Irish Financial Crisis
Name: Zhang Le “Irish Financial Crisis was both predictable and preventable.” To what extent do you agree with this statement? Use some financial indicators where appropriate to support your answer.
Irish Financial Crisis has drawn much attention recently. Driven by booms in property and lending, it left the society with massive issues such as high unemployment and large government deficit (Kelly, 2010, p.1). There is some debate on whether the crisis could be predicted and prevented. This essay will attempt to demonstrate that Irish Financial Crisis was both predictable and preventable. It will first state that Irish Financial Crisis was predictable through the observation of its abnormal economic growth mode and the soared property prices. Then it will turn to argue that the crisis was preventable. Firstly the primary leading factor was under control and secondly both theoretical and practical facts were provided as experience.
It has been argued that Irish Financial Crisis was unlikely to be predicted as the economy of Ireland had been in a rapid-growth tendency for over 15 years. According to Kelly (2010), the GNP of Ireland grew by 5 to 15 percent every year from 1991. Thus it seems impossible for the government, banks and borrowers to smell the danger of the financial crisis as they were accustomed to the economic condition (Kelly, 2010, p.23).
However, it is important to note that the way of economic growth after 2000 was completely different from what it used to be. During the 1990s, the Irish government adopted positive policies which enhanced the country’s competitiveness, followed by the rising employment. Compared with this, though competitiveness fell from 2000, employment still grew speedily driven by the construction boom (Kelly, 2010, p.7). It indicates that the development of Irish economy was in an abnormal way. To be specific, more and more people got involved in the construction boom either by building houses, selling houses or buying
Irish Financial Crisis has drawn much attention recently. Driven by booms in property and lending, it left the society with massive issues such as high unemployment and large government deficit (Kelly, 2010, p.1). There is some debate on whether the crisis could be predicted and prevented. This essay will attempt to demonstrate that Irish Financial Crisis was both predictable and preventable. It will first state that Irish Financial Crisis was predictable through the observation of its abnormal economic growth mode and the soared property prices. Then it will turn to argue that the crisis was preventable. Firstly the primary leading factor was under control and secondly both theoretical and practical facts were provided as experience.
It has been argued that Irish Financial Crisis was unlikely to be predicted as the economy of Ireland had been in a rapid-growth tendency for over 15 years. According to Kelly (2010), the GNP of Ireland grew by 5 to 15 percent every year from 1991. Thus it seems impossible for the government, banks and borrowers to smell the danger of the financial crisis as they were accustomed to the economic condition (Kelly, 2010, p.23).
However, it is important to note that the way of economic growth after 2000 was completely different from what it used to be. During the 1990s, the Irish government adopted positive policies which enhanced the country’s competitiveness, followed by the rising employment. Compared with this, though competitiveness fell from 2000, employment still grew speedily driven by the construction boom (Kelly, 2010, p.7). It indicates that the development of Irish economy was in an abnormal way. To be specific, more and more people got involved in the construction boom either by building houses, selling houses or buying
Bibliography: Morgan, Kelly (2010), whatever happened to Ireland? International Macroeconomics. Morgan, Kelly (2006), how the housing corner stones of our economy could go into a rapid freefall, The Irish Times. Morgan, Kelly (2007), banking on very shaky foundations, The Irish Times. Allister Heath (2010), how the euro caused Ireland’s crisis, City AM Friday. David Blackburn (2010), Ireland’s crisis is the fault of Fianna Fail, not just the euro, The Spectator. Matthew Sinclair (2010), the British taxpayer should not be bailing out Ireland, The Spectator.