>Under most circumstances I would agree with you, but in Iceland’s case I believe there’s a much larger issue that relates to state-run banks and national currency considerations. Once it is determined that almost all of a country’s private mortgage debt is held by foreign interests, a lot of those principles go right out the window.
So it is OK to screw over people who lend in good faith if they happen to be foreigners? Brilliant.
That's called "Nationalization."
Something for nothing is never a good economic policy.
Not at all. One of the biggest contributors to the collapse of the U.S. real estate market in the last few years was the fact that the people who lent the money weren't lending in good faith. It's not so much that these banks were out to screw the borrowers, but that they lent the money while knowing full well that they had no intention of keeping the loan on their books. The real estate collapse was not a real estate crisis ... it was a banking crisis. Banks extended loans under very easy terms because they knew they had no long-term exposure ... since they intended all along to package the loans into mortgage bonds and sell them to investors.