Professor Philip Lane:

We have to look at why the banks wanted to raise so much funding and why the world was willing to lend to them. It is important to look at that from both sides. I will look at why they were willing to lend to Ireland from a global point of view. There was a fundamental lag in perceptions. Ireland had grown so much for the previous decade. The late 1990s were really spectacular here. A trader or analyst in a global bank might have argued that Ireland had a pretty good story to tell. It is understandable why it started. It is understandable that this happened in 2003 and 2004, when the global conditions were so liquid. I looked at this last week. At that time, Irish banks had historically not been major issuers of bonds, for example. An argument in favour of buying some of them could have been made by those who did not have much by way of bond exposure to the Irish banking system. I think there was an appetite in 2003 and 2004. It was felt that Ireland might be under-weighted in global investment portfolios. In all of these things, there is a reason it starts. I think the bigger issue is that over time, it grew too quickly and it went on for too long. I do not necessarily have a big issue with the fact that this thing started. The issue is that there was too much delay in recognising that it had gone too far and was going on for too long.