It was in the early hours of the morning in a café in the centre of Dublin not long after the beginning of the millennium. A group of revellers in their early 30s, including this reporter, were winding down over a fry-up when the conversation turned a touch philosophical, the way it can when the participants have had one or two too many. "Do you think," one of the group asked, "that in years to come we'll look back on these times and say 'we were blessed to live through them. These were the best of times'?" The others nodded. "I think we probably will," was the verdict.

Little did the people involved in that conversation realise how accurate their assessment would prove to be.

They were all old enough to remember what Ireland had been like in the 1980s. The bleakness. The absence of opportunity, of hope. They had watched as friends and class mates in college - the "best and the brightest" as the cliché went - had emigrated. Now it felt special to be part of a success story. After decades of chronic under achievement, Ireland was being talked about the world over as it transformed in a decade from the 'sick man of Europe' to one of the wealthiest countries in the world. Instead of watching the traditional outflow to London or New York, Irish people were experiencing a whole new phenomenon as tens of thousands of immigrants flooded into the country, eager to get their share of the Celtic Tiger. At one point, Ireland was attracting more immigrants per capita than any other country in the world. Ireland, to borrow from Robert Emmet's speech from the dock, had really taken her place among the nations of the world.

Nobody sitting around the table that night believed that the boom times would last forever. They weren't economic experts, but having lived through the 1980s, they understood enough about the cyclical nature of economies to be aware that at some point in the future there would be more difficult times. But there was a general confidence that whatever happened there was no going back to the bad old days of unemployment and emigration. The pace of growth and improvement mightn't always be so break-neck but, generally speaking, it was onwards and upwards.

And that's how it appeared for most of the decade. The noughties were truly an extraordinary time to be alive in Ireland. Full employment, huge wealth, conspicuous consumption.

What we didn't know at the time was that the whole success story was tainted. At some point during the first decade of the millennium, the economic miracle – and for quite a time it was genuinely an economic miracle – became a mirage.

Because of a consumer boom and a bubble in the property sector that kept money rolling in to a bloated public purse, nobody noticed but Ireland Inc had stopped performing. The signs were there - a steady decline in competitiveness, a deteriorating balance of payments, double-digit percentage increases in government spending each year financed by a tax system that was extremely narrowly based and hugely dependent on transactional taxes such as Vat and stamp duty. But in this modern-day version of the last days of the Roman empire, those signs were largely ignored.

When the global crash came, Ireland, even if it had been a model of economic management, was always going to be vulnerable. As one of the most open economies in the world, we would be hugely exposed to any international downturn, never mind the worst global recession in almost a century.

But the problem was seriously exacerbated because the country was far from a model of economic management.

Like our economic growth figures from the middle of the decade on, the huge budget surpluses didn't tell anything like the full story. Strip away the property boom and the surplus quickly became an even bigger deficit. Instead of treating the Vat and stamp-duty tax from property as a windfall gain, like profits from a flotation of a public utility or a natural resources find, they were regarded as normal revenue and used to fund unsustainable spending increases.

Money was thrown at every problem. Industrial relations difficulties? Here's a billion for benchmarking and don't worry about getting any reformed work practices in return. Farmers unhappy at EU environmental regulations? Let's spend €1bn on grants in the farm waste-management scheme. You think the economy is overly centred on Dublin? Let's decentralise the public service to every medium-sized town in the country, totally ignoring the already flawed national spatial strategy plan for regional development.

During the boom years, the country was led by an extraordinary politician (in terms of the art of politics) in Bertie Ahern. Unfortunately, part of his success was built on giving people exactly what they wanted. It was government by focus group, government that involved avoiding saying 'no' to anybody unless it was absolutely and utterly unavoidable.

While it wouldn't have been easy for any government to take the heat out of the property sector without crashing the thing, Bertie Ahern's governments helped fuel the boom by throwing every possible tax incentive at them.

The banking sector also bought into the myth that the property boom could last forever or least could be managed. Traditionally, boring and rather staid organisations - no doubt trying to play catch-up with the dynamic (but ultimately hugely flawed and dangerous) Anglo-Irish Bank model - completely lost the run of themselves. They threw mortgages of hundreds of thousands of euro at young couples on relatively modest incomes and hundreds of millions at property developers who seemed to be high flying but in fact, in many cases, were flying by the seats of their pants. The traditionally risk averse banks put all their eggs in the property basket (case).

And even though it was as clear as day that old safeguards - the traditional income-to-loan ratios for mortgages being the most obvious example - were being dispensed with, nobody in authority shouted stop. There was an utter failure of regulation.

In the bitter and angry fallout of our economic paradise lost, the list of those who stand charged has been largely limited to the government, the banks, the financial regulators and, of course, the ultimate bogeymen, the property developers. But while all these groups have to take some, indeed most, of the blame for what went wrong, there is another, far more uncomfortable, question that has to be asked: What share of the blame for the madness of the Celtic Tiger must we all share?

It has become a cliché for every group that is affected by the unavoidable cutbacks in spending introduced by the government in the past year to state that "we didn't cause the recession". But how accurate is this accepted wisdom?

Of course, primary responsibility lies with the aforemention list of accused but to what degree was the entire population willing accomplices?

There is an argument that nobody wanted to shout during the madness because everybody - repeat everybody - benefited from it. Huge numbers of people were investing in property. Well over a hundred thousand people acquired second homes (and that's just the figure for houses bought in Ireland) and detailing the level of appreciation in property investments became standard middle class dinner party conversation.

But it wasn't just those in the property sector who stood to gain. Property developers may now be public enemies number one but the reality is that the huge increase in spending in health, in public-sector pay, in social welfare over the past decade was funded by the tax take from the property boom.

It was clear this couldn't last. In the run-up to the 2007 general election, political parties - government and opposition - considered going the fiscal rectitude path but quickly decided there was no votes in it.

In Fianna Fáil, right up to the final hours before Bertie Ahern's ard fheis speech, there was huge debate at a high level within the party as to what tack should be taken. Nobody was predicting global meltdown at that point - the chain of events that were set off with the collapse of Lehman Brothers over a year later seemed unthinkable even then ? but it was clear that some rocky times lay ahead.

It was crying out for one of the political parties to say: "We know the others are going make billions of euro of promises but we are heading into dangerous waters and such promises are irresponsible and unaffordable. Our only promise is that if we are in government after the election, we will take the necessary tough decisions to ensure our new found prosperity is maintained."

But none of the parties did so. At the ard fheis, Bertie Ahern read out a highly fanciful list of goodies for voters, promising to cut taxes and increase spending further. The opposition parties were no better. Fine Gael and Labour were talking tax-rate cuts and big spending plans. The Greens were promising Luas lines in Galway and other regional cities. The PDs in government, once the party of rectitude, were looking to get rid of stamp duty, which would narrow the tax base even further.

They promised billions upon billions upon billions in spending increases and tax cuts because they knew, from their very sophisticated focus- group research, that that was we the voters wanted. That doesn't excuse the lack of leadership shown by the political parties - far from it - but it certainly does provide a reason for it.

It is true that the government and the upper echelons lost the plot in terms of spending. The outrageous salary increases given to politicians and top civil servants were way ahead of what was being awarded internationally.

And some of the gold plating on refurbishments by state bodies were staggering. A few examples: in 2007 and 2008, the Department of Foreign Affairs spent almost $1.3m refurbishing the New York apartment of the Irish ambassador to the UN. Over €200,000 was spent on refurbishing offices for the former taoiseach Bertie Ahern, including €85,000 on furniture, carpets, curtains and other soft furnishings. And, of course, €11,000 was famously spent on curtains for the ceann comhairle's office in Leinster House.

But extravagance was by no means restricted to the state sector. Tens of thousands did their Christmas shopping in New York, the Bulgarian property sector was engulfed with Irish people anxious to invest in property abroad, there were queues outside department stores for the latest 'must-have bag'. The examples of consumer rip-offs were absolutely everywhere but it didn't seem to matter in the consumption frenzy that went on. Money was no object.

There can be little doubt that many, perhaps most, of us lost the run of ourselves. To make that point immediately draws an angry reaction from people arguing that the fault lies with the government, the lack of regulation, the banks, the developers etc etc. But it is possible to hold the view that those groups were central to what happened but to also believe that some personal responsibility has to come into play as well. Yes there was, wrongly and dangerously, a huge quantity of easy credit available from the banks, for example, but none of us was forced to accept it.

In some ways it was all totally understandable. After so many decades of failure and hardship, it was inevitable that we would struggle to adapt to our so rapidly created prosperity. A little like the 20-year professional footballer who is suddenly on €50,000 a week and is feted everywhere he goes, but is totally unprepared to handle it all, getting so much so quickly had to result in problems.

It is, however, possible to draw some consolations from the whole sorry tale of excess. The hangover now may be ferocious - particularly for those people who have lost their jobs or had their wages sharply cut - but boy did the nation enjoy the party that was the noughties until the middle of 2008.

And, more seriously, lessons will have been learned. We won't get back to the huge growth rates of the past and that is no bad thing. But the economy will recover and when it does, the hope is that we will all - government, regulators, banks, developers and Sean and Mary Citizen - remain a lot more measured and grounded.

What a decade though. They were, as that group of late-night revelers predicted they would be regarded, "the best of times". Let's just hope that recovery will come quick enough to avoid the inevitable "and the worst of times" being added to that assessment.