By LANDON THOMAS Jr.


DUBLIN - It’s 3 a.m. at Doheny & Nesbitt, a favorite watering hole of Dublin’s political and business elite, and Sean Dunne, the property tycoon, stoops to retrieve a penny from the pub’s grimy floor.

“I am never, never too proud to pick a penny up from the floor,’’said Mr.Dunne, Ireland’s best-known building developer.“I grew up with nothing and I know the value of money.”

It is not known whether Mr.Dunne will fall victim to today’s world financial catastrophe, but there is no doubt that his country has.

Everything, it seems, has grown worse here. The recession started earlier and its bite has been deeper. Housing prices have fallen by as much as 50 percent. Bank shares have plummeted by more than 90 percent. Unemployment is approaching 10 percent.

The roots of Ireland’s fall date to more than 20 years ago, when a clutch of economists, politicians and civil servants put their heads together in this very pub and planted the philosophical seeds for the Irish economic miracle.

Known widely as the“Doheny & Nesbitt School of Economics,”these beery musings soon became government policy that chopped taxes in half, sharply reduced import duties and embraced foreign investment - a radical transformation that gave birth to the Celtic Tiger and perhaps the most open and vibrant economy in Europe. But beyond the glow of this sudden efflorescence , a housing bubble had begun to form.

Developers like Mr.Dunne became multimillionaires and became visible public and cultural figures.

Ireland’s policy makers, seduced by record tax inflows and a full-employment economy, paid little heed to the lonely voices that warned of the crash that finally came over the summer, when interest rates in Europe began to rise. Banks that had steered more than 60 percent of their loans toward property stopped lending, and asset values plummeted.

By wide consensus here, two events have come to define - both culturally and financially - the sweep and excess of the Irish property boom. Both revolve around Sean Dunne.

In July 2005, Mr.Dunne paid 379 million euros for a 2.8-hectare plot in the exclusive Ballsbridge neighborhood of Dublin and promptly announced that he would tear down the two luxury hotels on the site to build a high-end commercial and residential development. (Hobbled by delays and vocal neighborhood opposition, the project sits before a local planning board that on January 30 will either approve or scrap the plan.)

The second moment occurred in 2004 when Mr.Dunne, now 54, celebrated his second marriage, to Gayle Killilea, a former gossip columnist 20 years his junior, by inviting 44 of his friends on a two-week Mediterranean wedding cruise on the yacht Christina O, on which Aristotle Onassis and Jacqueline Kennedy married.

That a billion euro property plan and a gaudy wedding celebration should be held up as cautionary exemplars of Ireland’s pursuit of money angers Mr.Dunne. In his view, it speaks to what some call the Irish disease.

“Jealousy and begrudgery are still alive and well in Ireland ,”he said in an interview.“It’s part of the Irish psyche and it is the result of 800 years of being controlled by other people.”

The Irish government recently announced a $7.5 billion bank bailout and took majority stakes in the country’s largest banks.

“We have repeatedly warned that the government’s housing policy was extremely dangerous,”said John Fitz Gerald, an economist at the Economic and Social Research Institute, a leading policy center in Dublin, who has long urged that the government stanch housing demand by raising taxes.“You will now see unemployment going to 10 percent and we will experience a sharp drop in output.”

He shakes his head and sighs:“This was predictable, but the government just did not deal with it.”