The Irish Banking Crisis

Introduction In the late 1990s, the Irish economy thrived, the unemployment rate fell to about 4%, productivity continued to grow. However since 2002 the essence of prosperity has changed. Labor production is no longer increasing, inflation is excessive, and growth in Gross Domestic Product (GDP) is increasingly related to the housing market. By 2006, the finances will remain solid, but the Irish economy is highly dependent on the real estate boom.

The 2008 banking crisis in Ireland is similar to other banking crises but it is unique in that it was the first banking crisis in euro area countries. This gave the Irish government and the central banks their own constraints during the crisis. Ireland's recession since 2008 is also very rapid. The influence on the creditworthiness of the Irish government was so serious that it was forced to seek assistance from the European Union and the International Monetary Fund. In 2008 and 2009, the US Treasury Department and the Federal Reserve saved many major banks and insurance companies as well as General Motors and Chrysler. Under the urgent request of US President George W. Bush, Congress passed a problematic asset relief program (TARP) with a mission of $ 700 billion. The banking department repaid the money, and the net cost of TARP actually brought a slight profit to the taxpayer over time.

The newly discovered boom in Ireland suddenly ended in 2008 as a result of the collapse of the Irish real estate bubble and the collapse of the banking system. Approximately 25-26% of GDP is required to relieve failed Irish banks and integrate the banking industry. In contrast, in the banking crisis of the 1990s, only 7 to 8% of GDP could bail out failing Finnish banks. When Ireland fell into recession, it led to a serious financial crisis and a political crisis. The unemployment rate rose from 2% in 2007 to 14.6% in February 2012, so the entry rate rose to the level of 1989.