Although the 2008 financial crisis that provides the background to Donal Ryan's The Spinning Heart had worldwide repercussions, the effects were felt particularly heavily in Ireland. The crash was preceded by a time of great prosperity in the country, such that the booming economy was given the nickname of the "Celtic Tiger," comparing it to some of the East Asian economies that took off in the late 1980s.
Foreign investment, increased partnership between employers and unions, industrial subsidies, more women joining the workforce, a low corporate tax rate, and membership in the European Union were all factors that led to an average 9.4% annual expansion in the economy between 1995 and 2000. Over the decade between the mid-nineties and 2006, Ireland transformed itself from one of western Europe's poorest countries to one of its most successful. The nation began to attract entrepreneurs and high-profile companies such as Dell, and also drew many immigrants from eastern Europe, contributing to a total population growth of 20%.
A minor downturn in 2001-2003 resulted from reduced investment in the information technology industry, decreased tourism after 9/11 and an outbreak of foot and mouth disease. This was followed by a few more years of modest growth, before the global recession hit in 2008 and the country joined the rest of the world in suffering major blows to GDP and employment.
All along, the property market was especially sensitive to economic shifts. In the years when the Celtic Tiger was at its strongest, developers built new properties at a frantic pace and land and house prices rose by an extreme rate, sometimes by 17% within a single year. The total amount lent to developers approached 110 billion euros. Nearly 750,000 new homes were constructed between 1995 and 2007 – 93,000 of them in 2006 alone. As early as 2004, there were warnings (in The Economist, for instance) that the trend could not continue for much longer.
The resulting "property bubble" reached its peak in 2006 (when construction accounted for 20% of the GNP), stabilized in 2007, and then, in 2008, burst. Skyrocketing interest rates and mortgage fraud meant that many borrowers who had overestimated or deliberately falsified their income in order to secure a mortgage were forced into foreclosure. This situation coincided with the subprime mortgage crisis in the United States. House prices plummeted by about a third, and more than 28% of Irish mortgages were in arrears as of December 2012.
Ireland's is considered one of the worst property crashes in the history of modern, developed economies. Although the Irish economy has been gradually recovering, with house prices starting to creep back up last year (particularly in Dublin), the country is still full of incomplete or abandoned "ghost estates" like the one where Réaltín and her son live in The Spinning Heart. In the 2011 census, the country reported nearly 230,000 empty residences. These remain as a reminder and a warning, even as Ireland begins to rebuild its economy and dream of boom years again.
An impressive photo essay in The Daily Mail showcases Ireland's "ghost estates."
Picture of abandoned housing estate from Wikipedia.org. Author, Terence wiki
This article is from the March 5, 2014 issue of BookBrowse Recommends.
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