Question: 1 Why was Ireland in trouble 2 What happened to

1. Why was Ireland in trouble?
2. What happened to Irish debt? To Irish bond ratings? Interest rates?
3. How did the Irish crisis highlight problems with the Eurozone?
4. What must Ireland do to solve its problem?

In November 2010, Ireland received a bailout equivalent to $27, 142 per capita. This bailout was all the more surprising because the rapid growth of the Irish economy since the mid-1980s had vaulted Ireland from the poorest Western European economy (save Portugal) to the richest (save Luxemburg), earning it the nickname the Celtic Tiger. Low corporate tax rates encouraged foreign direct investment, and a deregulated banking system rapidly expanded credit. The Celtic Tiger roared, and the housing market skyrocketed, fueling a property bubble. In the mid-2000s, the Irish built houses six times faster than the British or Germans (and three times faster than in the United States). The building was facilitated by Ireland's three largest banks, which extended credit by 2008 equal to more than three times the size of Ireland's GDP. The value of its housing stock quadrupled in the decade to 2006, with construction swelling to an eighth of the economy. The price of a typical Dublin house shot up more than fivefold.

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