Biggest bailout in history: 120 billion euros for Ireland

Ireland, the “Celtic tiger” of a few years back, has been brought down to its knees now. It will get a huge loan, put at some 120 billion euros, that is 75% of its GDP from the EU and the IMF. The crisis was caused by the state’s attempt to stop the bleeding of tens of billions of euros of the Irish banks.

The Irish finance minister announced yesterday evening he would suggest the Government to turn to the EU and IMF for financial support, ending a week of resistance. The Sunday Times said the package might amount to 120 billion euros, but the Irish minister said it would not be a three-digit amount, i.e., would not exceed 100 billion euros.
Ireland, a country with a 160 billion-euro GDP, is seeing itself forced to take out a loan that stands at 75% of its GDP and almost double its annual consolidated budget to be able to save its banks.
Irish banks have to cope with massive withdrawals and losses after the collapse of real estate prices by 50% from 2007 through 2009. A house that cost 120,000 euros in 1994 would be put at 1 million euros in 2007, only to reach about 500,000 euros in 2010, according to Financial Times.
The bailout package might amount to 120 billion euros, that is a little more than the 110 billion euros Greece borrowed this spring, yet Greece has a 235 billion-euro economy, British media said yesterday.
“I get the feeling that we are a turning point in many respects. What is happening in Ireland is no surprise to financial markets, the situation had been known for a long time. The surprising thing, however, is that financial markets continue to be nervous, despite a number of encouraging signals. Ireland’s situation impacts the euro zone and comes after the problems in Greece. It seems to me that the survival of the euro zone will come into question next,” economic analyst Aurelian Dochia says.