Spain’s housing bubble was smaller than Ireland’s but far more consequential

Evidence

According to Bank of Spain data, while Spain’s ten-year headlong rush into housing produced a 115 percent increase in house prices between 1997 and 2007, the United Kingdom’s bubble was bigger still at 140 percent, and Ireland topped the list at 160 percent. Why Spain matters much more than Ireland, however, is that Spanish GDP is approximately seven times the size of Ireland’s; Spain is the fourth-largest economy in the Eurozone and is responsible for almost 10 percent of Euro Area GDP. As such, the popping of the Spanish housing bubble was going to matter in more than just Spain. — Mark Blyth, Austerity, 187

Categorization

• XREF: The ‘too big to bail’ logic connects to the too-big-to-fail banking literature and the Eurozone-scale contagion design that austerity rhetoric exploited. — connects to: Ireland and Spain’s crises stemmed from bank real-estate lending, not fiscal profligacy — Mark Blyth, Austerity: The History of a Dangerous…, 181; Spain’s crisis emerged from regional savings banks, not its largest internationalized banks — Mark Blyth, Austerity: The History of a Dangerous…, 185; Iceland and Ireland offer a natural experiment comparing austerity with bank default — Mark Blyth, Austerity: The History of a Dangerous…, 638 (+2 more)

Broader Connections

• Spain’s crisis emerged from regional savings banks, not its largest internationalized banks #expands (0.85) — Mark Blyth, Austerity, 185
• Greek contagion to Ireland and Spain threatened the whole Eurozone #expands (0.85) — Mark Blyth, Austerity, 191
• Expectations-based expansionary austerity theory rests on Denmark and Ireland cases #qualifies (0.80) — Mark Blyth, Austerity, 457
• Iceland and Ireland offer a natural experiment comparing austerity with bank default #qualifies (0.75) — Mark Blyth, Austerity, 638