Short Termism-Government

The symptoms of an economic bubble include prices deviating strongly from intrinsic values and market players acting irrationally. Example of such behaviour in Ireland include Sean Dunne spending €54 million per acre for a hotel in Dublin 4 to middle class famillies owning three or four investment properties.

Though there is plenty of evidence from economic history such as Japan(1990-2003) and Tulip mania(1630's), to suggest that "the bigger the boom the bust" this government did nothing to prevent or limit the size of this bubble.

Why? Any action by the government to limit the size of the bubble would damage its survival because its fate was inextricably linked with that of the construction sector. Evidence to suggest this includes;

• in 2004 the construction sector represented 12% of GDP, there were 262,700 people employeed in the sector (as opposed to 165,200 in 2002),
• One eighth of workforce employed in construction; 1 in 5 of private sector workforce depending on construction ,
• And finally a Davy Stockbrokers report says tax revenue from the property market - including VAT, stamp duty and capital gains tax - has tripled since 2002 and will account for almost 17% of tax receipts this year. This report finished by stating "the public finances are now exposed to a downturn in the property market."

Therefore, they did nothing because they were only concerned with the short term; winning the next news cycle, the next opinion poll or the next election.