Effects of financial crisis

Question 1

Public Purse

Answer 1

• Value of mortgage debt skyrocketed from 47.2Bn to 139.8bn (Kitchin,R.2011)
• 110Bn euros let to builders and developers. However deep recession meant people could no longer pay their debts back (Kelly,M.2009)
• The bailout of the banks by the Irish state cost approximately 400BN (Connor,G.2011)
• Construction and lending contributed to 28% of lending (Riain,S.2012)
• ‘Moral Hazard’ bankers took high risks on who they gave mortgages to (Riain,S.2012) 100% mortgages
  Leading to large public debt
• Loss of faith in the banking system
  -With the state awash with large amounts of revenue from taxes of buying propert so the state reduced its taxes to therefore eroding its tax base (Kirby,P.2010)

Question 2

Economy so dependent on construction

Answer 2

• Due to the large amounts of money in property bubble
• Between 1991 and 2007 housing stock increased by 834,000 (Kinchin,R.2014)
• Construction accounted for 20% of GNP (Kelly,M.2009)
• Construction sector made up 7.3% of overall employment (Conefrey,T.2018)
• Heavily reliance on construction meant that when the recession hit and the bubble burst a large chunk of the population lost their jobs
• A further 69% drop in output from construction sector (Kithcin,R.2011)

Question 3

Intro

Answer 3

• ## As the country and the economy grew the country embarked on a frenzy of building private housing units, commercial property and public infrastructure (Kitchin,M.2014)