2016 Postmortem
In reply to the discussion: Why have we heard nothing about this incredibly important development in Iceland? News black-out?!? [View all]pnwmom
(108,976 posts)NYTimes:
http://www.nytimes.com/2011/04/19/opinion/19tue2.html
In the go-go years leading up to the financial crisis, Icelands banks were hugely irresponsible, luring foreign depositors with high interest rates and putting the money into risky loans. When Icelands big banks went under in 2008, they were 10 times as big as the countrys economy.
The government of Iceland failed to rein in bankers excesses. But its refusal to take on bank debts, forcing creditors to take losses and share in the pain, looks increasingly smart as Icelands economy begins to recover.
The European Union and the International Monetary Fund their bailouts of Greece and Ireland were designed to make creditors whole should learn from Icelands example. As they negotiate a rescue for Portugal, they should realize that taxpayers cannot bear the entire cost of the banks misdeeds.
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Washington Post:
http://www.washingtonpost.com/business/economy/iceland-makes-fledgling-recovery-from-its-economic-meltdown/2012/01/12/gIQAW1q83P_story.html
REYKJAVIK, Iceland On the snowy streets of this capital city, the economic panic of 2008 has mostly faded. The trendy cafes along Laugavegur brim with customers. Restaurant menus feature $40 grilled minke whale and $60 racks of lamb, and hardly a table goes empty. Boozy youths line up to pack nightclubs that thump all night. Its even okay now to joke about the crash, or kreppa, as its known: We may not have cash, but we have ash! reads one T-shirt with a picture of the Eyjafjallajokull volcano that erupted in 2010.
Icelands journey from financial ruin to fledgling recovery is a case study in roads not taken and choices not made by other countries faced with economic calamity in recent years.
By the time the United States and Europe began to wrestle with the fallout of the global financial crisis in 2008, this tiny island nation was experiencing full-fledged meltdown. Its bloated banks failed. Its currency collapsed. The prime minister invoked Gods help, and protesters filled the streets.
Iceland did what the United States chose not to do allow its biggest banks to fail and force foreign creditors to take a hike. It did what troubled European nations saddled with massive debts and tethered by the euro cannot do allow its currency to remain weak, causing inflation but making its exports more desirable and its prices more attractive to tourists.
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Los Angeles Times
http://articles.latimes.com/2009/feb/08/opinion/oe-solnit8
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In December, reports surfaced that then-Treasury Secretary Henry M. Paulson was nervous. Without a Wall Street bailout package, he reportedly warned members of Congress, civil unrest might become so widespread that martial law would have to be imposed. That same month, International Monetary Fund Managing Director Dominique Strauss-Kahn warned of the risk of worldwide riots in connection with the economic collapse.
What really worried them, I suspect, was not that people would throng the streets, or even that those people might demand radical social and political change. The real concern was that the rioters might achieve some of their demands.
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That's the point at which Icelanders began to get angry -- at Britain, but even more at their own government. The crashing country developed one growth industry: bodyguards for politicians, in a country where every pop star and prime minister had once roamed freely in public. An Icelandic friend wrote me: "Eggs were being thrown at the Central Bank. Such emotional protests have not been seen since the early part of the 20th century, although then people were too poor to throw eggs."
Soon they were also being thrown at Prime Minister Geir Haarde, whose policies were very much an extension of Oddsson's.
Where Iceland goes from here is hard to foresee. But as Icelandic writer Haukar Mar Helgason put it in the London Review of Books last November: "There is an enormous sense of relief. After a claustrophobic decade, anger and resentment are possible again. It's official: capitalism is monstrous. Try talking about the benefits of free markets and you will be treated like someone promoting the benefits of rape. Honest resentment opens a space for the hope that one day language might regain some of its critical capacity, that it could even begin to describe social realities again."
Chicago Tribune:
http://articles.chicagotribune.com/2012-04-30/business/sns-rt-us-iceland-economybre83t0or-20120430_1_poster-child-banking-boom-economy
While much of Europe wallows in recession, the economy of this volcanic island in the mid Atlantic is growing at a clip that has surprised many people, thanks to a currency fall - in which the crown lost almost half its value to the euro - an export and tourism boom as well as growing consumer confidence.
Currency depreciation though is only part of the picture.
Capital controls, progressive taxes and a careful phasing-in of austerity measures were also key to getting the country back on track, bringing a more than 10 percent fiscal deficit back to a near balance.
Iceland also did what other parts of Europe haven't dared to do - let its banks go under. It took some of the cost itself but forced foreign creditors to take the biggest hit.
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