This Is the House That Ireland Built

Wild property speculation and crazy bank loans have left the Irish economy reliant on emergency aid. The good news: Ireland's people know they have to clean up the mess themselves

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Photograph by Simon Burch for TIME

Out of the ordinary Houses at the back of the Silver Birches estate overlook a pool of sewage

There is nothing ordinary about this property," runs the broker's pitch for a substantial detached family home on the Silver Birches estate, a cracked tile's throw from the market town of Longford in the Irish Midlands. A tour of John Killane's house, one of only a small number of occupied dwellings in the development, suggests there is indeed nothing ordinary about the houses there. "Why don't you take a little walk across that floor?" Killane suggests, hovering at the threshold of his spacious dining room. His caution becomes understandable as each step triggers a violent swaying motion. The builders failed to divert a stream that continues to run its course beneath the floorboards.

Upstairs, the walls are sodden too; a Manchester United banner in his sons' bedroom threatens to turn Chelsea blue with mold. He's moved the kids into another room because their asthma is worsening. The original prospectus that helped persuade Killane to part with 260,000 euros for his new home three years ago — about $347,000 — promised a day-care center, tennis courts and smooth, green lawns where residents' children might safely play. If Killane risks allowing his boys outside to kick a ball, they do so on a mulch of mud and raw sewage that bubbles up from unfinished pipes leading to an open septic tank. Left to their own devices, the children of Silver Birches and Ireland's more than 600 other failed speculative developments known as ghost estates often run greater risks: climbing through broken windows into the ranks of empty houses — most never lived in, many never completed, built with tax incentives and cheap loans from financial institutions as rocky as Killane's floors — to play amid the debris and broken glass of the Irish dream.

Ghost estates aren't just symbolic of Ireland's fall from grace. They are one of its key causes, the most conspicuous legacy of the unhinged building boom and incontinent bank lending spree that have driven a once affluent nation into staggering debt. With its budget deficit totaling 32% of GDP, the highest by far in Europe, Ireland has metamorphosed from proud Celtic Tiger into mangy rescue cat. Even as officials from the European Central Bank, the European Union and the International Monetary Fund moved into the Irish Finance Ministry, the government continued to protest that the country could sort out its own mess. The cave-in came on Nov. 21 with a formal application for an 85 billion euro ($110 billion) bailout. The promise of the cash — and a four-year plan to slash a further 15 billion euros ($19.5 billion) in government spending — did little to soothe the markets, leaving Ireland's would-be rescuers scratching their heads. What more could be done? Yet the real puzzle about the crisis, which has wrought misery at home and triggered such turbulence in international financial markets as to risk toppling European countries like Portugal and even Spain into insolvency, is not why Ireland took so long to admit it needed help. It is why it blithely passed so many red danger signals on the way to the precipice.

Choppers in Galway
To understand the problems that engulf Ireland, we must do the one thing many Irish didn't do during the boom years: pause and take stock. Ireland's youth have never known anything but good times; their parents were eager to forget the humiliations and hardships of the past. As the economic miracle of the 1990s finally granted the Irish the power not only to reduce the influence of their former British overlords but even sometimes to lord it over them, Ireland's euphoria metastasized into madness.

Form your assessment of the Irish economy in the center of Dublin and you'd scarcely realize anything was wrong. The outer signs of wealth are still there, and if beggars crouch on the sidewalks, that's nothing new. The rising tide of affluence never floated all boats, but it did turn bricklayers into property magnates, small entrepreneurs into tycoons. The author John Banville recalls a "Joe Kennedy moment," an instant when, like the Kennedy patriarch who predicted the 1929 Wall Street crash after a shoe-shine boy offered him stock tips, he looked beyond the show of prosperity to the yawning abyss. "Last spring, when we were already deep in recession, I spotted driving past in the street here in Dublin a gleaming 2007 Bentley with a yellow taxi sign on the roof," he says. "It seemed almost ludicrously symbolic, but there it was." Eamon Gilmore, the leader of Ireland's opposition Labour Party, dates his realization of how badly awry things had gone to a trip to the Galway Races four or five years ago. "What fascinated me was the helicopters, all these helicopters. There was a whole helicopter culture," he says.

From tractors to helicopters, Ireland traveled a long way in just a few decades, diversifying from agriculture and low-cost manufacturing into high-tech enterprises and attracting foreign companies by offering low corporate tax rates and a highly skilled English-speaking workforce. Unemployment and an outflow of Irish talent declined in lockstep, and the economy notched an annual average growth rate of 6.5% from 1990 to 2007. By the eve of the 2008 banking crisis, Ireland's population of 4.25 million boasted more than 30,000 euro millionaires and 300 with fortunes estimated at more than 30 million euros ($39 million). One of the biggest players was Derek Quinlan, part of a consortium that in 2004 bought a clutch of London's most famous hotels, including Claridge's and the Connaught — which shares a name with Ireland's poorest province. One of his Irish employees promptly hoisted the Irish tricolor above the hotel. "I cried," said Quinlan. "My poor father, who was in the Irish army, would have loved to have seen this."

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