In arguably the fastest explosion of a country’s economy in history, Iceland marked a huge loss of value across the spectrum after the financial crisis caused the banking industry to collapse, currency to devalue and the government to crumble.

According to Professor Morgan Kelly at the University College of Dublin, the economy of Ireland may be following in the footsteps of Iceland. Speaking in terms of a housing bubble collapse in the country, the Professor speculated that this small economy is suffering the same financial industry losses and deficits seen in Iceland just six months before.

The Irish government recently nationalized the Anglo Irish Bank, a bank which Dr. Kelly believes the government and public has underestimated its real risk, suggesting that if it collapsed a run on Irish banks would occur, immediately resulting in the inability for the federal government to finance its debt, creating an Iceland-like collapse.

Kelly has made a range of predictions about Ireland’s economy over the last three years.

The President of the European Central Bank, Jean-Claude Trichet, dismissed the concept of Ireland defaulting on national debt as “absurd,” saying that Prime Minister Brian Cowen has moved the economy towards good economic news over the past months.

Irish government’s debt have undeniably hit record highs recently.

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