Skip to comments.Top Economists: Iceland Did It Right … And Everyone Else Is Doing It Wrong
Posted on 08/25/2012 4:47:27 PM PDT by Kartographer
A funny thing happened on the way to economic Armageddon: Icelands very desperation made conventional behavior impossible, freeing the nation to break the rules. Where everyone else bailed out the bankers and made the public pay the price, Iceland let the banks go bust and actually expanded its social safety net. Where everyone else was fixated on trying to placate international investors, Iceland imposed temporary controls on the movement of capital to give itself room to maneuver.
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What was done in Iceland cannot be done in the USA — Iceland has a homogeneous society and does not worship at the altar of multiculturalism and diversity.
Sounds like a great place to live. Think I might want to move there.
It also has a the population of a medium to small sized city in the US. So it’s more like Stockton going under than say - oh California.
On the other hand - letting the Banks fail has already been done here when we let the Savings & Loan industry implode without treating them as to big to fail back in the late 80s. We survived that - it wasn’t fun, but we got through it. The whole concept of the government stepping in to save companies whether Wall Street or Detroit is ludicrous. The Dog-Eat-Dog Capitalistic solution should be allowed to run it’s course. We would have recovered by now if it had been.
What was done in Iceland cannot be done in the USA Iceland has a homogeneous society and does not worship at the altar of multiculturalism and diversity.
Yep. No way you could pull that off here. Every major city would go into riot mode.
I, would welcome it.
Those who claimed Detroit, Wayne County, Michigan, and the United States couldn't have absorbed or adapted to the bankrupting of GM crack me up. The unbelievable amount of resources and infrastructure that is GM makes it obvious as one of the best investment opportunities in its component parts. Those machines and factories would have gone idle for minutes while savy investors jumped in to continue production.
Those in Iceland have it right. We need to see big corporations and big banks collapse if they can't properly manage themselves. There is no reason "big" should insulate anybody from anything, laws are laws, and ethics are ethics.
If we want honest business practices, it shouldn't matter how good our attorney is. What matters is what you get when you buy it from us. That's true for a small business like mine, and it's true at the huge mega corporation level and at the country level.
What Iceland did had limited effects outside of Iceland, because it was small, and to a degree they have been free-riders on everyone else.
How have they been "free riders?" Because the other countries decided to bail out their foolish citizens who'd put money in the Icelandic banks? That was their decision.
Iceland had nothing to do with it nor should they have.
As for those commenters claiming that it couldn't work here: nonsense. Of course, it could. Why would failing banks cause riots in the streets?
Why would failing banks cause rioting in the streets? For the same reason it did in the late twenties and early thirties in some parts of the United States. People facing the prospect of being penniless because of the idiocy of bankers who managed to salvage their own investments and accounts as well as those of board members, then shuttered the bank. Happened here with a bank owned by second cousins, I’m ashamed to admit. They were trapped inside the bank until police reinforcements arrived from other jurisdictions, torch and pitchfork time, for real. My grandfather counted himself lucky to get ten cents on the dollar, most were wiped out.
You really want this?
The FDIC didn't exist then. It does now. Let the bank fail -- in America, the depositors won't give a damn. Not saying I agree with it, but it is the case.
You’re opposed to bailouts. What do you think the Federal Deposit Insurance Corporation provides?