From
The Daily FeltoonIn case you missed it, the story going on in Iceland really began in the early 2000s, when Iceland followed the lead of countries like the U.S., loosened its regulation of banks, and allowed investment and deposit banks to mingle with each other and other banks around the world. In 2008, when the market implosion of Wall Street spread like a virus around the world, the three major private banks in Iceland all collapsed under the weight of the bets they'd made (a large portion of which was in the U.S. real estate market), and had to be nationalized.
As Dr. Krugman also recently pointed out, nearly everyone projected that Iceland was going to go into economic Armageddon if they didn't follow the lead of everyone else - save the banks, screw the working people, and make the public pay the price.
Iceland, however, did exactly the opposite.
Over the weekend, Iceland announced that they were finally going to begin paying out a small portion of foreign depositor claims, after their highest court upheld a law that protects the common people and the public welfare. Further, Iceland's Economy Minister said that all legitimate depositors, whether in Iceland or from other nations, will be repaid their full amounts of deposit. Investment bankers, however - like the Wall Street gamblers and their corporate cronies - will have to deal with the pile of bad bets they made all by themselves.
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