Ireland, the "Celtic tiger" of a few yearsback, has been brought down to its knees now. It will get a hugeloan, put at some 120 billion euros, that is 75% of its GDP fromthe EU and the IMF. The crisis was caused by the state's attempt tostop the bleeding of tens of billions of euros of the Irishbanks.
The Irish finance minister announced yesterday evening he wouldsuggest the Government to turn to the EU and IMF for financialsupport, ending a week of resistance. The Sunday Times said thepackage might amount to 120 billion euros, but the Irish ministersaid it would not be a three-digit amount, i.e., would not exceed100 billion euros.
Ireland, a country with a 160 billion-euro GDP, is seeing itselfforced to take out a loan that stands at 75% of its GDP and almostdouble its annual consolidated budget to be able to save itsbanks.
Irish banks have to cope with massive withdrawals and losses afterthe collapse of real estate prices by 50% from 2007 through 2009. Ahouse that cost 120,000 euros in 1994 would be put at 1 millioneuros in 2007, only to reach about 500,000 euros in 2010, accordingto Financial Times.
The bailout package might amount to 120 billion euros, that is alittle more than the 110 billion euros Greece borrowed this spring,yet Greece has a 235 billion-euro economy, British media saidyesterday.
"I get the feeling that we are a turning point in many respects.What is happening in Ireland is no surprise to financial markets,the situation had been known for a long time. The surprising thing,however, is that financial markets continue to be nervous, despitea number of encouraging signals. Ireland's situation impacts theeuro zone and comes after the problems in Greece. It seems to methat the survival of the euro zone will come into question next,"economic analyst Aurelian Dochia says.
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