Pssst… we can write an original essay just for you.
Any subject. Any type of essay.
We’ll even meet a 3-hour deadline.
121 writers online
The financial crisis in Ireland resembled the US-style collapse following the easy-money bubble that hit its real estate segment. It emerged from the availability of cheap credit accessible to almost all families desiring to buy and build houses. The process began in the 1980s through 1990s when Ireland experienced steady economic growth. The rapid economic boom would trigger a mass exodus of people with Irish ancestral roots motivated to return home (Roche, et al., 2013, p. 21). The high economic growth enticed individuals to seek employment internally backed by blossoming industries. The national unemployment rate would fall steadily from 15.7% in the 1998 to 4% in 2004 (Conefrey, et al., 2014, p. 18). The high growth witnessed from 1997 to 2007 transformed Ireland from a poverty-stricken nation into joining the wealthiest class.
Behind the high economic growth was mass job creation. The resulting increase in disposable income levels in the Irish economy attracted foreign investors. The low-tax rate to the corporate world saw more foreign companies set operating base in Ireland. The government would offer more enticing opportunities with free higher education accessible to European Union (EU) citizens. The increased number of graduates formed a pipeline of the ready labor market (Conefrey, et al., 2014, p. 18; Ruane, et al., 2010, p. 80). It coincided with expanding the trading market in the international platform, itself attracting more people to work in Ireland. Within fifteen years from 1990, the labor market grew from slightly more than a million workers to nearly two million.
Ireland aligned itself with pillars that ensured sustained economic growth, making it the Celtic Tiger. Increased job creation blend with economic growth motivated more Irish to embrace development. Developers started mass construction of houses banking on the projected wave of emigration. They anticipated that the rapid economic growth would support a second immigrants’ wave who could eventually purchase the houses (Norris & Coates, 2014, p. 299). Real estate developers sought lending from the Irish banks. Increased lending allowed the banks to grant record loans. The high demand for construction funds necessitated mass borrowing by the Irish banks themselves to sustain the domestic borrowing (Norris & Coates, 2014, p. 306). Such manifests in the foreign borrowings by Irish lenders from €15 billion in 2004 to €110 billion by 2008 responsible for €148 billion in EU residential mortgage debt (Duffy & O’Hanlon, 2014, p. 329). The Irish banks adopted a three-month rollover approach to obtain foreign funds. Unknowingly, the properties sector boom led to oversupply leaving most banks strangled with the classic asset-liability mismatch (Hall, 2009, p. 430). The Irish government would embrace the forecast by banks and developers that such lending presented opportunities to expand the ‘Celtic Tiger.’ Neither party would worry of the accumulating debt in 2006, with then Prime Minister Bertie Ahern declaring, “The boom is getting boomier.”
Before the financial crisis, Ireland experienced fifteen years of sustained economic growth and faster development trend. It would transform the country to one of the region’s fastest-growing and strongly placed among the wealthiest countries measured in GNP per capita. The occurrence of Ireland financial crisis was beyond its horizon as it realized two decades of economic alignment and political efforts to catch up with other EU member countries (Boullet, 2015, p. 18). Ireland would embark on initiatives to steer growth for its GNP per capita. The consistent adoption of growth-oriented policies enabled it to realize the desired growth at constant prices. By 2001, its growth rate would average 5.6%, reflected in the reduction of its public debt from 110% in 1987 to 25% of its output in 2007 (Gärtner, et al., 2013, p. 360). The transformation would become the Celtic Tiger period that allowed to government to realize marginal positive balance.
Poor positioning for its macroeconomic policy would lead Ireland to a hard landing. Ireland housing bubble would burst with the collapse of US financial firm, Lehman Brothers. The situation would trigger a chain of events that endangered the banking system by plunging it into endless crisis. It forced the government to initiate unconditional guarantee amounting to €440 billion to cover liabilities for the primary Ireland banks (Yurtsever, 2011, p. 690). At this time, the national unemployment tripled to 14.4% by 2011 while the GNP per capita declined by 10% and 12% in 2008 and 2009 respectively (Duffy & O’Hanlon, 2014, p. 330). Its outcome left everyone affected by the crisis with households dealing with budgetary cuts, decline welfare rates and declining disposable income by ten percent. Furthermore, it would rekindle the net emigration that stopped during the Celtic Tiger period. Poor macroeconomic management cost Ireland achievements realized within its twenty-years of economic reforms and adoption of budgetary discipline.
We provide you with original essay samples, perfect formatting and styling
To export a reference to this article please select a referencing style below:
Sorry, copying is not allowed on our website. If you’d like this or any other sample, we’ll happily email it to you.
Attention! This essay is not unique. You can get a 100% Plagiarism-FREE one in 30 sec
Sorry, we could not paraphrase this essay. Our professional writers can rewrite it and get you a unique paper.
Your essay sample has been sent.
Want us to write one just for you? We can custom edit this essay into an original, 100% plagiarism free essay.Order now
Are you interested in getting a customized paper?Check it out!