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Iceland did what any sovereign nation should do in that situation. They fixed it, and importantly they did it not by bailing out the bad guys but by taking ever
by nikster 14y ago
Iceland did what any sovereign nation should do in that situation. They fixed it, and importantly they did it not by bailing out the bad guys but by taking everything from them!
Iceland also apparently knew that so-called investor confidence is a joke as far as countries are concerned. A few years on, who is even going to remember this? Of those who remember, who is going to think this might happen again - particularly since iron clad policy was put in place to prevent it from happening again.
Maybe Irish and Greek politicians are just too chicken to do the right thing. Or, and I think thats unfortunately more likely, they are fighting for vested interests of a few that pay them money rather than their country or their people. Iceland stands out in that the politicians acted in the interest of the people.
- dataminer 14y agoI think part of the problem with Greece and Ireland is also that they are part of EU and are no more sovereign and in full control of their financial policies.
- waterlesscloud 14y agoIronically, Iceland's application for EU membership is cited as a major factor in its recovery. The story here is not all that simple.
- MaysonL 14y agoNot just part of the EU, but members of the euro zone: i.e., they have neither their own currencies nor their own central banks.
- rayiner 14y agoThere are more than 50 US cities bigger than the whole country of Iceland. I think the kinds of conclusions you can draw from Iceland's experience is a bit limited.
- maxxxxx 14y ago"But we are so much bigger" seems to be the standard excuse for the US not looking at what other countries are doing successfully and learning from them.
- lbrandy 14y ago> "But we are so much bigger" seems to be the standard excuse for the US not looking at what other countries are doing successfully and learning from them. Except we have evidence of what happens when a much larger fraction of the economy does what Iceland did. It was called the Great Depression. Small economies can borrow from abroad without destabilizing everything. Unless you are willing to directly take on the analogy of the Great Depression the 'Iceland for everyone!' argument is dead in the water.
- anonymoushn 14y agoI believe it was called the depression of 1920-21. I would certainly be up for it, as an alternative to following in the footsteps of Japan.
- anigbrowl 14y agoYou assume scale invariance. There is abundant evidence that this is not the case in the field of economics.
- maigret 14y agoIf the argument that scale hurts (all small western countries are very rich, but big countries complain "we're too big because we can't do that and that), then the obvious solution would be to split up. For me it seems just too easy. I think the reasons are more related to the culture than to the size.
- anigbrowl 14y agoIt's not that scale hurts; there are many benefits to scale. But obviously, it makes some things harder to deal with. Iceland has a population of 320,000 or so people and only one major city. Politics is a lot simpler with a population that small.
- tcbawo 14y agoIt probably helped that the amount was totally infeasible for a country of 320,000 people to pay back.
- tsotha 14y ago>Iceland did what any sovereign nation should do in that situation. They fixed it, and importantly they did it not by bailing out the bad guys but by taking everything from them! Well, you can always solve your debt problems by refusing to pay creditors. I wouldn't read too much in to the doings of a country with the population of a mid-sized city.
- kaonashi 14y agoIreland and Greece are only quasi-sovereign as they adopted the Euro; their hands are tied unless they adopt their own currency.
- patrickk 14y agoThe Irish Government retains the power to unilaterally renege on our bank debt. They lack the political balls to do the right thing- the phrase used by chicken shit Irish politicians and Eurocrats is "the bomb won't go off in Frankfurt, it'll go off in Dublin". The European Commission, the European Central Bank, Angela Merkel, and amazingly, US Treasury Secretary Tim Geithner have all leaned on Ireland to keep this bullshit charade of paying back all this bank debt. The IMF and the UK Chancellor are the only external parties who've said there's too much austerity in Ireland and paying off this massive debt pile is not right. Ctrl+F my username, I've posted links elsewhere to back this up.
- pjriot 14y agoBrian Lenihan converted the "bank debt" to sovereign debt when he guaranteed it. That never should have happened. To renege on that debt is a default now whatever way you slice it.