What happened to the Irish economy?

The economy of Ireland has transformed in recent years from an agricultural focus to a modern knowledge economy, focusing on services and high-tech industries and dependent on trade, industry and investment. In terms of GDP per capita, Ireland is ranked as one of the wealthiest countries in the OECD and the EU-27 at 5th in the OECD-28 rankings as of 2008. The Financial Crisis of 2008 is still affecting the Irish economy severely, compounding domestic economic problems related the collapse of the Irish property bubble. Ireland was the first country in the EU to officially enter a recession as declared by the Central Statistics Office.

Ireland assumed that in a free market its banks did not need regulation.  This assumption turned out to be very wrong, and at least a generation of Irishmen will now pay for that mistake.  Much of the progress Ireland made in jobs and prosperity is now in question, and ambitious Irishmen are having to go back to emigrating again.  

Regulation and government can throttle the spirit of enterprise, but the spirit of enterprise sometimes needs to be throttled.  The trick, as always, is to strike the right balance. 

"I don't make jokes...I just watch the government and report the facts". Will Rogers.

Both Ireland and Denmark were outliers in Europe by guaranteeing existing unsecured bank bond debt.

Ireland extended coverage to interbank deposits and existing and new senior unsecured debt. It also guaranteed covered bonds and even subordinated debt.

The ECB explicitly recommended on October 20, 2008 that government guarantees on interbank deposits should not be provided.

Wouldn’t the unlimited deposit guarantee have sufficed in the short-term at least rather than surrendering every chip on a night of panic?

Now the media these days is dominated with documentaries chronicling why the crash happened. People phone into radio talk shows relating stories of woe – some people have no food to feed their families. One ordinary law abiding man who was formerly self employed candidly admitted that he had to rob a carton of milk from a shop to feed himself. Another, a recovering cancer patient had only two tea bags in her cupboard and no transport to get to hospital. In households all over Ireland there is despair and anger. Unemployment in nearing 14% though many commentators claim this figure is much higher as once formerly self employed people have no welfare entitlements. Young people with no prospect of employment are once again starting to emigrate to Australia and Canada.

Ireland went from getting about 5% of its national income from house building in the 1990s – the usual level for a developed economy – to 15% at the peak of the boom in 2006–2007, with another 6% coming from other construction. In effect, the Irish decided that competitiveness no longer mattered, and that the road to riches lay in selling houses to each other.

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