Ah now, that is somewhat true and also somewhat false.
I lived in Ireland for most of this period, and really what caused the problem was the blanket bank guarentee which was introduced against the advice of Goldman Sachs. More specifically, the attempt to save a bank known then as Anglo Irish Bank (http://en.wikipedia.org/wiki/Anglo_Irish_Bank).
Now, Anglo Irish really only lent for construction development, and were majorly tied up with the ruling political party of the time, Fianna Fail.
This bank was not systematically important, but they were politically important. The government put approx 30 bn into this bank, and tried to pass it off as a loan. Eurostat, quite rightly said no, you'll never get this money back, and ordered Ireland to count it as debt in 2010. This spiked the irish debt levels, spooked the markets and led to the bailout of Ireland by the IMF and EU.
The worst part is, even though the agreement with these external bodies was to cut costs everywhere (in profession such as law, accountancy and medicine) the brunt of the cuts have so far fallen on poor people.
If one could go back to September 2008, a blanket guarenetee had not been issued and Anglo had been allowed to go bust, then ireland would be in a very different position.
That being said, Irish people appear to be taking austerity quite well, and given the demographics, will probably recover over the next ten years. This all could have been avoided, and while the EU certainly didn't want banks to fail, the majority of the problems were caused by Irish political corruption.
The worst part is, the party responsible for this will be back in power within ten years, where they will have a fourth shot at bankrupting the country. Ireland, my country, has serious issues with stupid governance which is mostly disguised by the willingness of the people to work hard and ignore the stupidity.
It was Merrill Lynch, not Goldman Sachs. Goldman Sachs role in the guarantee is murky, several ex members of their staff have been associated with the events, e.g. Geithner, who it is claimed torpedoed efforts to default on bank debt.
Timothy Geithner really screwed Ireland. He was probably under a lot of pressure to maintain the illusion that banking debt was more secure than it actually was in that time period (along with his colleagues in the ECB), but it was still no excuse for the Irish Government to bow to the external pressure. My generation will be paying for this mistake for decades. The correct move was to "do an Iceland" and wipe out the unsustainable bank debt.
Here's one article (not the best source but there are others available):
And here's the story of how a dodgy deal lead to the former (now deceased) Irish Minister of Finance enacting the blanket bank guarantee (this single meeting is the reason the country is so screwed):
I lived in Ireland for most of this period, and really what caused the problem was the blanket bank guarentee which was introduced against the advice of Goldman Sachs. More specifically, the attempt to save a bank known then as Anglo Irish Bank (http://en.wikipedia.org/wiki/Anglo_Irish_Bank).
Now, Anglo Irish really only lent for construction development, and were majorly tied up with the ruling political party of the time, Fianna Fail.
This bank was not systematically important, but they were politically important. The government put approx 30 bn into this bank, and tried to pass it off as a loan. Eurostat, quite rightly said no, you'll never get this money back, and ordered Ireland to count it as debt in 2010. This spiked the irish debt levels, spooked the markets and led to the bailout of Ireland by the IMF and EU.
The worst part is, even though the agreement with these external bodies was to cut costs everywhere (in profession such as law, accountancy and medicine) the brunt of the cuts have so far fallen on poor people.
If one could go back to September 2008, a blanket guarenetee had not been issued and Anglo had been allowed to go bust, then ireland would be in a very different position.
That being said, Irish people appear to be taking austerity quite well, and given the demographics, will probably recover over the next ten years. This all could have been avoided, and while the EU certainly didn't want banks to fail, the majority of the problems were caused by Irish political corruption.
The worst part is, the party responsible for this will be back in power within ten years, where they will have a fourth shot at bankrupting the country. Ireland, my country, has serious issues with stupid governance which is mostly disguised by the willingness of the people to work hard and ignore the stupidity.