Real estate loans spur Irish recession

Oct. 6, 2008 at 9:10 AM

DUBLIN, Ireland, Oct. 6 (UPI) -- A move by the Irish government to guarantee all $550 billion of the country's bank deposits is a consequence of reckless real estate lending, analysts say.

When Ireland made the unilateral move last week, it surprised EU partners. But Sunday Germany announced that its government would guarantee private bank accounts as EU nations are being forced to confront the fact that their own lenders, as well as U.S. banks, made poor real estate bets, The Washington Post reported.

The newspaper said Irish economists and political leaders are facing a severe recession and have come to realize their problems stem not just from spillover from Wall Street's woes, but from massive, reckless domestic real estate lending as well.

"This didn't fall from the sky. There are people who are up to their necks in profligate and greedy lending," Ruairi Quinn, a senior Irish Labor Party official, told the Post.

"People now look back on the 10 to 15 years leading up to 2006 as the Golden Age," added Geoff Tucker, an economist at the Hooke and MacDonald real estate firm. "Things are different now. There is a huge amount of uncertainty."

Like Us on Facebook for more stories from UPI.com  
Latest Headlines
Top Stories
Texas man killed in apparent alligator attack
Kentucky clerk sued for refusing to issue same-sex marriage licenses
Police arrest N.C. soldier with assault rifle headed to mall photo shoot
North Korean biochemical weapons researcher defects to Europe
Four accused in slave-labor trafficking ring on Ohio egg farm