I saw this article posted on facebook a few days ago and thought that Iceland's approach to ending the recession mirrored my own opinion. So, take what you can from this. The link to the site from where the article was posted is at the bottom of the article.
Iceland got over the recession fast—by jailing the banksters, and bailing out the people
From Jack Gordon:
Well the people of Iceland reversed it. Turned it around. As the article below says, Iceland made the “creditors of private banks gone wild eat the losses.” Gee. You’d think this would be huge news. Why aren’t we hearing anything about Iceland from the MSM? Gee, take a guess why. http://www.washingtonsblog.com/2012/08/top-economists-iceland-did-it-right-everyone-else-is-doing-it-wrong.html Top Economists: Iceland Did It Right … And Everyone Else Is Doing It Wrong
Posted on August 25, 2012 by WashingtonsBlog
Iceland Shows the WayNobel prize winning economist Joe Stiglitz notes:What Iceland did was right. It would have been wrong to burden future generations with the mistakes of the financial system.Nobel prize winning economist Paul Krugman writes: What [Iceland's recovery] demonstrated was the … case for letting creditors of private banks gone wild eat the losses.Krugman also says: A funny thing happened on the way to economic Armageddon: Iceland’s very desperation made conventional behavior impossible, freeing the nation to break the rules. Where everyone else bailed out the bankers and made the public pay the price, Iceland let the banks go bust and actually expanded its social safety net. Where everyone else was fixated on trying to placate international investors, Iceland imposed temporary controls on the movement of capital to give itself room to maneuver.Krugman is right. Letting the banks go bust – instead of perpetually bailing them out – is the right way to go. We’ve previously noted: Iceland told the banks to pound sand. And Iceland’s economy is doing much better than virtually all of the countries which have let the banks push them around.Bloomberg reports: Iceland holds some key lessons for nations trying to survive bailouts after the island’s approach to its rescue led to a “surprisingly” strong recovery, the International Monetary Fund’s mission chief to the country said.The IMF’s point about bondholders is an important one: the failure to force a haircut on the bondholders is dooming the U.S. and Europe to economic doldrums. The IMF notes: [The] decision not to make taxpayers liable for bank losses was right, economists say.In other words, as IMF put it: Key to Iceland’s recovery was [a] program [which] sought to ensure that the restructuring of the banks would not require Icelandic taxpayers to shoulder excessive private sector losses.Icenews points out: Experts continue to praise Iceland’s recovery success after the country’s bank bailouts of 2008.Barry Ritholtz noted last year: Rather than bailout the banks — Iceland could not have done so even if they wanted to — they guaranteed deposits (the way our FDIC does), and let the normal capitalistic process of failure run its course.Bloomberg pointed out February 2011: Unlike other nations, including the U.S. and Ireland, which injected billions of dollars of capital into their financial institutions to keep them afloat, Iceland placed its biggest lenders in receivership. It chose not to protect creditors of the country’s banks, whose assets had ballooned to $209 billion, 11 times gross domestic product.And Iceland’s prosecution of white collar fraud played a big part in its recovery: [The U.S. and Europe have thwarted white collar fraud investigations ... let alone prosecutions.] On the other hand, Iceland has prosecuted the fraudster bank heads (and here and here) and their former prime minister, and their economy is recovering nicely … because trust is being restored in the financial system. http://markcrispinmiller.com/2012/12/34714/ |
