friday morning, 14th September and based on the statements issued by the UK Financial Regulator, responsible for its prudential supervision.

The emotional side however can be more important and over-ride financial logic.  There is nothing worse in finance than the fear of a bank bust.  In other words eliminating the extreme worry that some depositors will feel is more important than getting the extra rates of interest that Northern Rock has been paying in the Irish market.  So, if it will cause you sleep loss and stress, if you will be disturbed by ongoing media coverage, you should move to another bank.  The question is which one, because we simply don't know which banks are also vulnerable to the interbank credit squeeze. 

I would avoid banks who have aggressively lent to the Irish developer sector in particular, as these may become problems over the short-term and choose a mainstream bank with a good credit rating.  The irony is that in the absence of knowing where the virus from the sub-prime fallout has spread, we cannot entirely rely on credit rating agencies.  It is a timely reminder that there are no absolute guarantees even with banks.  The inevitable run on Northern Rock deposits will test its technology and service and this will test the strength of the support from the U.K. Regulator and the Bank of England.