1. Ireland’s Financial Crisis The Celtic Tiger Boom & Bust 2008 - 2011 By: Griselda Hernandez, Jennie Duong, Driss Elouartallani

2.  Low Corporate Tax Rate  Low Interest Rates  Liberalized Banking Regulation

7.  Asset Price Crisis When asset prices are driven well above their fundamental economic values.  Debt Crisis After government intervention it turned into Ireland’s debt crisis which had to be bailed out by the EU and IMF.

8.  In 2007 the housing market started to correct itself.  Interest rates began to increase  The Economy Became Affected by the shock of the sub-prime financial crisis and the recession in Ireland’s main trading partners, Britain and the USA.

10.  2008 The economy contracted by 1-2.5%  Domestic Demand Fell Sharply  Low Consumer Confidence

11.  The term to describe Ireland’s rapid economic growth in 1995 to 2003.  It evolved from one of the poorest Western Europe countries to one of the most successful.  Had the second highest GDP within the EU.

12. Current Price level of GDP in Euros

13. Level of Unemployment (in thousands)

15.  Its government took on the liabilities of its oversized banks who also had lent indiscriminately throughout the Eurozone.  Resulted in a loss of liquidity and market funding, and have made Irish banks overly dependent on capital from the European Central Bank.  The government had to bailout the largest financial institutions in Ireland.

16.  Sept 30, 2008 – guarantees all the debt and liabilities of the six institutions for €440bn. “The cheapest bail-out in the world”.  Jan 2009 – Anglo Irish becomes nationalized, fearing it could collapse.  Feb 2009 – Government gets a 25% stake in Bank of Ireland and Allied Irish.  March 2009 - Standard and Poor's downgrades Ireland's credit rating from AAA to AA+ and says it may fall further.

17.  Oct 2009 – The “bad bank” known as National Asset Management Agency is created to deal with the risky property loans.  Dec 2010 - Nationalizes AIB.  March 2011 - Ireland's central bank publishes the results of "stress tests" on its four remaining banks, estimating an additional €24bn injection of capital will be needed.  Throughout 2008 – 2011: the government bails out the banks for a total of €70bn.

18.  Ireland is part of the European Union and is using the Euro.  The EU implemented a pro-cyclical fiscal policy.  All of the banks debt was guaranteed by Ireland’s government.  The IMF and EU approved a three year bailout package for 85 billion.

19. Key Objectives: Identify banks that are in trouble and return them to health through downsizing and reorganization. Recapitalize banks and encourage them to rely on deposit inflows and market-based funding. Increase bank supervision and regulation while introducing a comprehensive bank resolution framework.

20.  Reducing public expenditure : The size of the public sector will be reduced, and universal social welfare benefits will also be cut.  Tax rates will increase. 45% of Irish households have not paid income taxes until now.  Public debt will remain high for the next few years.

21.  Purchasing power and incomes have been reduced drastically for consumers.  Jobs have been lost (especially construction) unemployment is high.  Because of government budget cuts, subsidies, and government aid are drastically reduced, which greatly affects lower income families.  People are leaving the country for better opportunities, 140,000 by 2012.

22. QUESTIONS ?