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Iceland seems to have fixed the problem the correct way: default. This is the part that dumbfounds me, Iceland ignored the common wisdom when they common wisdo

by kls 15y ago

Iceland seems to have fixed the problem the correct way: default. This is the part that dumbfounds me, Iceland ignored the common wisdom when they common wisdom said that very bad things would happen to them if they did not listen to the "smart" people. They went ahead and did it, and none of the bad things happened, further things got a lot better. But somehow we allow everyone to convince us to ignore the blatant evidence that Iceland presented that those saying don't default are pretty much lying through their teeth, because they have a conflict of interests.

nl 15y ago
common wisdom said that very bad things would happen to them if they did not listen to the "smart" people That's not true. The "smart people" understand Keynesian economics and said that pretty much any policy was better then austerity. Unfortunately, there seem to be social pressures that seem to encourage the very thing that will make things worse during a recession. How many times have you heard things like "everyone is suffering and the government must share that pain and tighten its belt too"? In fact, the "smart people" are screaming to do the opposite!
- kls 15y ago
  IIRC the common wisdom at the time, was to put all of the private risk onto the public which is what was proposed, Iceland said no, you got yourselves into this mess and you are not going to spread that risk to the public. Austerity was the proposed solution, in other countries, only after the governments became saddled with the consequences of private risk taking, conveniently after the private risk takers where clear of the consequences of their speculation.
zacharypinter 15y ago
It might have been the best decision for Iceland, but it's not all roses: http://www.npr.org/blogs/money/2012/04/13/150586792/should-iceland-kill-the-krona http://www.npr.org/blogs/money/2012/04/13/150586792/should-i...
- kls 15y ago
  Sure and I apologize if my comment implies that, I don't think that I did though, I was simply stating that Iceland unlike a host of other countries, made the best worst decision available in times like these as such they should serve as an example of how to manage a financial crisis and more importantly as a reminder that governments need to keep their eye on what should be their #1 concern, their citizenry. When choices have to be made they should be made for the good of the people first, with all other interest being second.

by kls 15y ago

nl 15y ago

common wisdom said that very bad things would happen to them if they did not listen to the "smart" people That's not true. The "smart people" understand Keynesian economics and said that pretty much any policy was better then austerity. Unfortunately, there seem to be social pressures that seem to encourage the very thing that will make things worse during a recession. How many times have you heard things like "everyone is suffering and the government must share that pain and tighten its belt too"? In fact, the "smart people" are screaming to do the opposite!

kls 15y ago
IIRC the common wisdom at the time, was to put all of the private risk onto the public which is what was proposed, Iceland said no, you got yourselves into this mess and you are not going to spread that risk to the public. Austerity was the proposed solution, in other countries, only after the governments became saddled with the consequences of private risk taking, conveniently after the private risk takers where clear of the consequences of their speculation.

zacharypinter 15y ago

It might have been the best decision for Iceland, but it's not all roses: http://www.npr.org/blogs/money/2012/04/13/150586792/should-iceland-kill-the-krona http://www.npr.org/blogs/money/2012/04/13/150586792/should-i...

kls 15y ago
Sure and I apologize if my comment implies that, I don't think that I did though, I was simply stating that Iceland unlike a host of other countries, made the best worst decision available in times like these as such they should serve as an example of how to manage a financial crisis and more importantly as a reminder that governments need to keep their eye on what should be their #1 concern, their citizenry. When choices have to be made they should be made for the good of the people first, with all other interest being second.