Essay --

In the past decade, both the USA and Ireland have experienced huge economic downturn for a number of different reasons. The crisis in the US was largely due to subprime mortgages and mortgage-related securities defaulting between 2006 and 2008. The Irish crisis was more due to the large borrowing by the banking sector from overseas banks which led to overpriced property and unsafe lending by banks for property development. Some people argue that the collapse of the American economy had a large impact on the Irish economy which collapsed in the years following the US crisis. First, let’s focus on the US crisis and the main reasons behind it. The problem began when banks started to issue ‘Ninja Loans’. These were loans that anybody could take out and they didn’t require you to have a job, assets or any type of income. They were offered on teaser rates that jumped by up to 2%. The main issue with these loans was that they were non-recourse, that is, the banks couldn’t chase the owners for money. They only had the house as a security and this made it very easy for people to walk away fr...