How did Iceland recover from it's banking crisis? --------- Iceland's rapid return to health hinged on a series of measures that Nobel laureate Paul Krugman l

How did Iceland recover from it's banking crisis? --------- Iceland's rapid return to health hinged on a series of measures that Nobel laureate Paul Krugman later referred to as "doing an Iceland." Krugman, an admirer of Iceland's dramatic comeback, has recommended a similar policy cocktail for other nations in crisis. The rules are as follows: Allow your ailing banks to collapse; devalue your currency if you have one of your own; introduce capital controls; and try to avoid paying back foreign debts. That may sound like an extremely self-serving recipe -- and it was. Whereas billions of public money was pumped into the banking system in Ireland so that financial institutions could pay back their creditors, Icelanders voted against this route in two separate referenda. They couldn't see why they should pay for the greed of foreign investors who followed the Siren song of high interest rates to the island nation. Jónsson only shakes his head wearily when asked if he has a guilty conscience. He claims to have been one of the few who warned of the currency bubble long before it burst. Now, he is excited about the country's new opportunities, which are remarkably similar to the ones it has always had. "A hard-working populace. A healthy democracy. A high level of education. Tourism. Natural resources, such as wind, hydro-power and geothermal energy. And fisheries. What would we be without the fisheries?" http://www.spiegel.de/international/europe/financial-recovery-of-iceland-a-case-worth-studying-a-942387.html http://www.spiegel.de/international/europe/financial-recover...