While the global economy is enduring some of the greatest uncertainty in almost a century, the economy of the Republic of Ireland has been among the worst affected. The Irish Government today announced that the economy contracted by 5% up to the end of September….and that was BEFORE any of the banking fallout such as the collapse of Lehman brothers.
The Irish economy experienced a property bubble from 2002 to 2006 which was fueled by pro-developer economic policies from the incompetent government. This bubble has completely imploded with property values down in excess of 30% in some parts of the country…and falling.
Over the same period the government of Ireland shifted the tax base toward property taxes and reduced individual income taxes in what some opposition spokepersons claim was in an effort to gain voter support for the 2007 gebearal governmental election.
Observers are extremely concerned that the economy was in such decline before the impact of the global banking crisis and predict a decline of up to 12% in Q4. Institutional investors have already dumped Irish bank shares, consigning 2 of them, Bank of Ireland and Anglo Irish Bank to sub-€1 junk stock status.
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Davy Stockbrokers (owned by Bank of Ireland at the time) indicated that house prices were significantly overvalued almost 3 years ago. Yet Bank of Ireland continued to GAMBLE shareholders money on speculative lending to property developers