Irish banks didn't "invest" in property as such, they just lent spectacular amounts of money to both mortgage applicants and property developers. The result was a huge property bubble. Anglo Irish Bank is the most notorious of all the banks, because it financed property developers particularly and got itself into a huge mess and has to be bailed out by the government, or the country's economy will collapse (according to the government.)
Anglo had an arrogant and corrupt board also, which didn't help. (Incidentally, their former CEO, David Drumm, is hiding out in Massachusetts, and has filed for bankruptcy there, due to the far harsher bankruptcy laws in Ireland compared to Massachusetts.)
Irish banks could raise money in Europe (German money for example) and lend it at a higher rate here in Ireland. Because Ireland has such a tiny economy relative to mainland Europe, they could raise, and lend on huge amounts of money relative to the size of the Irish economy. At the peak of the bubble, something like one-in-seven people were employed by the construction industry, either directly or indirectly, which gives you an idea of how important it was to the economy. Now the government is talking nonsense about building a 'knowledge economy' - which makes me shudder as they will try to turn former bricklayers into C++ programmers or something equally daft. The property bubble was Ireland's first taste of real wealth in our recent history and we pretty much blew it on big houses and Range Rovers, like a newly-minted lottery millionaire.
http://en.wikipedia.org/wiki/Anglo_Irish_Bank
Anglo had an arrogant and corrupt board also, which didn't help. (Incidentally, their former CEO, David Drumm, is hiding out in Massachusetts, and has filed for bankruptcy there, due to the far harsher bankruptcy laws in Ireland compared to Massachusetts.)
Irish banks could raise money in Europe (German money for example) and lend it at a higher rate here in Ireland. Because Ireland has such a tiny economy relative to mainland Europe, they could raise, and lend on huge amounts of money relative to the size of the Irish economy. At the peak of the bubble, something like one-in-seven people were employed by the construction industry, either directly or indirectly, which gives you an idea of how important it was to the economy. Now the government is talking nonsense about building a 'knowledge economy' - which makes me shudder as they will try to turn former bricklayers into C++ programmers or something equally daft. The property bubble was Ireland's first taste of real wealth in our recent history and we pretty much blew it on big houses and Range Rovers, like a newly-minted lottery millionaire.