Whatever the explanation, the Irish property bubble was aggravated by the apparent willingness of foreign financial institutions to fund reckless lending in Ireland. Housing prices peaked already in 2007, but any hope of a soft landing vanished the following year.
Yet, within the last two years, we also have observed on how financial market malfunction has severely impacted the real economy, a very hard lesson to learn. Many aspects of this phenomenon have been written and discussed, both from policy makers’ perspective as well as analysts’.