By Ronan McMahon

Ireland is in deep trouble. The banking system has failed and is in a limbo of government guarantees while politicians argue about where to put 100 billion euro or so in real estate loans. Borrowings increase every day just to pay teachers, police and nurses. Unemployment in absolute terms is higher than at any point in history while the unemployment rate is fast approaching the 17% and 18% last seen in the late ‘80s.

One of the biggest property booms every seen has spectacularly unraveled with disastrous consequences for the country. Since 2002 Ireland had become an economy that depended on the Irish selling houses to each other. Then, just as the domestic bubble was popping, global credit and financial crises came along. This is a perfect storm of domestic and international problems.

It’s pretty much impossible to value real estate right now in Ireland as there is no market. There have been very few fire sales. Developers and banks are waiting for the “bad bank” to be established so it can deal with the problems. A fire sale by any bank or developer would reveal the horrific state of developers’ and banks’ balance sheets. The government, banks and developers want the taxpayers to overpay (through the bad bank) for these bad loans. They want to kick the problem another decade down the line.

Against this backdrop it would take one hell of a deal to get me interested. I recently found one in an Irish newspaper.

Read the full article here.