The Irish economy and exchange traded fund (ETF) was hit hard and swiftly as a robust housing-bubble burst.

Back in the good ol’ days, low interest rates, inward immigration and bank lending sprees helped drive housing’s share of the economy from 5% to 14%, the highest percentage in Europe, reports Landon Thomas Jr. for The New York Times.

Policy makers in Ireland where delightfully distracted by record tax inflows and a full-employment economy which helped overshadow the warnings of a imminent crash. The result are housing prices that have diminished by 50%, bank shares plummeting 90%, unemployment approaching 10%.

The sings of a housing bubble manifested itself with family homes in Dublin costing as much as similar housing in Beverly Hills with house prices more than doubled over a 10-year period. Housing debt jumped from 60% to 160% during the same period as a percentage of GDP.

The Irish government has announced a $7.5 billion bank bailout and have taken majority stakes in large banks in a move to quell doubt in the reliability of bank deposits. It is still uncertain whether or not the government will continue to allow banks to support high-risk, high-reward loans recklessly directed to developers.

  • NETS ISEQ 20 Index (IQE): down 47.7% since Aug. 22 inception

ETF IQE performance

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