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The illness
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During the 1990s the Irish Economy (The Celtic Tiger) was one of the
most remarkable post war industrial phenomena
•
Ireland, once relatively poor, became one of the richest countries in
Europe
•
Growth rates of almost 10% achieved primarily through massive inflow
of Foreign Direct Investment
•
Ireland’s tradition of high emigration was reversed to net immigration
•
However, around 2002, the Irish Banks went on a splurge of reckless
lending to property purchasers and developers
•
Government budget expenditure soared. Minister for Finance Charle
McCreevy famously said “If I have it I’ll spend it”. This was financed by
revenues from the artificially booming property sector
•
House and land prices soared to levels among the highest in the world.
People engaged in a frenzy of buying before prices went even higher.
This was all facilitated by banks providing credit with little or no due
diligence
•
Economic commentators said there would be a “soft landing” of
property prices
•
In 2007 the tax revenues fell short of target and wiped out the expected
budget surplus
•
Ireland officially entered recession in 2008
•
All of this coincided with the collapse of Lehman Brothers and the onset
of the global financial crisis
•
Timing is everything!!
IGTA eJournal | Summer 2015 | 31