Opinion

Sunday 19 August 2018

Politicians show little sign of lessons learned after the crash

Ten years on from the bursting of the property bubble and the start of the crisis of western finance, Dan O'Brien assesses what has really changed

One of the great imponderables will always be how Ireland would have fared had Lehmans been saved and an international recession avoided. Stock photo
One of the great imponderables will always be how Ireland would have fared had Lehmans been saved and an international recession avoided. Stock photo
Dan O'Brien

Dan O'Brien

By the summer of 2007 it was increasingly clear that the Irish property frenzy was not going to end with a soft landing. The big question was how hard the landing would be. Then, exactly a decade ago, came the first rumblings of the international financial crisis, which was to erupt explosively 13 months later with the collapse of Lehman Brothers. By the time that happened, the Irish economy was already deep in recession.

One of the great imponderables will always be how Ireland would have fared had Lehmans been saved and an international recession avoided. Had the world remained 'normal', the Irish crash might have been shallower, thanks to stronger exports and less financial panic. On the other hand, more normal interest rates over the past decade would have made servicing debts - private and public - a lot more costly. Frankfurt's unprecedentedly low interest rates came at just the right time for an Irish economy which was, and remains, highly leveraged.

Putting aside the imponderables, consider what we know. Let's start with the positives. However deep and painful the crash was, most of the gains in incomes and wealth achieved over the previous decade were retained. Ireland is no longer a laggard in material terms compared with its peers in north-western Europe. The dozen or so years of Celtic Tiger catch-up growth, after decades of underperformance, have transformed the country permanently, and for the better.

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