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The housing market has been dangerously overheated. An existing house in Ireland in 1993 cost, on average, just over $83,000. In 2006 that figure has skyrocketed to $471,000. As far back as 2000, the International Monetary Fund was warning that there was no precedent for such growth without a serious crash. Not surprisingly, real estate inflation also means a huge accumulation of red ink; household debt as a proportion of disposable income in Ireland has risen in the past five years to a dangerous 140%. The implications are obvious, and familiar: any economic hiccup could force consumers to stop spending.

That's one of the main reasons the Davy report believes that the Celtic Tiger will take a catnap. Davy's most optimistic scenario predicts growth will slow to 3.25% annually in 2009 and 2010--still quite good by European standards--but its pessimistic scenario predicts a 5% annual drop in housing prices and GDP growth of just 1%. Bulls like O'Brien argue that population growth alone should be enough to keep the expansion on track. His report predicts that, thanks to Ireland's late baby boom and open immigration policy, the country will reach 5 million citizens by 2015 and 6 million by 2050. "That demand will continue to be a major driver," he insists.

Can the government do anything to keep the party going? It's planning to plow more money into research and development--and give more tax credits to companies that do the same--while focusing on innovative sectors like nanotechnology and regenerative medicine. "We want new products, new services, new ways of doing things emanating from this research," says Micheál Martin, Ireland's Minister for Enterprise, Trade and Employment. Moreover, even U.S. firms that have helped Ireland blossom recognize that Ireland needs to create more of its own global companies, along the lines of the Kerry Group, a Tralee-based food-ingredients company that enjoyed $5.6 billion in revenues in 2005.

In the meantime, though, people in Leixlip and the rest of the country seem thankful that they have got Intel inside--and hope that their house values hold up.