We often seem consumed in Southern Nevada by the badly depressed economy. First it was liar loans and mortgage fraud, then the foreclosure crisis and now record unemployment. The massive boom seems to have created an equally massive bust. But we're not the only place on the planet that has been broken by a massive real estate bubble. Ireland has seen many of the same problems - a real estate bubble that has turned the Celtic Tiger into a pale shadow of itself a few years ago. Foreclosures and plummeting real estate prices, failing banks and severe cuts to public budgets have roiled Ireland in the last two years. We take a look at the impact real estate bubbles have created in both places with a transatlantic hook-up.
At the core of this comparison is the unforgiving landscape where Ireland and Las Vegas are physically located. Las Vegas should be and is comparitively underpriced to other locations in the United States because it sits in the middle of the desert. When values were raised due to inflated overarching themes of "Manhattanization" Las Vegas fell victim and thus the current reduction in valuation. JT –Nov 29, 2010 09:51:54 AM
LOL at the Irish are well-educated and read but they still have no jobs and a crap economy. I wonder if this kicks off a new era of diaspora poetry & other literature there.
Vegas - it looks like we are stuffed!AuntyPalin –Nov 29, 2010 09:50:26 AM
Agreed, Ireland's corp tax rate is very attractive compared to the rest of the EU, but there are other reasons U.S. firms set up shop there.
Not only do the Irish speak the same language, but they have a very good educational system. At the end of the day, is that the Achilles heel of Nevada's economy?Scott Swank –Nov 29, 2010 09:31:36 AM
I'll crib from Brad DeLong. The U.S. has 5,000,000 houses with $100,000 of unsustainable mortgages -- or $500 billion in real estate losses. That's 10% of the dot-com recession, i.e. not a big deal in an $80 trillion economy. But there's 30-1 leveraged finance built atop it, which gets into real money.
How comparable is Ireland's situation? How much of Ireland's trouble goes back to guaranteeing bad bank loans? Would it have been better to just wipe out the banks' stock holders rather than put the public on the line for these bad debts?
And then how much of Ireland's trouble goes back to the EU? If Ireland had it's own currency, specifically one independent of stronger nations such as Germany, how much of its trouble could it avert with currency fluctuations?Scott Swank –Nov 29, 2010 09:18:31 AM