The Profound Lessons of the Debt Crisis of Ireland

Ireland is highly concerned about the debt crisis. Because the real estate bubble burst triggered the current debt crisis of Ireland, in particular, rapid economic growth can not be over-reliance on real estate market, but not laissez-faire in order to sustain economic growth and the spread of the real estate bubble. China should learn from the Irish debt crisis and deepening the current real estate regulation.

Recently, the EU finance ministers agreed that the IMF and the EU to Ireland to provide 85 billion euros worth of rescue plan. Of which 35 billion euros to support the Irish banking system directly, the rest more than 500 billion euros of rescue loans to support the Irish government expenditure. At this point, was extremely worried about the market come to an end the debt crisis of Ireland, temporarily remove the market for a new round of European debt crisis may be an outbreak of pessimism. The debt crisis of Ireland, to give us many inspirations.

First, the real estate bubble burst is triggered by the debt crisis of the current Irish one of the important reasons. The lessons learned in particular deserve attention.

Data show that Irish house prices in the past ten years increased by an average 3 times to 4 times, the real estate bubble to promote economic growth in Ireland. However, with the raid and the international financial crisis, the arrival of the real estate market suddenly in a depression, the real estate bubble is bursting, resulting in the real estate market had been a large number of lending banks suffered huge losses. In order to help banks facing difficulties, the Irish government may have to spend huge amounts of money around 50 billion euros. It is reported that the Irish relief fund size of the banking system will share this year's budget deficit rose to 32% of GDP, all of a sudden, this is 10 times the upper limit of the euro area budget. Without external assistance, Ireland is difficult to rely on the success diligence policies or austerity measures to reduce fiscal deficit. As a result, investors in the Irish market triggered the debt crisis worsening anxiety and panic.

Visible, real estate kidnapped the bank, the bank has kidnapped the Irish government, which is caused by an outbreak of Ireland, the main reason for the debt crisis. From this perspective, the Irish debt crisis, debt crisis and the Greek outbreak is very different reasons, mainly due to debt crisis of any previous laissez-faire government spending led to debt, the debt crisis originates from the Irish relief for real estate difficulties facing bust banking system.

Second, the Irish debt crisis shows once again that the rapid economic growth can not be over-reliance on real estate market, not to laissez-faire economic growth in order to maintain the spread of the real estate bubble.

In fact, the Irish middle-aged in the past 10 years, average economic growth rate of 7.2%, per capita GDP ranked second in the European Union, but also because of its rapid economic growth in Ireland is called "Celtic Tiger." But in the past 10 years, behind Ireland's rapid economic growth, but you can see the real estate development on a decisive impact on economic growth in Ireland. Although 90 of the last century because of Ireland's low corporate tax rate of 12.5% to attract foreign investment and promote economic growth in Ireland. However, with foreign-funded enterprises continue to enter, and the influx of investors and to meet the housing needs of immigrants, these factors stimulate the real estate market in the country unprecedented prosperity. This makes a lot of bank loans to developers, provide an extremely favorable to the individual mortgage policies. Ireland real estate industry in the past ten years has been the rapid development of real estate share of GDP rose from 5% to 10%, becoming one of the pillar industries of Ireland. As a result, real estate become the promotion of foreign direct investment after the main driver of economic growth in Ireland. In order to maintain economic prosperity in Ireland in the past ten years, the spread of laissez-faire real estate bubble and proliferation, which in its soaring housing prices is evident. When the 2008 after the outbreak of the international financial crisis, Ireland's real estate bubble was shattered, resulting in pulling one of the main engine of economic growth stalled, which derived from a range of economic issues will eventually tear down the Irish.

Third, the real estate bubble burst as the debt crisis led to the outbreak of the fuse of Ireland, particularly over economic growth depends on real estate development, economic growth and laissez-faire in order to maintain the breeding and spread of the real estate bubble, the situation in China "deja vu", of particular concern, such as China's domestic prices since 1998 has increased by an average of 4 times to 5 times.

Since the 2008 outbreak of the international financial crisis since the investment, particularly real estate investment to promote China's economy has become the main engines. With real estate investment in China to stimulate economic growth, by increasing the scale of real estate investment and relaxation of the credit threshold for individual mortgage loans and other measures, but also letting the breeding and spread of the real estate bubble led to housing prices since 2009 has been the rapid rise in .

Given the current real estate bubble burst is the potential risk, China has adopted a stringent regulation of real estate, trying to avoid the rupture of the housing bubble credit crisis banks, jeopardizing the country's financial and economic security. Fortunately, so far seems to have never worried about China's real estate bubble will burst this problem. However, China really be able to completely avoid the real estate bubble burst and caused the potential economic and financial crisis? Consideration of this issue deserves. In any case, the debt crisis of Ireland tells us that China must adhere to deepen the current real estate regulation.

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