The Irish Financial Crisis Was Both Predictable and Preventable. to What Extent Do You Agree with This Statement?

This fills a gap in introducing the reader to economical problems that were triggered due to this banking collapse such as macroeconomic problems. Which I will include in to paper to furthermore give the reader a more global approach in how the economy plays a significant role in our day to days lives.

The housing crisis of 2008 can trace its origins back to the stock market trends of the mid- to late 90 's. During a period of extended growth in the stock market, increased individual wealth among investors led to generalized increases in spending, including in the housing market. With more disposable income in the pockets of consumers, the demand for housing increased in the late 90 's. Due to the fact that homes are large projects and their construction takes a large amount of time, the supply of homes in the market is inelastic on the short term. Because of the fixed supply of homes, as per the law of supply, which

With the consistent increase of property prices and more personal debt than ever before, we assume that there’s a housing bubble in Australia. The statistics show that from 2008 till now, property prices have been going up as a result of increased mortgage debt. When it slows down, that could cause a property crash. We are sure that there’s a housing bubble, but we cannot confirm when it will finally burst although a few area in Australia has already met a decrease of house prices. There are 3 indicators of the housing bubble in Australia.

When the housing bubble came tumbling down, there were high defaults rates on the electorate and this led to the emergence of high risk borrowers (Bianco, 2008). These were people with a questionable financial history and may have lacked the sufficient means to sustain their mortgage payments and hence, went under. This occasioned massive loses to all the players in the housing sector. The worst hit was the lenders and the various investors.

During this essay I will compare the difference of economic and policy development of Ireland, north or south in relation to the United Kingdom. As of today Ireland themselves are bit more advanced, exchange secondary economy. Ireland was among the starting gathering of 12 EU countries that started streaming the euro on 1 January 2002 “Although Ireland had aspirations to become a member of the Community as far back as 1961 it was not until 1972 when a referendum confirmed Ireland’s entry into the European Community with 83 per cent of voters supporting membership. Ireland formally acceded to the then EEC in 1973”. (Loughran, 2015).

In this essay, I will briefly explain what happened during the financial crisis of 2007-09, and also discuss the contribution of the government to the financial crisis.

The banking crisis of the late 2000s, often called the Great Recession, is labelled by many economists as the worst financial crisis since the Great Depression. Its effect on the markets around the world can still be felt. Many countries suffered a drop in GDP, small or even negative growth, bankrupting businesses and rise in unemployment. The welfare cost that society had to paid lead to an obvious question: ‘Who’s to blame?’ The fingers are pointed to the United States of America, as it is obvious that this is where the crisis began, but who exactly is responsible? Many people believe that the banks are the only ones that are guilty, but this is just not true. The crisis was really a systematic failure, in which many problems in the

Throughout history there has always been some sort of a class struggle. The rich always seemed to get richer while the poor barely managed to get by. One of the main things that contributed to the ever-expanding gap between the rich and the poor was greed. Whether it was the greed for money or for power, greed was certainly a driving force. More recently, the greed of several, rich and powerful individuals helped to cause one of the largest financial collapses of modern times. The purpose of this paper is to establish some of the key players in the economic crash of 2008, and to show some common

“Since 2007 to mid 2009, global financial markets and systems have been in the grip of the worst financial crisis since the depression era of the late 1920s. Major Banks in the U.S., the U.K. and Europe have collapsed and been bailed out by state aid”. (Valdez and Molyneux, 2010) Identify the main macroeconomic and microeconomic causes that resulted in the above-mentioned crisis and make an assessment of the success or otherwise of the actions taken by the U.K government to resolve the problem.

During the housing boom, the insecurity of consumer’s financial situations was used by those in finance to make a profit. Many entities were enticed by their greed to take risks and cut corners that ultimately affected the consumer, not themselves. The consumer’s own search for profit and their trust in the housing market made it easy for them to be lured into the gambling game being played by banks and investors.

The result of the Irish economy is quite impressive. From 1991 to 2000 annual real growth averaged 8%, compared with the EU average of 2%, by 1996, Inflation had declined from 11.3% to under 2%. By the end of the decade, the government ran such large budget surpluses, that by 2000 the national debt had fallen to 40% of the GDP.

Housing prices in the United States rose steadily after the World War II. Although some research indicated that the financial crisis started in the US housing market, the main cause of the financial crisis between 2007 and 2009 was actually the combination of housing bubble and credit boom. The banks created so much loan that pushed the housing price to the peak. As the bank lend out a huge amount of money, the level of individual debt also rose along with the housing price. Since the debt rose faster than people’s income, people were unable to repay their loan and bank found themselves were in danger. As this showed a signal for people, people withdrew money from the banks they considered as “safe” before, and increased the “haircuts” on repos and difficulties experienced by commercial paper issuers. This caused the short term funding market in the shadow banking system appeared a

Besides, low interest rates and large inflows of foreign funds created easy credit conditions for years before the crisis and that simulated the boom in housing construction (Steverman and Bogoslaw, 2008). Moreover, easy credit and money inflow greatly contributed to U.S housing bubble and the rise of house’s price.

In the period of 2000-2007, it is estimated that banks created over £1 trillion through their issuance of loans to borrowers prior to the crisis (Positive Money, 2014). Consequently, the impact of such a credit expansion caused real assets, such as house prices, to increase as a result of the increased demand. Similarly, through the same mechanism, an expansion of credit also caused increases in the values of securities tied to U.S real estate (i.e. mortgage-backed securities), as investors believed that house prices would continue to rise. Furthermore, one might postulate that changes in economic variables, such as the money supply or rate of inflation,

Ireland’s modern and highly industrialized economy strived well throughout the 1990s and into the 2000s due to free-market policies that attracted investment capital. It joined the euro as a founder member and ceded control over its own monetary policy. Interest rates were too low for a fast-growing economy, resulting in a colossal construction and housing boom, funded by absurdly lax lending by the banks. The housing bubble burst in 2008 generated a financial crisis, house process collapsed, the economy went into a downward spiral, the budget deficit soared, and a nation recovery plan was imminent. Once the 2010 national recovery plan was implemented after the government nationalized several banks, Ireland accepted a $90 billion European-Union International Monetary Fund rescue package. This policy agenda had aimed to get the economy back on solid ground by 2015. In February 2013, Ireland reached an agreement with the European Central Bank to restructure loans and ease the debt burden incurred when the Anglo Irish Bank was nationalized in 2009. Ireland’s economy was expected to grow in 2014, but the ratio of public debt to GDP still remains very high.