"Unorthodox" crisis response policy FTW

[ddstory]

Remember Iceland's bank collapse? The country's economy tanking, angry people yelling and banging cutlery on the icy streets of Reykjavík, and people around the world pointing fingers at Iceland, citing it as the worst example of greed taking over a society? There were some pretty nasty comments, mostly coming from Britain (many of whose citizens

Comments

[nairiporter]

Geithner in jail? That would be interesting.

[dwer]

if it resulted in actual bank CEOs also being in jail, I'd totally take that.

[sandwichwarrior]

He should be but he wont be.

In more "civilized" cultures a man who had failed as monumentally as he had would have already thrown himself upon his sword.

[nairiporter]

I am not talking about his perceived or real failure in his job. In more civilised cultures that is not considered a crime. Concealing fraud, is.

[dexeron]

That's such great news for Iceland. I remember watching a version of that crisis explained in "Inside Job" and it wasn't painting a pretty picture. That's really amazing to see how the people came together, did what had to be done, and fixed the problem. I only wish I could see that sort of thing happening here.

[htpcl]

I'm all for busting corrupt politicians and sending them to jail. It's the right thing to do.

Also, empowering people is good, as long as there's a viable market in place where they could spend their money and send the big wheel of economy turning - provided that there already is an efficient economic structure in place like in Iceland.

Just let's not be fooled into believing that countries like Greece can in any way draw examples from Iceland. Because I've heard the argument "Greece should emulate Iceland's example" too often. Greece's situation is quite different, in that they went way too far with the welfare state. Welfare is a good thing, but only when used within reasonable limits. And they got carried away. What's worse, they systematically defrauded the EU into believing that everything was OK, until shit suddenly hit the fan.

Iceland's situation was different. It was more about easy loans at ridiculous interest rates, and a credit bubble, i.e. it had much to do with the banking sector gone wild, rather than any social

[gunslnger]

This is true.

[peristaltor]

What if they did both debt jubilee and welfare reform?

[johnny9fingers]

Size, scale, whatever: I think you called it right when you said that comparisons with any of the top ten economies (and knock-on effects for the world economy as a whole) would be invalid.

We can see how a significantly bigger economy's debt (Greece) is destabilising both the Eurozone and the world economy. And as an aside, a single day's banking IT failure showed to many Britons just how bad it could have gotten if our banks hadn't been rescued when they were.

Mind you, hats off; Iceland has done exceptionally well given the nature of the crisis; the response has been rational, and a better working example than poor ol' Ireland's forced response to a slightly different sort of debt crisis.

Alas, we in the UK are led by folk ideologically opposed to regulation, taxation, and social cohesion. And the US is similar, if not more extreme.

Oh well. Fortune favour the plucky Icelanders. Not at our expense, of course, but nevertheless...

[ddstory]

I think you called it right when you said that comparisons with any of the top ten economies (and knock-on effects for the world economy as a whole) would be invalid.

Um, I didn't. But thanks, because I would've, anyway. :)

Each country has its specifics. And it should adapt their approach to said specifics. I'm far from the thought that one model applies for all, that's simply unrealistic.

[underlankers]

If the USA did what Iceland did, the global economy collapses. Taking on even more foreign debt to make up for the failing of our banking system and then defaulting? It wouldn't work for any of the large economies to do that kind of thing. It's good Iceland got away with it as far as Iceland is concerned, but this is 100% not something that can be exported as a role model for other states.

[ddstory]

Could Iceland's experience at least serve as a wake up moment for people and provide some perspective that'd help them shake off their financial delusions and begin to realize that living beyond one's means is detrimental in the long run?

AHAHAHA! Keep dreaming. ;)

[underlankers]

If people had that concept, the whole framework of history over the last 150 or so years would have been very different and for the better. People trying to live beyond their means and overstretch themselves is a human failing that like all the others keeps repeating itself when they should know better.

TL;DR: I quite agree.

[peristaltor]

Taking on even more foreign debt to make up for the failing of our banking system and then defaulting?

That ain't what the OP said happened. No debt was increased on the gov.

As it is, we are printing our way out of the wallow of failing debt, so either way our economy will contract (either through forgiveness or dilution), but the latter way-again, the way we're doin' it-has historically led to hyperinflation.

Strap in.