Iceland Was Right, We Were Wrong: The IMF

[cprise]

12. I don't agree with creating conditions for a run on the banks

Letting the major US banks fail would have caused an outright collapse of the economy. Maybe you think a collapse in 2008/2009 would have brought about a better economic consensus and gotten rid of the plutocracy, but I tend to disagree.

The political economy of the 2000s let those banks get to the point where they were, indeed, too big to fail without taking down everything else around them. We had put a profound degree of trust into them through our trust in US currency. The error was in letting those banks become so consolidated and unregulated in the first place.

At that point, they could credibly hold a gun to our collective heads. At that point, you just give them the money, or else. Probably the best thing to do in our case would have been to throw some initial sum at them to keep them liquid for a number of weeks, then attempt to introduce conditions for what percentage of their debts we would be willing to back them up.

Iceland was still right to do what they did, but their country could not set the tone for the global economy and what they endured was engineered in foreign lands. Wealth was being rapidly pulled out of the country, not transferred to an elite within the country.

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The 2008 crisis should be a lesson that you can't let your entire economy be run by private, unregulated banks and on hopes that wealth-accumulation machines will let that wealth "trickle down" to the rest of us (they will in theory, but over time something or other will spook the rich and they will prefer to hoard more than usual). If the US had Iceland's political wherewithal, the logical first steps in our case would be to restore Glass-Steagal and progressive tax rates and put central banking under government control.

The likelihood of that happening in the near-mid term is highly unlikely, as people are becoming disenfranchised and the ones that aren't are distracted with endless entertainment and social network navel-gazing. Both of those trends are backed by a culture that fawns over super heroes (ubermen of the CSI/military type and of the fantastical type -- a distinction that media corps and government are blurring) and also hates its own image (working class people, as seen on 'reality TV'). I would even say that most people here who would rather help others stay "in the game" are so conditioned that they will more than likely work to "vote them off the island" instead; they prefer money and centralized corporate services to transact - watchfully - in every little thing they do.

The only way I can imagine getting from 'here' to 'there' is to create the kind of culture that can seriously entertain and go through with a general strike. People need to learn what "labor" is beyond the couple of paragraphs they read in a highschool textbook, and Labor needs to lose its oblivious attitude toward Public Relations so that those textbooks and TV shows reflect something more meaningful. Class is something that our media and government needs to cope with at a constitutional level. This is all pie-in-the-sky however, as people prefer police to unions and feel little much less for people around them:

http://abcnews.go.com/blogs/politics/2012/08/americans-to-tsa-love-you/

http://www.psychologytoday.com/blog/born-love/201005/shocker-empathy-dropped-40-in-college-students-2000

Good luck with that...