“And we pray for Ireland’s financial situation…and all the people who suffer because of it.”

Priests do not usually get involved in political economics. But among the prayers for the dead, the sick, the unhappy and the incompetent at St. Patrick’s cathedral on Sunday was an entreaty to the Almighty to intervene on behalf of Irish bond yields.

Many times have we criticized Ben Bernanke for ‘playing God’ with the economy. Will we now get a chance to criticize God for playing Ben Bernanke?

Whether or not God intercedes in such matters, we cannot say. But had we been in charge of the program at St. Patrick’s cathedral yesterday we would have saved our breath. Ireland’s financial problems were caused by man. They can be solved by man too.

But not without some pain. And not by central bankers’ clumsy attempts to avoid it.

Friday’s market news from America showed a continuation of the trends we’ve been watching for weeks. The Dow fell more than 100 points. Gold took a big dive too…and ended the day’s trading at $1,500. Oil remained at $91 a barrel.

We know it’s not necessary to tell you, dear reader, but we will tell you anyway. These things do not signal a recovery. They do not signal inflation. They do not signal an end to the ‘lost decade’ America has suffered since 2000.

Last week, we focused on the strange happenings of the 21st century. Despite the most promising initial conditions in human history, the century so far has been a dud.

Why?

Nobody knows. Perhaps it is just a normal cyclical pullback after years of credit expansion. Or, maybe it is much more than that – a regression to the mean, in which developed countries slow down for decades so that emerging countries can catch up. Or maybe it marks the end of the Fossil Fuel Revolution, in which we confront the declining marginal utility of further (more expensive) inputs of oil. If so, we may be looking at a Lost Century, not just a lost decade.

All we know for sure is that the Internet, and related communications technologies, have not performed as advertised. They’ve improved efficiency, but they’ve left billions of people measuring out their lives on email and tweets, while real growth has declined.

So, let’s put that in the back of our minds and return to the here and now…that is, to Ireland.

“Ireland is screwed,” said our local expert. “Our property developers are broke. And they owe a lot of money to the banks. So they’re broke too. And the banks owe a lot of money to the government, so the government is broke too. And now they’re taxing pension funds and our houses aren’t worth anything, so we’re all broke.”

By way of example, we went to look at a lovely Georgian house…set on 400 acres…with its own ocean beach. It had been fixed up and was offered for sale for 12 million euros. Then, the crisis hit. Now, the asking price is 7.5 million.

“That’s the asking price,” said the realtor. “Naturally, in this market, the actual sales price might be a bit lower.”

How much lower is anyone’s guess. Houses in Dublin are selling for about half what they fetched a few years ago. And there are abandoned projects all over the country. We looked at a group of houses built near the coast. They were the equivalent of Irish McMansions…large houses with thatched roofs on small lots. There were about 12 of them…offered for sale at about $800,000 each.

“Well, that was bad timing. The developer had to cut the price in half. They’re now selling for about $400,000,” the agent explained.

“How many have been sold?”

“None.”

Hmmmm….

Not that your editor is really interested in acquiring more property. He has too much already. But he likes to keep an eye on the property market. It helps him understand what is going on.

Besides, he’d like to have a stately Irish mansion to house his family office…if he could get it cheaply enough.

“Oh yes, that would make sense. The Bonners are an Irish family. From Donegal. Everybody knows that. But if I were you, I’d hold my fire,” said our local expert, who offers financial management services to rich Irish families.

“There’s still a lot of momentum in the property market here. I mean, people still think that property will go back up. Speculators are still buying places that they think they are getting at bargain prices. But did you see the bond market on Friday? Irish debt fell again. And if there is any more trouble in Greece, bond investors are going to re-appraise all their European debt. There will be no way Ireland will be about get out of this without a default.

“It also seems likely to me that Ireland has gone into a long, long slump, much like Japan. What we’ve seen so far could be the very beginning. We could see property prices continue to fall, as people are unable to finance or re-finance mortgages…as the banks go broke…and as people come to realize that Irish property is not going to bounce back. Property values are down about 50% so far. They could go down 80% or 90% before this is over.”

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.