I originally thought you were implying that low tax rates to lure in business was the cause of debt:
rmc: "In Ireland, these kinds of tax breaks are one of the foundations of our economy."
You: "And that's the reason Ireland has something like 1000% external debt to GDP"
I pointed out that a property bubble was the primary cause, and that low tax rates are unrelated to this. Lets put aside your original argument, and focus on the new one. You assert "more multinationals->higher debt for local business and government". Could you explain this step?
As for why Ireland was hurt more than others, their bubble was bigger:
Oh well. But WHY was the bubble bigger in Ireland? Do Irishmen need some kind of bigger houses and more of them than the rest of the world?
Anyway, we keep going and going in circles. Let's stop. The whole story (including why more debt) is very well described here: http://en.wikipedia.org/wiki/Celtic_Tiger
More on that later I guess.
Let me just add that it would be very simplistic to attribute "current problems" just to the property bubble, or high debts to just low tax rate for multinationals. So to make it clear, that's not how I think.
There was a large bank bailout, due to how much the banks had invested in property. A large percentage of government income (around 25%) came from 'Stamp Duty', the tax you must pay when you buy a house. When the property market collapsed, the government was getting less money that it was used to.
i.e. the collapse of the property market increased government spending/debt and decreased government income.
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.
