The Party is Over, The Hangover Almost

If Ireland were a young adult, and you left a young adult in a bar full of free booze, the consequences would be that the individual would drink and party until the drink ran out or the individual passed out. Given this opportunity, they might not engage in excess consumption the first time or even a few times but over time, carnage would almost definitely occur.

This is exactly how I consider the economic phase from 2000 to 2008, essentially the later debt-fueled part of the Celtic Tiger. As a nation, we didn’t think about the consequences and instead kept going as if it would never end.  This is exactly the sort of mindset Irish people get into when they are given something for free. I believe this mindset is a legacy of the oppression by various groups where the common thread amongst them was deprivation.

The “free booze” was the cheap money provided by Europe and allowed Irish banks to lend in volumes and new ways that previously wasn’t possible. This caused the property bubble as well as many individuals taking on excess personal debt. Of course, just because something is available, does not mean it should be consumed, however the large majority of people will suffer from confirmation bias particularly when all available reference points agree it’s a good idea. For example, in the case of young first time buyers, many believed that they had to buy as this was their only opportunity to buy due to escalating prices,  a fear of missing out on the chance of owning a home drove many to buy unsuitable houses at prices which were overvalued.

We are now emerging from the hangover stage where the drunkards are sobering up and the neighbours are complaining about the disturbances from last night. Everyone has a fair picture of what went on. There is a lot of damage done but nothing that cannot be repaired with time. The decisions taken at this point in our history are vital as a crisis is too good an opportunity to waste to make step-change improvements in our public sector, our economy, our finances and how we want our country to look and operate.

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