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I wonder though if this is something that can only work on a small scale. Iceland has only 320,000 people, which means that even as huge as their debt was, the

by zmmmmm 14y ago

I wonder though if this is something that can only work on a small scale. Iceland has only 320,000 people, which means that even as huge as their debt was, the economic ramifications of their default were quite small on a global scale. It seems to me that the effects of this kind of thing would scale up in a highly non-linear way and you can't just assume that an economy 10x the size will behave the same way a smaller one would, let alone the US or other major economies. For example, the primary reason Iceland is doing OK now is that the rest of the world economy (despite being in extremely poor shape) managed to survive, so Iceland's export industries have somewhere to export to. If the whole world economy had collapsed Iceland might be in the worst shape of all.

thewarrior 14y ago
Yes the world economy would have collapsed and like Iceland recovered much faster (Not that I'm sure about it but thats the point being made here).
martythemaniak 14y ago
Iceland did what numerous other countries have done in the past to deal with the same situation, including Argentina in the 2000s, Sweden in the 90s and the US during the 30s.
- philwelch 14y ago
  The US during the 30's ended up remaining in a deep depression that didn't let up for well over a decade, something that casts doubt on any of the actions the US government took during the time.
  - yxhuvud 14y ago
    US during the 30's started off trying to use austerity. That is what made it longer and more painful.
    - deleted 14y ago
      [deleted]
- chalst 14y ago
  One of those things is not like the others: the Argentinian financial crisis was about the Argentine government defaulting on its sovereign debt, which did not happen in the other cases. The Argentine crisis was about the government (i) borrowing excessively, (ii) having its debts in a foreign currency (dollars), and (iii) maintaining a fixed exchange rate. Rather like the Greek situation. Sweden was in a similar situation to Iceland (though not as extreme), but chose to guarantee bank creditors - so it behaved in the opposite manner to Iceland, making the same choice that Ireland did, though it was much smarter in how it went about recapitalising banks than Ireland was.
anigbrowl 14y ago
Of course that was a factor. Every time I ask anyone I know from Iceland about stories like these, they roll their eyes and say it's BS. Also, notice that this is published in the Irish Independent, a fairly newspaper which traditionally supports what is now the opposition party and which dug the country into a hole in the first place. It would be a mistake to assume this commentary is wholly objective; likewise it would be a mistake to overlook the historical record, in which Ireland has been through past periods of austerity and emerged sooner than its peers for having taken the bull by the horns. In the meantime, it's useful to remember an Irish proverb: 'faraway hills look green.'
- disgruntledphd2 14y ago
  And its written by Dan White, he of get on the property ladder and the time to buy is now. Seriously, I cannot understand how anyone still listens to him, but apparently they do.

by zmmmmm 14y ago

thewarrior 14y ago

Yes the world economy would have collapsed and like Iceland recovered much faster (Not that I'm sure about it but thats the point being made here).

martythemaniak 14y ago

Iceland did what numerous other countries have done in the past to deal with the same situation, including Argentina in the 2000s, Sweden in the 90s and the US during the 30s.

philwelch 14y ago
The US during the 30's ended up remaining in a deep depression that didn't let up for well over a decade, something that casts doubt on any of the actions the US government took during the time.
- yxhuvud 14y ago
  US during the 30's started off trying to use austerity. That is what made it longer and more painful.
  - deleted 14y ago
    [deleted]
chalst 14y ago
One of those things is not like the others: the Argentinian financial crisis was about the Argentine government defaulting on its sovereign debt, which did not happen in the other cases. The Argentine crisis was about the government (i) borrowing excessively, (ii) having its debts in a foreign currency (dollars), and (iii) maintaining a fixed exchange rate. Rather like the Greek situation. Sweden was in a similar situation to Iceland (though not as extreme), but chose to guarantee bank creditors - so it behaved in the opposite manner to Iceland, making the same choice that Ireland did, though it was much smarter in how it went about recapitalising banks than Ireland was.

anigbrowl 14y ago

Of course that was a factor. Every time I ask anyone I know from Iceland about stories like these, they roll their eyes and say it's BS. Also, notice that this is published in the Irish Independent, a fairly newspaper which traditionally supports what is now the opposition party and which dug the country into a hole in the first place. It would be a mistake to assume this commentary is wholly objective; likewise it would be a mistake to overlook the historical record, in which Ireland has been through past periods of austerity and emerged sooner than its peers for having taken the bull by the horns. In the meantime, it's useful to remember an Irish proverb: 'faraway hills look green.'

disgruntledphd2 14y ago
And its written by Dan White, he of get on the property ladder and the time to buy is now. Seriously, I cannot understand how anyone still listens to him, but apparently they do.