IRELAND ±´Celtic Tiger´

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Transmission from the United States Housing Price Bubble and Collapse Financial Market Freeze and Collapse Policy Response
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Support for Financial Sector Monetary Policy Fiscal Policy

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Effect of the Euro Currency Zone Greece¶s Problems

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Subprime Debt Obligations made in USA held around the world caused global financial shock. Housing bubbles burst in UK , Ireland, Spain as well as US. Failure of Lehman Bros in September 2007 caused massive panic over counterparty risk. AIG required $180 billion bailout to cover Credit Default Swaps, insurance against bond defaults underwritten without reserves. Stress on banks around the world led to shrinking credit availability. ³Shadow´ off-balance-sheet banking sector collapsed as short-term funding vanished. Falling demand spread from US to all countries; as US imports dropped, other countries¶ exports fell.

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BNP-Paribas forced to close funds in August 2007 UK bank Northern Rock taken over by government German state banks IKB, WestLB, BayernLB and Sachsen bailed out by government Irish banks given government deposit guarantees Switzerland injects funds into UBS Iceland¶s banks unable to roll over short term borrowing, default on deposits of foreigners

Previous economic crises in Europe have led to large devaluations of currencies. ” Within euro zone, single currency prevents devaluation , provides automatic financial support through capital markets. ” Non-euro currencies depreciated sharply in 2008, British pound sterling, Swedish kronor, Polish zloty, Hungarian forint.
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Major economic crisis in Ireland that is partly responsible for the country falling into recession for first time since 1980s. ” Left more than 326,000 people unemployment. ” According to Ireland¶s Central Statistics Office, the nation¶s GDP shrank by 7.5%
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Due to low corporate tax. Due to European central bank (ECB) interest rate . Banks were giving loan for refinancing at very low rate. The expansion of credit and included a property bubble which petered out in 2007. Irish banks, already over-exposed to the Irish property market, came under severe pressure in September 2008 due to the global financial crisis of 2008- 2010.

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Anglo Irish Bank
Bank was exposed to the Irish property bubble. The share price was dropped.

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Growth And Unemployment
It had severe recession in 2008.GDP was down by 7.5% and GNP was down by 12% in 2009.

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Property Market
Residential and commercial property was slumped badly.

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Immigration
More than 65,000 people left Ireland.

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Stock index crashed from 10,000 points to around 1,465 down ,14 years low .

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Anglo Irish bank was exposed to property bubble. A hidden loans controversy in December 2008 led to a further drop in its share price. The ISEQ dropped to a 14-year low on 24 September 2009, probably triggered by the unexpected resignation of former Anglo Irish Bank director, Anne Heraty from the board of the Irish Stock Exchange

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The Irish government sought a European Union-Global Monetary Fund bailout over the weekend, finally succumbing t pressure from t fellow Euro zone members n panicked fiscal markets. In 2008 Irish budget ,government increased the value added tax (VAT) by half percent to 21.5% The budget 2009 included a new income levy for imposed on all government workers. The govt . ordered ,the closure of military barracks near Northern Ireland.

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The 670 employees, 480 of them were laid off from their govt. jobs. The workers responded angrily to the unexpected decision and revolted against the decision. More than 12,000 people protested against the emergency budget 2008 on the streets of Dublin, Ireland. Due to the threatened return of university fees by government , teachers and students descended in solidarity on government buildings at Leinster House , Dublin

Irish Financial Crisis march in Dublin ,Ireland

Irish government shouldn¶t increase the taxes (VAT) on basics commodities as US government did . ” Government should keep a regular check on banks giving loans to whom.
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