4 ms·

"I hope the Greek government has the guts to go bankrupt. It'd be a short term loss with a long term gain. It's not like the creditors have to lose out, Argenti

by rsync 11y ago

"I hope the Greek government has the guts to go bankrupt. It'd be a short term loss with a long term gain. It's not like the creditors have to lose out, Argentina showed that by paying off its debts after their currency issues." The confusing part is that there is a very recent, very relevant precedent that was set by Iceland and for some reason that course of action is completely off the table. I don't know why. It appears to have worked very well for Iceland.

tptacek 11y ago
Iceland isn't part of the Eurozone, is it?
- kawera 11y ago
  No, it isn't.
  - tptacek 11y ago
    Then how are the situations comparable? Iceland had a bank crisis triggered by a speculative bubble produced by poorly managed deregulation. It imposed capital controls, was bailed out by the IMF, and took on a crapload of debt in the process, which it is paying off. All this was managed by Iceland's central bank, which controls Iceland's own currency. Greece has multiple structural flaws and an economy that does not appear compatible with the Eurozone, while being locked into the monetary policy of Germany and France, who effectively control the ECB. The only thing these events seem to have in common is that they were economic crises. Iceland's problems were acute; Greece's chronic. Iceland's had a single cause, Greece many. Iceland controls its monetary policy, Greece signed that over to the Eurozone. Iceland got assistance from the IMF, Greece requires ongoing assistance from the ECB. Iceland is paying off its debts, Greece is (it seems apparent) never going to do that.
radu_floricica 11y ago
I don't think Iceland's government defaulted. AFAIK, they simply let their own banks fail and made no move to support them. UK was pretty pissed off because their citizens lost cash in those banks, and they expected Iceland's citizens to cover for them. Greece is in a completely different pot of hot water. Their incomes (taxes) keep being lower than expenditures, aka salaries, pensions etc. Not getting any more EU help means they will start paying their doctors and firefighters with monopoly money.
- peterfirefly 11y ago
  > and they expected Iceland's citizens to cover for them. because that was actually Iceland's obligation so it wasn't at all unreasonable for the UK and the Netherlands to expect that. http://ec.europa.eu/finance/bank/index_en.htm http://ec.europa.eu/finance/bank/index_en.htm (Single Passport and cross-border banking)
  - nextw33k 11y ago
    I don't know the exact details but I didn't think Iceland was in Europe, the UK wanted to rush them in so that those rules could apply: https://en.wikipedia.org/wiki/Accession_of_Iceland_to_the_European_Union https://en.wikipedia.org/wiki/Accession_of_Iceland_to_the_Eu...
    - peterfirefly 11y ago
      Iceland is and was in the EFTA and hence in the EEA where the single-passport rules apply -- and applied back then as well, otherwise the Iceland banks operating in the UK and the Netherlands would have been under UK/NL supervision instead of IS supervision. UK/NL were not ALLOWED under those rules to meaningfully supervise IS banks operating in their countries. As long as they operated under IS law and IS supervision, they operated under IS insurance rules with the usual EU (EEA) 100k€ limit. Iceland blatantly broke the rules. Later, after the shit hit the fan, Iceland did apply for EU membership and negotiations begun. Iceland later withdrew their application.

by rsync 11y ago

tptacek 11y ago

Iceland isn't part of the Eurozone, is it?

kawera 11y ago
No, it isn't.
- tptacek 11y ago
  Then how are the situations comparable? Iceland had a bank crisis triggered by a speculative bubble produced by poorly managed deregulation. It imposed capital controls, was bailed out by the IMF, and took on a crapload of debt in the process, which it is paying off. All this was managed by Iceland's central bank, which controls Iceland's own currency. Greece has multiple structural flaws and an economy that does not appear compatible with the Eurozone, while being locked into the monetary policy of Germany and France, who effectively control the ECB. The only thing these events seem to have in common is that they were economic crises. Iceland's problems were acute; Greece's chronic. Iceland's had a single cause, Greece many. Iceland controls its monetary policy, Greece signed that over to the Eurozone. Iceland got assistance from the IMF, Greece requires ongoing assistance from the ECB. Iceland is paying off its debts, Greece is (it seems apparent) never going to do that.

radu_floricica 11y ago

I don't think Iceland's government defaulted. AFAIK, they simply let their own banks fail and made no move to support them. UK was pretty pissed off because their citizens lost cash in those banks, and they expected Iceland's citizens to cover for them. Greece is in a completely different pot of hot water. Their incomes (taxes) keep being lower than expenditures, aka salaries, pensions etc. Not getting any more EU help means they will start paying their doctors and firefighters with monopoly money.

peterfirefly 11y ago
> and they expected Iceland's citizens to cover for them. because that was actually Iceland's obligation so it wasn't at all unreasonable for the UK and the Netherlands to expect that. http://ec.europa.eu/finance/bank/index_en.htm http://ec.europa.eu/finance/bank/index_en.htm (Single Passport and cross-border banking)
- nextw33k 11y ago
  I don't know the exact details but I didn't think Iceland was in Europe, the UK wanted to rush them in so that those rules could apply: https://en.wikipedia.org/wiki/Accession_of_Iceland_to_the_European_Union https://en.wikipedia.org/wiki/Accession_of_Iceland_to_the_Eu...
  - peterfirefly 11y ago
    Iceland is and was in the EFTA and hence in the EEA where the single-passport rules apply -- and applied back then as well, otherwise the Iceland banks operating in the UK and the Netherlands would have been under UK/NL supervision instead of IS supervision. UK/NL were not ALLOWED under those rules to meaningfully supervise IS banks operating in their countries. As long as they operated under IS law and IS supervision, they operated under IS insurance rules with the usual EU (EEA) 100k€ limit. Iceland blatantly broke the rules. Later, after the shit hit the fan, Iceland did apply for EU membership and negotiations begun. Iceland later withdrew their application.