Wondering Why?

Why did Ireland need a bailout?

Ireland is one of many countries that is a member of the European Union.  In terms of economy, this particular country is said to have performed really well back in the mid-1990s up to about 2006.  During these times, Ireland enjoyed of having a very healthy and competitive banking sector with several new players coming in and further improving the country’s bottom-line.  After these so-called heydays though, Ireland’s economy started to dip down with its government having to shelf out lots of money just to save its own banking industry.  By around 2008, Ireland was in a credit crunch that it literally needed some kind of rescue package from other member countries of the EU. By 2010, a bailout was given by the EU specifically to help Irish banks recover from losses and help the country’s economy to go back on the right path. This particular outside help or bailout was literally necessary to help Ireland sustain its own economy and propel it to post positive growth.  As many experts would say, Ireland’s bad economy at the time will have a negative impact on various sectors of their own government and the private sector.

At the height of Ireland’s economic crisis, Ireland’s government basically had to financially support its banking system to help it stay afloat.  Many businesses and organizations depended on the banking system for their activities. Back then, many banks were struggling because of the credit crunch and partly due to the collapse of financial institutions in the US like Lehman Brothers.  With the growing instability of banks, the Irish government was forced to provide their banks with much-needed money for a healthy flow of cash.  Apparently this move was not enough to stimulate the whole economy and more cash was needed from the outside to help the whole country.  This influx of cash or capitalization was made possible through a bailout provided by EU banks.  The basic goal of the bailout is to help sustain Ireland’s economic and banking activities and stimulate them for future growth.

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