Iceland shows the way,dump the IMF and nationalized banks

[safeinOhio]

http://www.marketwatch.com/story/icelands-debt-comes-in-from-the-cold-2012-02-17
By MarketWatch
SAN FRANCISCO (MarketWatch) — Iceland. The mere mention of this rocky island outpost used to send chills down the spine of over-leveraged nations worldwide.

No more. What was once the poster child for economic excess has emerged a role model for countries struggling to save their bacon in the global bond market
When global credit markets unraveled in 2008, Iceland’s three biggest commercial banks collapsed. Iceland’s debt rating plummeted to junk status. The value of its currency, the krona , fell sharply and a severe economic recession set in.
But it’s a testament to the Icelanders that they quickly recognized they’d built a house of cards and took drastic action to recover that involved, among other things, nationalizing one bank and handing control of all three major banks to the equivalent of a board of creditors.
The tough lessons of the past decade’s excesses galvanized Icelanders. They got to work slashing public spending to bring it closer in line with their GDP, salvaged their tattered currency and, last summer, successfully exited a rescue program set up by the International Monetary Fund. Consequently, Iceland once again has access to international credit markets.

[marasinghe]

1. and Argentina.

[CaliforniaPeggy]

3. They are a smart, sturdy people.

I greatly respect their work to recover from this crisis.

Would that other countries had done what they have.

[Gabi Hayes]

7. From the North Malden/Icelandic Saga Society:

[Zalatix]

4. Slashing public spending? Sounds like the poor got forced to pay for the rich's excesses.

[safeinOhio]

8. Not as bad as others where only the people pay.

They let the banks default, forgave debt on homes and let the bond holders eat the loss without bailing them out first. Yes, they slashed some public spending, but not to bail out the investors and banks like all the other countries. Basically, they did it their way and said screw the IMF demands to save the bankers and bond holders.

[Zalatix]

9. Any idea exactly what types of public spending got cut? Still, I admire Iceland

Sounds like they privatized the profits and losses alike. Even the looney Libertarians should praise them, LOL.

[lunasun]

11. and they are still alive to tell the story

People here cant overcome fear of things like nationalized anything really nowdays let alone banks
Too afraid to say screw the IMF and what they think would happen if they did spread the loss back around to the bankers and bond holders.

[safeinOhio]

5. "As a precursor to the global Occupy Wall Street movement"

A better article here. This is big news and it is hard to find information about it. Go figure.

http://www.businessweek.com/news/2012-02-19/icelandic-anger-brings-debt-forgiveness-in-best-recovery-story.html
People Vs Markets
Iceland’s approach to dealing with the meltdown has put the needs of its population ahead of the markets at every turn.
Once it became clear back in October 2008 that the island’s banks were beyond saving, the government stepped in, ring-fenced the domestic accounts, and left international creditors in the lurch. The central bank imposed capital controls to halt the ensuing sell-off of the krona and new state-controlled banks were created from the remnants of the lenders that failed.
As a precursor to the global Occupy Wall Street movement and austerity protests across Europe, Icelanders took to the streets after the economic collapse in 2008. Protests escalated in early 2009, forcing police to use teargas to disperse crowds throwing rocks at parliament and the offices of then Prime Minister Geir Haarde. Parliament is still deciding whether to press ahead with an indictment that was brought against him in September 2009 for his role in the crisis.

[marasinghe]

6. ".... needs of its population ahead of the markets at every turn ...."

what a concept.
trying to drag us back to the ice ages -
when people mattered to 'human society'.

[Zalatix]

10. Iceland may be humanity's last refuge from predatory capitalism

[lunasun]

12. and a harbor for justice too

former Prime Minister Geir Haarde.> Parliament is still deciding whether to press ahead with an indictment that was brought against him in September 2009 for his role in the crisis.

[bhikkhu]

13. The OP title doesn't really reflect the article, or what happened

There was a whole lot more negotiation and compromise than there was chest-thumping, and the IMF and Iceland worked together very well and successfully.

This is another good article on it: http://www.advisorone.com/2011/09/01/success-iceland-exits-imf-recovery-program

[dkf]

14. And would YOU like to put your retirement funds in Icelandic bonds?

Personally I wouldn't because I don't trust them with my future. But hey that is me.

[sabrina 1]

15. Well, think of it this way. The Greeks can kiss their pensions and everything else goodbye.

Too bad they did not emulate Iceland in the beginning and default, then nationalize their banks, prosecute anyone responsible for the corruption, and even if they had to make some other compromises, their pensions so far, are still there.

So, if you were to ask me, I would trust my pension more with Iceland, than leave it in the hands of those currently destroying the rest of Europe.

[muriel_volestrangler]

16. Iceland did not default; they just refused to take on the debt of the Icelandic banks

so it's different from Greece, where the government owed the money to external banks. Iceland's actions could have been emulated by Ireland, though, which did have a broadly similar situation (though Ireland was inside the Euro, so there was no devaluation of currency in the markets).

[sabrina 1]

20. They didn't have to, they took charge of their own affairs, GREECE should have defaulted

rather than playing these games, feeding more bailouts to the banks which is all that is going on there.

[DFW]

17. Iceland has a few advantages other countries lack

Their entire population is only a few hundred thousand, they have huge fish resources for food and free thermal
heating from volcanic activity close to the surface of much of the country. I don't know to what extent they
have harnessed their many waterfalls for hydro-electric energy, but it is an option.

I wouldn't want their weather (it barely got over 50°F when I was there, and that was in July), and it's not the
world's most exciting place to live (HUGE problems with alcoholism) but they don't have many problems other
countries with bigger populations have.

[Lydia Leftcoast]

19. But when I was there last summer (and yes, it was chilly) I took a tour

of the south coast, and as we passed a certain building, our guide said, "That was built as a women's prison, but after the economic crisis, we turned it into a prison for bankers."

The people on the bus, mixed nationalities, applauded.

The main thing I noticed as a visitor was that the Norwegian, Swedish, and Danish kroner were all worth between 15-17 cents, while the Icelandic kroner were worth less than 1 cent.

[DFW]

24. The Icelandic krona was always worth way less than the mainland kroner/kronor

It never had anywhere near a parity with the other Scandinavian currencies. Otherwise the youth
hostel I stayed in would have cost more than the Ritz-Carlton!

For the record, krona or krone (depending on which country) is the singular.

I also think your guide might have been joking. I don't think that enough women in Iceland
commit crimes to justify building their own prison.

[Lydia Leftcoast]

27. It was a small building, about the size of two McMansions put together

as befits a country with a population less than that of Minneapolis.

[AnotherMcIntosh]

18. Thank you, Icelanders. You are setting a good example.

[FrodosPet]

23. Iceland has the economy and population of a medium sized county in the USA

They are a small, resource rich island with a largely homogenous culture and population. Would it be possible to scale what they are doing over 1000 times to fit our circumstances?

At that, they have weathered the worst of the storm, but from what I've read, things are still not rosy in terms of inflation and unemployment.

[AnotherMcIntosh]

28. I wonder whether they are friendly to strangers.

[Electric Monk]

21. K&R

[annabanana]

22. Isn't this also the place that kicked the men out of power?

WAY TO GO LADIES!

http://www.guardian.co.uk/world/2009/feb/22/iceland-women

After the crash, Iceland's women lead the rescue

Iceland's spectacular meltdown was caused by a banking and business culture that was buccaneering, reckless - and overwhelmingly male. Business editor Ruth Sunderland travelled to Reykjavik to meet the women now running the country, and heard how they are determined to reinvent business and society by injecting values of openness, fairness and social responsibility

[Amonester]

25. + Infinity!

Great find!

~ snip ~
Prominent among them are Halla Tómasdóttir and Kristin Petursdóttir, the founders of Audur Capital, who have teamed up with the singer Björk to set up an investment fund to boost the ravaged economy by investing in green technology.
--------

Bookmarked,
Tx!

[annabanana]

26. Brava Iceland!!. . . . . N/T

[hack89]

29. "... a rescue program set up by the International Monetary Fund"

The headline conflicts with the article. Looks like the IMF played a huge role in helping Iceland.