Property prices have fallen by 6% and tax receipts are down €600 million in the first quarter. Panic is beginning to take hold. Expectations of soft landings are fading as developers slash selling prices and buyers hold off till things settle. Architects-the canaries of the building industry-are being handed their P45s as developers close up shop, bank their land and migrate to London to build the Olympics. The banks meanwhile are frightened to lend to each other as their security and assets are revalued in an atmosphere of suspicion and uncertainty. All these factors are leading to a credit squeeze and recession. Whether this recession will be short, a simple overdue correction of an overheated property market, or whether it deepens into a serious economic depression, depends on how the government reacts.