Top Economists: Iceland Did It Right … And Everyone Else Is Doing It Wrong

Iceland Shows the Way

Nobel prize winning economist Joe Stiglitz notes:

What Iceland did was right. It would have been wrong to burden future generations with the mistakes of the financial system.

Nobel prize winning economist Paul Krugman writes:

What [Iceland’s recovery] demonstrated was the … case for letting creditors of private banks gone wild eat the losses.

Krugman also says:

A funny thing happened on the way to economic Armageddon: Iceland’s 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.

Krugman is right.  Letting the banks go bust – instead of perpetually bailing them out – is the right way to go.

We’ve previously noted:

Iceland told the banks to pound sand. And Iceland’s economy is doing much better than virtually all of the countries which have let the banks push them around.

Bloomberg reports:

Iceland holds some key lessons for nations trying to survive bailouts after the island’s approach to its rescue led to a “surprisingly” strong recovery, the International Monetary Fund’s mission chief to the country said.

Iceland’s commitment to its program, a decision to push losses on to bondholders instead of taxpayers and the safeguarding of a welfare system that shielded the unemployed from penury helped propel the nation from collapse toward recovery, according to the Washington-based fund.

***

Iceland refused to protect creditors in its banks, which failed in 2008 after their debts bloated to 10 times the size of the economy.

The IMF’s point about bondholders is an important one:  the failure to force a haircut on the bondholders is dooming the U.S. and Europe to economic doldrums.

The IMF notes:

[The] decision not to make taxpayers liable for bank losses was right, economists say.

In other words, as IMF put it:

Key to Iceland’s recovery was [a] program [which] sought to ensure that the restructuring of the banks would not require Icelandic taxpayers to shoulder excessive private sector losses.

Icenews points out:

Experts continue to praise Iceland’s recovery success after the country’s bank bailouts of 2008.

Unlike the US and several countries in the eurozone, Iceland allowed its banking system to fail in the global economic downturn and put the burden on the industry’s creditors rather than taxpayers.

***

The rebound continues to wow officials, including International Monetary Fund chief Christine Lagarde, who recently referred to the Icelandic recovery as “impressive”. And experts continue to reiterate that European officials should look to Iceland for lessons regarding austerity measures and similar issues.

Barry Ritholtz noted last year:

Rather than bailout the banks — Iceland could not have done so even if they wanted to — they guaranteed deposits (the way our FDIC does), and let the normal capitalistic process of failure run its course.

They are now much much better for it than the countries like the US and Ireland who did not.

Bloomberg pointed out February 2011:

Unlike other nations, including the U.S. and Ireland, which injected billions of dollars of capital into their financial institutions to keep them afloat, Iceland placed its biggest lenders in receivership. It chose not to protect creditors of the country’s banks, whose assets had ballooned to $209 billion, 11 times gross domestic product.

***

“Iceland did the right thing … creditors, not the taxpayers, shouldered the losses of banks,” says Nobel laureate Joseph Stiglitz, an economics professor at Columbia University in New York. “Ireland’s done all the wrong things, on the other hand. That’s probably the worst model.”

Ireland guaranteed all the liabilities of its banks when they ran into trouble and has been injecting capital — 46 billion euros ($64 billion) so far — to prop them up. That brought the country to the brink of ruin, forcing it to accept a rescue package from the European Union in December.

***

Countries with larger banking systems can follow Iceland’s example, says Adriaan van der Knaap, a managing director at UBS AG.

“It wouldn’t upset the financial system,” says Van der Knaap, who has advised Iceland’s bank resolution committees.

***

Arni Pall Arnason, 44, Iceland’s minister of economic affairs, says the decision to make debt holders share the pain saved the country’s future.

“If we’d guaranteed all the banks’ liabilities, we’d be in the same situation as Ireland,” says Arnason, whose Social Democratic Alliance was a junior coalition partner in the Haarde government.

***

“In the beginning, banks and other financial institutions in Europe were telling us, ‘Never again will we lend to you,’” Einarsdottir says. “Then it was 10 years, then 5. Now they say they might soon be ready to lend again.”

And Iceland’s prosecution of white collar fraud played a big part in its recovery:

[The U.S. and Europe have thwarted white collar fraud investigations … let alone prosecutions.] On the other hand, Iceland has prosecuted the fraudster bank heads (and here and here) and their former prime minister, and their economy is recovering nicely … because trust is being restored in the financial system.

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  • http://theendisalwaysnear.blogspot.com nahummer

    The more voices screaming that there IS an alternative the better. It’s amazing that a few of those links have a pretty sizable readership, yet most people will continue to follow the lead of the Fed/ECB and their bankster cronies. There’s two sides to every contract and those who are completely amoral have no right to scream “moral hazard”.
    http://theendisalwaysnear.blogspot.com/2012/08/the-hazardous-morals-of-bankers.html

  • Will

    This is because Iceland is one of the few western countries not completely owned and manipulated by Zionists. No Zionist country will ever not side 100% with the banks. The banks are how they extract wealth from the taxpayers of sovereign nations to fund their international criminal empire.

    • Peter Pearson

      Oh for real………….

    • Sterlyn

      You my friend, are an idiot.

      • JAcob Svetlik

        I AGREE

    • sam

      chuh bruh

    • sf

      When you had to choose between the pills, it was a trick. They were both blue pills.

      • Leggyladyus

        BRILLIANT POINT!

    • http://jrfibonacci.wordpress.com JR Fibonacci

      Will,

      I appreciate the spirit of your analysis (unlike some of the others who replied to you). However, I would disagree with you on one point and I assert that it is court systems and the armed mercenaries (deputies, police officers, etc) of court systems which extract wealth from taxpayers, not banks. Banks may of course benefit, but let’s be clear about the mechanism or process.

      When an imperialist army conquers a nation and imposes taxes there, that siphons resources from the colony to the imperial capital, so it is not the banks so much as the armies and court systems and law enforcement officers who execute garnishments and levies and foreclosures and evictions and arrests and executions for non-payment of the “extortion protection money” (taxes, tithes, tributes, indulgences, etc). Yes, these “domestic soldiers” may extract wealth on behalf of creditor banks, but the armies of domestic law enforcement squads and swat teams are the actual primary mechanism of redistribution.

      To say something like “the banks” is a very broad labeling. Many people think of credit unions as banks and if I was talking to a 5th grader about all this, I would say “respect the banks” and furthermore “be especially cautious of those armed men patrolling the area.”

      Take as a case the Cambodian wealth transfer by the Khmer Rouge. First, Pol Pot went to France and was trained there by Communist Free Masons, who may have reaped enormous financial benefits from the comprehensive seizure of property and resources in the capital city of Cambodia some time thereafter as the entire city was “evicted.” Whether it is French Free Masons who are enriched by the Cambodian Killing Fields, or New York Free Mason bankers who are enriched by the Bolshevik redistribution of ownership (relating to a transfer of the wealth of around 60 million Russians killed in the process by “their own government”), the general pattern is the same.

      It is not ALL banks. In particular, banks without bullets and bombs are easily emptied by bankers that do have bullets and bombs. Again, consider the banks in Cambodia or the banks in Russia just prior to the communist take-overs. The communists may say things like “it is the banks that are at fault!” When the communists say that, keep in mind that some of them may be bankers and that they may be positioning themselves to keep out competition. When a few bankers create a communist centralization of resources and influence and violence, excluding all minor banks, they may call it “an overthrow of the banking system,” when in fact it may be more like a hostile takeover (“nationalization”) of all the minor competitors by a cabal of allied bankers that portray themselves as “anti-banker” and “populist” and “pro-proletariat” and so on.

      ww.thedominOILeffect.com

    • JAcob Svetlik

      Nothing is absolute the cold hand of science has shown us that. 100%? Thats a bold piece of shit claim. Criminal? Thats eye of the beholder. You must be a devout christian or something, because you just believe with out questioning. You and every other doubter who wont try is the problem. Go do some yoga until you can suck your own dick.

    • John C. Toasten

      You can’t be serious!

      “This is because Iceland is one of the few western countries not completely owned and manipulated by Zionists.”

      You don’t plan on strapping Jato Rockets on a 1966 Chevy and trying to fly across the Grand Canyon anytime soon do you Will? If so, I’ll nominate you know for this years Darwin Awards.

  • gozounlimited

    The same people behind death dumps for dollars …. Who is Behind the Climate Change and Carbon Trading Scams? …. see here: http://www.stormfront.org/forum/t694484/

    Thank You President Obama …. for protecting me from chemtrails when I asked you to …. LOVE YOU!!!!!!!

    • gozounlimited

      PRAYERS and LOVE to Friends and Relatives on their way to meet Issac. The story of Issac reveals a diabolical scheme where Rebecca Issac’s wife, uses deceit and dishonesty to fool Issac into ordaining his son Jacob instead of Esau with the blessing of God. When the events recorded in Genesis 27 reoccur, the experience for those involved in always treacherous.

      When Rebekah conceived, she had a violent pregnancy. Isaac was little help to her, so she cried out to the Lord for answers, and he spoke to her: “Two nations are in your womb; and two peoples shall be separated from your body; and one people shall be stronger than the other; and the older shall serve the younger” (Gen. 25:23).

      The Mandala is turning …. repeating the same lessons ….. Return To Innocence …. here: http://www.youtube.com/watch?feature=endscreen&NR=1&v=2rALVgdoMHk

  • David Rogers

    I guess it’s time to invade Iceland then, right? Or at the least, impose onerous sanctions and no-fly zones? Maybe take them to the secret WTO Tribunal for not playing by our (banks) rules. Otherwise some might be tempted to emulate their success, if anyone besides a few Nobel geniuses was actually watching. Sadly, no one is just now, so all there is to say is that if I had some ham we could have ham and eggs, if I had some eggs.

    • donnie

      love it!

  • jo6pac

    Hell, Niceland even put banksters in Jail instead of handing out bonus like Ameika did.

    • Þorsteinn Haldórsson

      Not true not one is in jail and most live quite nicely in England and rest of europe in penthouses. Me as a citizen, I am footing the bill with a mortgage that has risen 40% to pay it all down,,,,,don´t listen to this crap being out out speak to a person actually living there.

  • Matty O

    What these very smart people seem to be forgetting is that the losses that the banks passed on to the people where taken by foreign citizens. If in America you deposited money into a savings bank and it was unable to pay the FDIC would pay you so in essence the tax payer takes the loss either way. The European holders of Iceland bank accounts were covered by their local governments so Iceland essential forced foreigners to foot the bill.
    So I’m really not surprised it worked out great for them. They even had a national referendum on whether they should payback the Europeans who made deposits and the people voted no. These people didn’t make risky investments they deposited into an Iceland Bank they thought had a good interest rate.

  • http://www.marijuanaparty.ca/article.php3?id_article=161 Blair T. Longley

    Iceland was shell shocked by sudden indebtedness, that was obviously impossible to repay!

    Iceland could not be easily infiltrated, by the CIA, etc., to subsidize some inner oppositions.

    And, an excuse to start bombing Iceland could not easily be found to justify military actions.

    The international banksters have decided to ignore Iceland, for now …

    Banksters’ typical techniques of the methods of organized crime failed?

    We are inside of a COMBINED money/murder system.

    Money is based on robbery, backed by murder.

    The debt controls depended on death controls.

    History making War King made Fraud King.

    P.S.

    Regarding the dismissal of the first poster’s comments.

    The Anglo-American Empire IS also effectively Zionist.

    That is NOT “Jewish” but rather best organized crime.

    Furthermore, I would extend the principles to assert that the only real solutions are better organized crime. The only way forward is different death controls, to do different debt controls. It is IMPOSSIBLE to change the money systems without changing the murder systems too! Iceland was an interesting counter-example, for the reasons I mentioned above, to the standard, established triumphs of the methods of organized crime being the basis of our civilization. Unfortunately, we will most probably get different death controls in the worse possible ways, by going on down the path of least morality. Political economy is always inside of human ecology. The central core concepts of human ecology are the death controls. The history of militarism was the real history of that. However, that generated the almost infinite paradox that those who were the best at death control were also the best at lying about that … which is why our civilization is now global fiat money electronic frauds, backed by atomic weapons. Iceland cannot be an example for the rest of us, because they were such a special case as to be able to temporarily isolate themselves from, and somewhat resist the supreme organized crime gang of the international banksters. They are temporarily able to embrace impossible ideals, but are not actually resolving any of the deeper issues … Iceland is merely muddling through, without the clear ideas about their limits. On a little island, they MUST limit their population growth, etc., BUT HOW? We use the symbols of money to organize systems of lies and robbery, while our most professional liars got extremely good at only discussing that through the means of immaculate hypocrisies. When Iceland opens recognizes and maintains their death controls, then that murder system will back up their real money system, and its debt controls, otherwise, they are still on autopilot cruise control. Spaceship Earth IS a big island too, like Iceland, and we should face that fact. However, everything we did was controlled by the people who were the best at dishonesty. That is the grand paradox that we face, and Iceland is not enough of a genuine solution to that dilemma yet …

    • Edd.

      Good afternoon Blair T. Longley,

      I read your comment from: Top Economists: Iceland Did It Right … And Everyone Else Is Doing It Wrong Posted on August 25, 2012 by WashingtonsBlog, and I was interseted in reading the material that helped you reach this conclution. I find it very interesting and would like to know more.

      Would you kindly reply to me with, authers or titles to read, bloggs and websites, or what ever you suggest may be a place where I may start to understand and know why you are correct.

      29-08-2012 Wed,
      Cheers Edd.

  • Howard T. Lewis III

    Min mor fra Stavanger. Min mormor fra Island.

  • ROH

    Way to go Iceland. Save the world from greedy banks by Packaging it and selling it.

  • STRAYHORSE

    Iceland needs to open a training programs for all people in all nations and states that are serious about making the same changes in their own nations/states. Iceland got it right – time to share the process with the world community and stop this economic madness of corpratocracy by the banks and financial houses of the world that htreatens the very future and existance of generations of people. If Iceland is listening, I for one am ready to apply for the first training academy for bringing down those theives and provacateurs in the banking industry in my area who are destroying America.

  • roy tanoulas

    Let the example of Iceland show the direction of the compass for all
    other European countries. May the spotlight shine brighter to expose
    the corruption of the international banking cartel.

    roy

  • j eldert

    Iceland is hardly comparable with the rest of Europe or the united states. Iceland has always been quite isolated, also from economic point of view. Their GBP mainly depends on fishing which is mainly consumed domestic and some swapped on trading. These thin connections to other countries allowed iceland to make their own decisions without longterm effects on their international trade.

    Europe and the US are main players in the global economy. Their decisions reaches out to the entire world. Iceland has in the case no significance at all. The international banks in Europe and the US are the main part of the international financial market. Allowing those bank to collapse would breakdown the entire international financial structure. The collapse of a local iceland bank, has no effect at all, except for iceland.

    For those reasons iceland cannot be seen as an example for the rest of the world.

  • Herman

    I find it odd that no one mentions that many other countries took on the burden for Iceland. When Icesave failed, for example, the Dutch government paid-out every Dutch creditor at that bank till €100,000 to keep trust in the banking system intact. I assume most other countries did the same. This way it was far easier for Iceland to recover. I doubt very much that it would have played out the same for the US if they were to let all their financial institutions go bankrupt.

  • http://rehmat1.com/ Rehmat

    On March 9, 2011 – The BBC reported that property tycoons Robert and Vincent Tchenguiz were arrested as part of an investigation into the collapse of Icelandic bank Kaupthing. However, it was not mentioned that the two brothers were Israeli citizen and their father, Victor Tchenguiz, was an Iranian Jew and the royal jeweller of King Reza Shah (d. 1979). According to The Telegraph (March 6, 2010), Vincent Tchenguizs once dated Dorrit Moussaieff, the Israeli-born Jewish wife of Iceland’s President Dr. Ólafur Ragnar Grímsson.

    Now, why I am mentioning this Jewish power in the tiny country Iceland with a population of 320,000? Well, the other day, I read Manfred Gerstenfeld’s Op-ed in Israeli daily YNet (July 18, 2011), entitled ‘Iceland against Israel’. Dr. Manfred is a political activist and Chairman of Board of Fellows at the Jerusalem Center for Public Affairs. His grievances against Icelanders are not much different than the Jewish lobby groups have against everyone who disagree with Zionists’ narrative of the world.

    http://rehmat1.com/2011/07/28/is-iceland-on-israeli-radar-after-norway/

  • John

    Not mentioned above is the fact that Iceland put their strategy to a vote…the people decided not to bail out the banks. If it had been put to a vote here in the USA I’m sure we would have had the same outcome.

  • Jerry

    While foreign creditors not getting paid back may have had something to do with their recovery, they deposited their money and took their risks. If you invest in a business, and it goes bust, do you go crying to the government for a handout? Only if it is a bank, and your losses exceed federal guarantees. The banks screwed up. Let them fail. The debts alone were 10x the Icelandic economy. Shouldering that burden would take generations to pay off. It’s not surprising. If you kill a vampires feeding off an organism, the organism they were feeding off of gets better (barring infection). If you don’t think this is primarily a Zionist enterprise, note who the Balfour Declaration was addressed to, that the vast majority of the Neo-Cons are Zionists, that they were pushing hard for the bailouts, and how many scams the Rothschild despots have been associated with. Find out who Iceland’s creditors were. I bet they weren’t a bunch of small, mom & pop savers.

  • Jerry

    I bet they weren’t a bunch of small, mom & pop savers; for the most part, anyway.

  • Patrick Murphy

    Sky also blue, water wet.

    Sigh (Yeah, I’m Irish).

  • Þorsteinn Haldórsson

    Once again the lies fly from our Government about solving problems and don´t mention they are doing this on the backs of homeowners with indexed mortgage loans which have risen 40% and continue to rise. I still have yet to see one banker or political friend of money behind bars or paying one red Krona in fines. There is so much smoke being sent out to cover the lies its a crime in itself.

    As a citizen of Iceland and living under these lies I find it offensive that news blogs actually buy into this crap. Imagine yourself buying a house for 200,000 dollars and a 30 year mortgage for 800 a month. Then Presto its 360,000 dollars and your payment is 1400 a month without a pay rise. this is the situation in Iceland and the public sector is buckling under it.

  • Þorsteinn Halldórsson

    Complete bull, Iceland set up 3 new banks in the name of the old and gave foreign investors 2 of them which are now taking peoples homes as collateral for loses on indexed mortgages. No bankers or money friends of the Government are in jail or paying a penny. The banks got all loans at a fraction of cost in the new ones and continue to charge full tilt for the loans to customers like myself who has seen his mortgage rise 40%.
    I wish Kruger would shut up……

  • Kay Smith

    sigh, some people never learn. NOT bailing out the banks is what saved Iceland. Prosecuting the White collar criminals helped to save Iceland. In the U.S. the bank officials are the criminals and they should not be respected. Yes the Police etc are the tools in which they use to enforce their theft but they are merely tools. It is no more the tool’s fault for the extraction of funds than a hammer’s fault for extracting a nail that holds together a wooden structure. I do not and will not respect any bank and I do not respect any government who makes the less fortunate taxpayer suffer and pay for the wealthy elite’s losses.

  • Leo

    The only point that bothers me is that the point was made in mainstream press like WSJ and the like. This would suggest that the big players for the empire have got some kind of deal: they don’t just walk away.

  • http://www.tomdegan.blogspot.com Tom Degan

    Okay, I just made up my mind. Guess where I’m moving to when the economic chickens in this doomed country REALLY come to roost.

    http://www.tomdegan.blogspot.com
    Tom Degan

  • Daithi

    I think it’s important to note that the Icelandic parliament twice voted to have the country and their people shoulder the burden, it was the President, himself no angel, who refused to sign it into law triggering a referendum which of course was massively carried in favour of not paying the bondholders. Their politicians, except the President in this instance, deserve no credit for this, they acted exactly the same as every other European nations politicians have.

  • Steve

    Apparently you have a very conventional view of the causality of the events–much like the official gov’t report.

  • A J

    Agree. Banks should pay for their own mistakes. The Government would not bail me out if I had behaved so irresponsibly.

    • Benny

      You bet! The gov’nah would throw your back-side in prison mate!

  • steve69007

    Hold white collar executives responsible and reformat laws that let them get away with theft.

    • Nice

      Very good point, and one of the better points on this subject that I heard made was that is was not so much a bad thing to bail out the banks, but they should not have bailed out the bankers as well. I am paraphrasing Joseph Stiglitz from his interview http://www.wnyc.org/shows/heresthething/2012/may/07/. Not that everything he says is gospel but he makes some strong points on the way the gov handled this.

    • Chad

      Never going to happen.

      • Magda Lohrmann

        They are counting on you to say that. Not picking a fight but everybody who gives up hope for justice is the problem.

      • Benny

        Did you read reference to the above articles, dude? Talk about cognitive dissonance…

  • caesarv

    As much as I believe this is the way, it would take all countries to stand up to the banks in unison. Iceland has a population of 320,000. do you think the world banks cared what they did? Their hold on the rest of the world is stronger than we know. I am sorry, I choose to read between the lines. The big question is how do we step away from fear to change the system.

    • http://www.facebook.com/trista.cormier Wyld Kat

      Be brave……

    • KeithOK

      “The banks grew to about 10 times the nation’s total economic output
      before defaulting on $85 billion in 2008.” A lot of the money was from investors in other European countries.
      Yes, I think they cared.

      http://www.bloomberg.com/news/2012-08-03/post-crisis-iceland-is-test-site-for-too-big-to-fail-prevention.html

      • http://www.facebook.com/pauli.christie Pauli Christie

        bad luck for those creditors who in their very nature are not concerned with the people they lend to but to the profits they will receive….they made a gamble and lost….they need to get used to the idea…it will be happening again and again in the near future…

    • http://www.facebook.com/cptnbob Joel Urbina

      The response to your question is between the lines… Iceland just did it. They did not know the outcome, but they chose to have more faith in the majority of their population instead of a very, very small percentage like Ireland and the US have done. Iceland has learned how quickly that can help a country. The point is not the size of the country (yes they’re small, but their economy’s big enough to be in the same discussion of other industrialized countries), the point is that they held thieves and swindlers who were trying to heavy-hand them accountable instead of bowing down and becoming their slaves.

      How could a society make sense if the people are afraid of the government and the government is afraid of corporations/banks? Yet, this is what’s happening all over the world. Iceland was lucky enough to have some people looking out for the interests of the people instead of the banks and they (the government and the people) will be rewarded indefinitely for that.

    • http://www.facebook.com/kathy.nobrega Kathy Nobrega

      JUST DO IT

    • DivX

      There is another facet to the story – that of the economies around the world which are heavily dependent on the banks which were bailed out. Now, while Iceland’s banks tried to go global and failed spectacularly, the bailed out banks of the US were already global entities when they came to the crisis, which meant that the whole global economy would have come crashing down if they had not been bailed out.
      I agree that the perpetrators should have been brought to justice, and not doing so is a big mistake by the US, but I rejecting the rationale behind bailouts outright, is not a correct way of looking at things, either. As caesarv said above, read between the lines, and if possible, try not to take a narrow view.

      • H.K.

        The snowballing inflation is killing more jobs every day than letting the banks fail while protecting the citizen’s would have. In financially protecting their citizens they allowed those people to keep supporting businesses. Yes, a lot of people who worked in their banks lost their jobs but that is a stark contrast to people here in the U.S. losing their jobs in ALL industries. Someone loses either way but it’s easier to find new jobs for 1000 people than it is to find new jobs for 15,000,000 people.

        The money exists whether the banks are there to control it or not. In Iceland’s case it was given to the people instead of taken and this saved all of the other businesses.

    • solrun

      By Capital Iceland had more debts then USA. So what happen did happen, Iceland is still recovering but are doing very well, Many Bankers are in Prison right now…. Iceland did this after USA and many other Country turn there back on them, different the what they are doing for Greece right now

    • Magda Lohrmann

      If Iceland is so insignificant why would they let them do what they have done knowing the rest of the world would see it?

    • http://www.facebook.com/rosemary.wiedman Rosemary Wiedman

      We do the same thing! What is happening in this country is criminal, its about time we did something about it. We don’t need all countries to stand up, we can do it here in this country. Its cowards like you being dumbed down that keeps us enslaved to this crap.Stand up!! , you are supposed to be an American, but the liberals are killing the American spirit!

      • Saint Cayetano

        Sheesh! Will you Kool Aid drinkers never learn? Apparently not since it’s not the Dems who are letting the banks sidle up to the trough cutting off millions of Americans from their savings. You’re a pretty dim bulb of a “good ol’ American” but it’s sadly funny how you gripe about the Liberals who are trying to stop the flow of tax cash to private pockets, the exact opposite of what the Reps are doing.

  • http://www.facebook.com/paige.d.lewis Paige Duffy Lewis

    Agreed.

    Barry Ritholtz noted last year:

    Rather than bailout the banks — Iceland could not have done so even if they wanted to — they guaranteed deposits (the way our FDIC does), and let the normal capitalistic process of failure run its course.

    They are now much much better for it than the countries like the US and Ireland who did not.

    • Apartment223

      It’s actually Corporatism, not Capitalism. Keynesian economic theory is far from laissez faire capitalism as well.

  • http://www.facebook.com/rjones222 Rick Jones
    • http://www.facebook.com/profile.php?id=682681011 Trish Blau

      Thank you! I have tried to find this info for almost a year now. I will occasionally see someone from Iceland comment on the memes about Iceland on facebook saying that they’re not true but it has been difficult to find the evidence. Thanks again!

  • http://www.facebook.com/Starsfan22 JD Evans

    “Too big to fail” is now ingrained in the System. When Bush & Paulson & Congressional leaders decided it would be too dangerous for the US banks to all crash at the same time (not a problem for the Icelandic banks) then the next logical decision was for the US government to bail them out. TARP was an economic decision but it was also ultimately a political one.

    • modicum

      The worst and most horrifying thing is now they are even BIGGER!!!

  • qnetter

    I think this analysis ignores one important point. Most Americans’ retirement plans are not “savings” that can be insured, nor do many expect to be able to fully retire on Social Security. Because our retirement os dependent on private funds that are invested in those securities, we ARE among those investors who would go under if the banks are allowed to.

    • http://www.facebook.com/pauli.christie Pauli Christie

      exactly why it was designed that way…the US has to bite on the poisoned apple now or eat the whole thing later……the bite is getting bigger and bigger every day….throw out the corrupt government cut the ties that bind the government to the corporations and international private reserve banks….then the US can get back to what it was intending to be over 200 years ago.

      • Feed-up

        I can’t believe that none of you know anything about the “financial reset” taking place around the world and the arrest and prosecution of these criminals that is to come. You deserve what you get because you should be educating yourselves on the solutions and helping to bring the solutions into reality.

    • An Old Veteran

      That is why I have none of my funds tied up in such things. Most everyone I know told me that I was stupid for not putting my $$ into the markets and the products of the banking and investment systems. Now that those systems have corrupted and destroyed a lot of those investment products with worthless derivatives those same people are asking me how I managed to keep so much of my $$.

      It is a case of leading the masses into the fire for the benefit of a few. Of brainwashing them with products full of empty promises based upon little to nothing of any real, tangible value. Who came up with these products and systems? The public at large or the money manipulators who crashed the markets and congratulated themselves for their “ingenuity” (sic)? That is, of course, a rhetorical question.

  • jmartin

    To caesar, looks Iceland stood up against fear and made a change in the system. It could have been devastating to them had it went south. Also, sometimes its the little guys that make the difference. Change has to start somewhere and maybe this will cause some of the power houses to follow suit… Either we as people change our behaviors or we are going to destroy everything we have, economically and geologically. Don’t discredit Iceland because of their size.

  • Jason

    Never thought that I’d agree with something Krugman said

    • http://www.facebook.com/people/Aaliyah-Yelkon/100000352091345 Aaliyah Yelkon

      Well, Krugman doesn’t agree with Krugman. This certainly wasn’t his position in the fall of 2008.

  • Gzeeee

    Give a rotten man a gun and he can rob a bank. Give a country a rotten bank and it can rob a generation.

    • Parthon

      Give the country a rotten government and it can rob the world. ;)

      • solrun

        Iceland have a rotten Government…. it was the People of Iceland that deside what Iceland had to do

        • DJones1964

          Then that would make them a model government for listening to their people… Show me another government that does that today… The US government ignores its people and does what it wants instead.. We have a corrupt and rotten to the core government..

          • Lauren

            Iceland the model. Just say NO to Wells Fargo, Chase and B of A, etc. already.

      • leemd46

        and which country having a rotten government are you referring to? Certainly not Iceland.

    • Tom

      The US congress failed Americans including future Americans unless the bailout money is returned with interest! Will this happen? Thinking about my grandchildren.

  • Boogie

    too bad the government is a puppet in the hands of rich, wealthy and greedy bankers. Interests of the people? pfft interests of the rich are top priority

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  • veritas_1

    Fun fact, Idaho has a bigger economy than Iceland.

  • http://www.facebook.com/susan.samuel.9 Susan Samuel

    I am very disenchanted with the proven criminal acts by certain bankers that appear to have been brushed to one side. The perpetrators have all been able to walk away with mind blowing “Golden Parachutes” the next bank driven crisis will be greater as there are absolutely not consequences to the collective greed & abuse of trust.

    • Guest

      I am with you! :)

      • DJones1964

        They were not brushed to the side… They were rewarded with our money.. We are the ones who got brushed to the side in all of this…

  • An Old Veteran

    The congress and the economists, etc., all have tried the top-down stimulus and it has failed every time. They will not even consider a bottom-up stimulus because they swear that such an act is “communism” as if they really know what communism is.

    Iceland is not a communist country but the citizens woke up and forced the country to do a bottom-up stimulus and it is working. We here in the USA and those in most European countries have been thrown away because we do not have the political or economic influence that the few wealth and power brokers possess.

    I for one may consider moving to Iceland, if they’ll have me. Don’t worry, I’ll come with just enough $$ to pay for myself and hopefully enough to add to Iceland’s smart and growing economy of the people, by the people and for the people.

    • modicum

      Too cold! LOL. “As if they know what communism is” – exactly.

  • http://www.facebook.com/profile.php?id=700111077 Max Fenris

    I wish I lived on a tiny Island with a tiny government. These goofy Vikings are so
    Nationalistic and Socialistic… OH WAIT! Does that mean they’re
    National Socialists??????????

  • AIV

    I wonder if our Congressmen, Senators,President and Vice President as well as Head of the Federal Reserve Board, i wonder if any of them read the paper?

  • http://www.facebook.com/laaul Lori Aul

    President Obama, Economic Advisors & Congress, hope you learn a valuable lesson from Iceland. Criminals deserve to go to jail & hardworking citizens should never pay the price, nor should future generations!

    • http://www.facebook.com/john.nelson.1238292 John Nelson

      To this day not a single banker in the USA has gone to jail for putting our country in this position.

    • http://www.facebook.com/john.nelson.1238292 John Nelson

      To this day not a single banker in the USA has gone to jail for putting our country in this position.

      • http://profiles.google.com/seejayjames seejay james

        Exactly…I hope Elizabeth Warren gets on that with a vengeance!

  • leperskin

    Yes,yes and yes…and also to change the subject ever so slightly,there should also be a shoot first policy on supermarket shareholders who make capital from the very food we need to live as well as those who would profit from the energy we use to keep us from freezing to death in the cold…up against the wall with them all!!..
    now there’s a slogan..!!

  • AB

    Let’s hope the US and the troubled European countries learn from this example – it’s only a matter of time until the global banking system collapses as far as I am concerned

  • KRS

    A large pile of Bologna. Hundreds of thousands of small guys across Britain lost their savings because the Icelandic banks went bust, but the Icelandic government refused to pay them. So it was not just about “teaching those banks and bankers a lesson” but destroying individuals lives without any care in the world, as long as they were not icelandic. I don’t view this approach as at all morally justified. Iceland were happy to benefit from the income of foreign individuals when it helped them, but hung them out to dry when it didn’t. This article seems to have missed this point.

    • Parthon

      The banks went bust. The banks should be help responsible. Since when do banks have to be bailed out by the Government? Lives were destroyed, not by the Iceland Government, but by the banks that screwed up. If you want moral outrage, then aim it in the right direction. Iceland also suffered from the banking crisis, should they deserve to suffer twice?

    • J Canuck

      YOU seemed to have missed the point. The same system that created the problem wasn’t going to solve it. Going deeper into debt to pay off past debt is a never ending cycle. Iceland just broke the cycle and tried something new. And to echo the other reply to your assinine comment, aim your outrage at the right people: the bankers. If you really look carefully, they were playing both sides of that leger, causing others to suffer outside of their country.

    • MistNet

      But really WHY did those small guys lose their savings? What you are describing was not caused by the Icelandic governements refusal, but was an effect of system channeling losses. We here have losses socialized, not by law of nature, but by political decisions implemented by the very institutions that initialized the situation. Normally taking hostages is punishable under Law of Criminal Acts.

  • Gordie Hayduk

    Let’s focus on the individuals that are both responsible and culpable: the American political system; i.e., Congress (primarily). They write the laws (or not), with the assistance of staffers and lobbyists (read: corporations, bankers, investors, etc.). If Congress and the political monkeys aren’t doing their jobs to the benefit of We The People – and they’re not – then we need a constitutional amendment like the one posted at http://www.tinyurl.com/stop-corruption. This proposed amendment places the burden of serving We The People with integrity and honor, or they get penalized (…if you or I screwed up at work like Congress, we’d be living under a bridge!). The question is: HOW do we force Congress to call a convention? The constitution mandates (in Article V) that only 34 states need to make application for this event to begin – yet over 750 state applications are held in disarray in DC like they never existed. People, this is OUR CONSTITUTION – our contract with the federal government to function for the benefit of We The People, not the 1% or 10% or whatever. Now Google “Article V Convention” and begin learning enough about the ONLY way we’ll ever change the game – one day at a time.

  • cattdogg

    Yes! Thank you! Greed is killing American and the banks are at the helm of it! Let’s punish these greedy white collar criminals and get REAL capitalism (not today’s capitalism = greed, and profit off of the backs of the middle class and WORKING poor).

  • janet

    We the people of the US were against bailing out the banksters, but they (the government) went ahead and did it anyway, using our taxpayer money. Doesn’t anybody remember that? It’s like we have no voice anymore; the thieves disrespected our will but they used our money. And that’s what the 99% were also protesting against. Then they also gambled with people’s mortgages and left millions homeless and none of the thieves that did that have been taken to any kind of court. We really don’t have leaders that represent us and that is the difference with Iceland. They do have a real democracy.

  • rk

    I agree- Thanks for the article David W.- One point though I take this to mean if a client has managed investments at an investment house like Wells Fargo, if there is a portion in these banks they totally lose- kind of discourages investments and lending in the future though- a vital link for businesses.

    • Parthon

      That’s just what the banks want you to believe. ;)

  • http://www.facebook.com/marco.spiezia Marco Spiezia

    Seigniorage is the reason why we have Public debt, but strangely enough nobody seems to point that out in the news… Banks have been pretty sly so far, but people are waking up to the idea that they should not be responsible for the mistakes of a few. Good banking is based on lending to good people with good ideas and seeing the profits of that lending in time. Our banking is based on a few muppets who try and make a quick buck on very risky investments at the expense of the lenders (who often don’t have a clue where their money is actually being invested… most of us!). When it all goes bad (see the american house crash that started this decade’s mess) we pay for it. Well I say no more! The moment we as single countries start printing our own money and become owners of it our economy will start picking up…. JFK tried it with the Executive Order 11110 in 1963. 4 months later he was assassinated and the Order was one of the firsts to be revoked by L B Johnson, the following American president. Conspiracy theory or not these are facts, and Iceland is the proof that getting out of this downward spiral IS actually possible.

    • http://www.facebook.com/profile.php?id=1274453877 Raymond ‘Wolf’ Ritzmann

      Your “facts” are incorrect,

      Executive Order 11110 was issued by U.S. President John F. Kennedy on June 4, 1963.

      This executive order delegated to the Secretary of the Treasury the President’s authority to issue silver certificates under the Thomas Amendment of the Agricultural Adjustment Act, as amended by the Gold Reserve Act. The order allowed the Secretary to issue silver certificates, if any were needed, during the transition period under President Kennedy’s plan to eliminate silver certificates.

      E.O. 11110 was not reversed by President Lyndon B. Johnson and the section added to E.O. 10289 remained on the books until President Ronald Reagan issued Executive Order 12608 on September 9, 1987 as part of a general clean-up of executive orders. E.O. 12608 specifically revoked the section added by E.O. 11110 which effectively revoked the entire Order. By this time, however, the remaining legislative authority behind E.O. 11110 had been repealed by Congress when Pub.L. 97-258 was passed in 1982.

      • MistNet

        Yes, certainly the E.O.11110 was not revoked but instead never effectuated and actually discontinued under L. B. Johnson. The new US dollar with the inscription “US Treasury” instead of “Federal Reserve” was already printed, but as far as I can remember never put into circulation.

  • Jay

    This article is deceptive.

    America and Europe are populated with much larger numbers of people, compared to the 319,000 populating Iceland. Iceland has a lot more “perceptual” transparency, and fewer people to look for and prosecute.

    America and Europe have far more nationally and internationally connected potential violators/criminals, and it would take a lot more work to arrest and try them all in court.

    In America, THAT would also be dependent on being able to hold to account the local, state, and federal legislators complicit in banker crime. In Europe, you also have to expand that process into the legal systems of multiple sovereign nations determined to insulate themselves WITH that sovereignty.

    The reason Iceland was successful is because they are out in the middle of the ocean with a much more manageable number of people, and it was easier to corral the obviously corrupt participants. I also consider they didn’t get all of them, because the bankers couldn’t have done what they did without fundamental consent and/or participation at federal levels.

    By that thinking, I feel many of the criminals in Iceland who could have, or should have gone to prison with the bankers are still walking around free, and are more quietly getting paid by the new bankers in place. The “cultures” of banking and government have not changed, and continue to attract the right people with the moral “flexibility” to maintain them.

    Dogs in a dog park run reasonably free, and steal toys and bones from each other, bite and fight each other, with a behavioral disregard for consequences. Human behavior is not different by any demonstrable measure. Even if you like to think you stand habitually on a moral high-ground, and can prove it, you still know you have to lock your house and car, keep your passwords and keys private, and dial 911 to keep yourself and family safe, because someone is prepared to take your shit when you aren’t looking…..

    …..even respectable looking bankers and government officials.

  • http://www.facebook.com/jason.rice.3720 Jason Rice

    This article is deceptive.

    America and Europe are populated with much larger numbers of people, compared to the 319,000 populating Iceland. Iceland has a lot more “perceptual” transparency, and fewer people to look for and prosecute.

    America and Europe have far more nationally and internationally connected potential violators/criminals, and it would take a lot more work to arrest and try them all in court.

    In America, THAT would also be dependent on being able to hold to account the local, state, and federal legislators complicit in banker crime. In Europe, you also have to expand that process into the legal systems of multiple sovereign nations determined to insulate themselves WITH that sovereignty.

    The reason Iceland was successful is because they are out in the middle of the ocean with a much more manageable number of people, and it was easier to corral the obviously corrupt participants. I also consider they didn’t get all of them, because the bankers couldn’t have done what they did without fundamental consent and/or participation at federal levels.

    By that thinking, I feel many of the criminals in Iceland who could have, or should have gone to prison with the bankers are still walking around free, and are more quietly getting paid by the new bankers in place. The “cultures” of banking and government have not changed, and continue to attract the right people with the moral “flexibility” to maintain them.

    Dogs in a dog park run reasonably free, and steal toys and bones from each other, bite and fight each other, with a behavioral disregard for consequences. Human behavior is not different by any demonstrable measure. Even if you like to think you stand habitually on a moral high-ground, and can prove it, you still know you have to lock your house and car, keep your passwords and keys private, and dial 911 to keep yourself and family safe, because someone is prepared to take your stuff when you aren’t looking…..

    …..even respectable looking bankers and government officials.

    • http://www.facebook.com/people/Robin-Parmar/100000245432932 Robin Parmar

      So, according to you, the more criminals the less we should prosecute, since our task would somehow be harder? An odd idea to be sure.

    • MistNet

      I agree. Procecuting the system does not change the system, as the laws are made by the system. But reality is in the eye of the beholder, and so with the concept of how money is created and used, so when a nation refuses to play by the rules of the system imposed by the benefactors of the system the people by itself changes reality, replacing it, not with nothingness, but with creation. The world does not come to an end even when the system of belief comes to an end, and the banking system is just that; a belief-system.

    • Realitycheck

      And your point is? What you are saying just underlines what a failure our so called “justice” system is. It seems that only money gets “justice” in this country and that needs to change. If Europe and America would be united against the banks they would have to play ball or be at the mercy of countries like China and India. And believe me, those countries would not hesitate to go after them if they feel they have been defrauded, Banks need to lend to make money, they could never turn their backs on Europe or America if we would make them pay like Iceland did. We need to stop make the public pay for rich peoples gambles. I don’t mind you getting rich if you do it through hard work, innovation etc, but if you just start manipulating the market to get your huge profits you are just a fraud and criminal, and you deserve to go to prison and all money needs to be paid back. It is time to get really tough on criminals and really essay on hard working families.

  • noneimport

    If America gave each private household $50K, it would have bailed out both the people and the banks. I know I would have either invested or paid off student loans, just as a majority of people would, I know some would spend it but most would pay off or pay into something. This debt pay-off/investing would have given the banks the cash in hand they needed, keeping them from going bust, and would have kept jobs secure as less job cutbacks would be needed since debt was reduced. That would have been the smart thing. It would have been rough but we wouldn’t have needed to borrow so much and would have eased the bursting bubble, not just a band-aid but a working therapy for a system that was no longer working…..I know I have simplified it but the point remains the same

    • Glenn Marks

      Instead of making excuses the USA should just do it. Arrest the bankers, get the stolen money back. It’s that simple. It was done, according to William Black, during the S&L crisis in America and they got all the money back and the banksters jailed.

  • Palina

    I live in Iceland and there has not been one banker put in prison, and the banks here in Iceland are doing fine, they are still screwing us.

  • JT

    But wheres is the article?

  • http://www.facebook.com/people/Occupy-Wallstreet/100002999968433 Occupy Wallstreet

    It could be done here, BUT, thanks to Citizens United, big corporations bought off congress and got laws passed that would allow them to do what they did. Obama’s justice department tried to prosecute them, but had to come to the conclusion “they did nothing illegal.” If you want justice, you have to go out and get it yourself…… http://www.facebook.com/occupy.wallstreet.1217

  • Countryboy516

    I agree with what Iceland did, but our government would never put our white collar executives in jail because half of congress would have to go to, and besides the government would not make a profit for there retirements.

  • http://www.facebook.com/profile.php?id=1658866059 Ken Detweiler

    Problem is the money the banks are losing is largely our retirement plans. Boy – I sure wish the Republicans had privatized Social Security too :-/

    • BDM

      You would not be wishing for privatized social security if it ever was put in place. Those same corporate raiders would and could very possibly abscond with your funds, or go chapter 11. Putting public money in private hands is foolhardy. I’m already not a fan of private hands managing public essential services, but give them ownership of your retirement pie and I guarantee you, you will wish you hadn’t.

      • kartashok

        Agreed, if ANYTHING is to be privatized, not one cent of money should go towards it in the form of taxes. Taxes should be paid to public institutions only.

  • disqus_Jup0w7QDdi

    been saying to all that wants to listen ,,, lol Check Iceland

  • Raquel Carmen Taj-Taj

    Yes , Iceland did the write thing , the rest of the world should follow the same example . Bankers and irresponsible governments must pay for their criminal acts not the tax payers .

    • kartashok

      *Right!

  • FactCheck

    Iceland might have bailed out their own civilians, but victims of their banks that happened to live abroad were not compensated for their loss. The international private savers (a lot of them mid-income earners) are still paying the price.

    • Sue

      That goes for any investment…..why invest in Iceland in the beginning? Surely it was because the returns were better than investing anywhere in Europe? If people are prepared to hand over their hard earned money for a greater return (greed?)why should they be compensated when it goes belly up?

  • Greg D

    When the banksters and their well connected buddies no longer decide how we are governed through the open back doors of governments, we will live in real democracies. Until then we are stuck in a quagmire of vested interests destroying just governance and equanimity.

  • chillywillyli

    The US Government did not bail out the banks… WE DID! And now they want to steal our Social Security to pay for it as well….

  • http://www.facebook.com/jacques.marneweck.5 Jacques Marneweck

    This is a new way of thinking and I must say I like it :D

  • http://www.facebook.com/profile.php?id=1634193787 Mass Vocals

    massvocals Ron Paul said the same thing and the American voter was misinformed so we have the tax payer bail out I give up / i mean am not paying am taking .

  • http://www.facebook.com/profile.php?id=1634193787 Mass Vocals

    they should lock up qall the bankers end the patriot act what a fool law that is and arrest every banker and end this mess

    • Jonathan H

      Mass Vocals wrote: “they should lock up qall the bankers end the patriot act what a fool law that is and arrest every banker and end this mess”

      Arrest and lock up ALL the bankers? Everyone from Doris working in the local bank, through to her local branch manager, right up to the bankers that invest pensions, even if they’ve done a good job?

      OK, so then we’ve got everyone keeping their money in a sock under the bed, wandering around with piles of cash.

      Talk me through how that’s going to work, especially for international transactions? I’ve just ordered $28 of electrical parts from the USA – does that mean I would have to post the cash to the USA…. hang on, how would the currency conversion work?

      Regarding the patriot act, I assume you mean Title 3 of the USA PATRIOT act titled “International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001,” which is intended to facilitate the prevention, detection and prosecution of international money laundering and the financing of terrorism.

      Does that means you’re in favour of international money laundering to fund terrorism?

      I mean, it seems like you’ve given it a lot of thought, so talk me through your thinking here…

  • hvaiallverden

    Just a note.

    What the economists are actualy telling You is this, and its basicly simple, if YOUR company goes down, it rearly goes down in flash, its a slow prosess, and this implicates the leaders have not been in controll and slept at the helm.

    And to the “capitalists” in here, dont serve us this drivel about Savings, this banks where/was an Investment banks with HIGH risk and they all knew it. If you putt anything into a system that promotes risk, dumb fu… then dont come crawling to me after the crash and whine about loosing your savings.
    I dont care, so do the Icelandic people, and they have their sole right to do so.
    The main cause in the Icelandic saga is fraud, cutting corners and good old Coocking of Books.
    Simple chriminal fraud.

    Do you know the difference between Old scool millioners and the rest, and their rule of thumbs.
    All in all it boils down to basics:
    They NEVER gamble with MORE then what they can aford to loose.
    And if its to good to be true, then its probably, to good to real/true.
    Capice

    Thats what they tell me, never forgett this Boy.

    And I have ZERO symphaty with gamblers.

    This are the fundaments of any investment, gamble or not, fail and YOU have to live with the consequences with your OWN actions, not someone else.

    And the finnscial experts are spott on, sosializing depth is the best way of ruining a country.

    Grow up, and take a hint.

    peace

  • arthurdecco

    Interesting that your Facebook “share” doesn’t work. I’m locked out from sharing.

  • MistNet

    The Big Banks, as before, under and after both world wars, are the real initiators, perpetrators and benefactors of desperation amongst the nations.

  • Jonathan H

    It’s true to say that Iceland DID jail its bankers (while in the UK, Labour were so enthralled by them they gave the very worst of them, “Fred the Shred”, a knighthood!).

    It’s also true to say they didn’t bail them out.

    However, hundreds of thousands of people lost pensions, councils in the UK lost VAST amounts of taxpayers money, some people lost literally everything.

    In the UK, the government decided that it was better not to have pensioners losing savings. If the UK adopted Iceland’s attitudes, sure, everyone would be a lot better off. But “the left” would have smashed everything up by then.

    Also, at 320,000, Iceland has the same population as Coventry and is 940 times smaller than the population of the US.

    Iceland’s unemployment rate is 4.8%

    Unlike the UK, welfare fraud is extremely frowned upon, only those in need claim it.
    Unlike the US, it neither sits sandwiched bordering huge areas of 2 other countries.
    Iceland also doesn’t have enormous financial burden of mass immigration.

    Well-respected econmist Tim Harford from BBC Radio 4’s “More or Less” puts it this way:

    Is Iceland really relevant?
    As a symbol, perhaps. As a model, surely not. Iceland is unique – a tiny, highly-educated place almost entirely dependent on fish exports.

  • deltalima

    What’s missing from these discussions of Iceland’s (correct) approach to the banking ‘crisis’ is some context. Please don’t forget that the then-current Icelandic government initially wanted to bail the bankers out, but the public of Iceland responded by surrounding the Parliament, protesting for weeks, and even going so far as throwing rocks at the building. The government resigned and the people of Iceland have subsequently rewritten that country’s Constitution (through extensive and insightful use of new media) in an open source (or crowd-sourcing) exercise.
    The real story is not the Icelandic Economic Miracle, the real story is the Icelandic Democratic Revolution.
    One part cannot stand alone from the whole.

    • guest

      they exemplified the “we the people” line that the cuckolded americans are now to afraid to utter even in the dark shadows of their homes.

  • Paul

    I agree in principle, the problem in the U.S. was those losses by the banks were in the area of 12-17 Trillion overall, had they failed. Allowing that would have entirely evaporated the entire worlds credit markets. You would not have been able to make a withdrawel or present a draft/check at a bank.
    Allowing them to continue in a business as usual fashion, including profitably, was criminal and shameful.

  • Benny

    Mwuhahahahahaha! I have read some Icelandic sagas, and I’m really not at all surprised that this has happened in the land of ice and snow where the hot springs blow!!! A good, independent lot is Iceland.

  • http://www.facebook.com/people/Donna-Chevrier/729655423 Donna Chevrier

    This was the best read I’ve had in years. Bravo Iceland!

  • BobbyBlue

    The banks, part of the capitalist system, are saved from the rigours of the capitalist system! Well done, Iceland, but don’t worry, you’re on your own – only the Vikings know how to deal with troublemakers!

  • Jimmy.C

    It does not require rocket scientist to figure this out. Why the Obama admin. Go along with the Bush ad. In bailing out the banks and the corporates. When the Obama ad. Should have bail out the people. I see this flaws in the sys, in spring 2009 and told the people so, but people think I was a fool.

  • Jimmy.C

    If Pres. Obama just use 1/3 the money to bail out the corps America to bail out the people like Iceland did, I bet you a dollars we are much better off than we are today.

  • Jimmy.C

    It calls white collard criminal. The Bush ad. Covered, deregulation, allow the financial exec. Robbing the American working class of theirs life savings. They all should be in jail!!! Instead they got reward for it ! What we have now is the corrupted sys. We do away with bribery the government in the name of “Lobbying”

  • John Kagen

    Nobody talks about the fact that the economy of Iceland was guaranteed by the other Scandinavian countries to the tune of billions in funds. This created he needed trust since both Sweden and especially Norway are solid economies with huge surpluses and growth despite lower European financial debacles.

    They even imported a Norwegian finance-controller to handle the economy into a recovery!

  • http://xcannabis.com/ Reverend Ryan

    If only the USA had the best interests of the people who live here. Im impressed with the sensibility of Iceland.

  • LindaMC

    This is exactly what the U.S. and Europe should do, get rid of all the evil cabal for good, the Rothschilds, Rockefellers and Morgan’s, they’re the ones running the world and controlling us as slaves, taking our tax money and using us. Down with them and go the way of Iceland, that is the only way we will ever be free from their tyranny.

  • http://www.facebook.com/mike.widmer2 Mike Widmer

    That’s very interesting to know….To think that our own country hasen’t the brain power to think ( mebey outside the box.)….of alternative ideas….like those in Iceland..

  • Tatty_D

    The other part of the story, when we were told there were no alternatives, the media, who is not independent of interests, pretty much had a news black out.

  • C Kearney

    Couldn’t agree more. Ireland has brought it’s people to their knees with bailing the banks out. People are struggling to put food on the table never mind keep a roof over their heads, and the banks are still paying out their unbelievably and undeserved bonus’s, and the most galling thing is the bonus’s are being paid out of the bail out money.

  • Deanna

    This should be the case for all big business. If they cannot compete on the international market or even the national market, let them go bust. Let another company come in that will get things on track. These bailouts are the worst idea ever. Why should we all unto our four-hundredth removed grandchildren have to be impoverished by and pay for the greed, incompetence, corruption, and mistakes of our banks, Wall Street, and our so called public servants. Let’s get some accountability here enforced upon those who allegedly are in charge of the banks and government!

  • Deanna

    Iceland, us – no real difference except that all of our politicians are the paid for whores of big business, big banks, and foreign interests. We had a depression before the Great Depression. Our nation pulled out of it fast by NOT bailing out the banks, etc., but by letting the economy reset itself. Then came the bought and paid for presidents like McKinley and Roosevelt the first, owned by Rockefeller, Carnegie, and JP Morgan, who brought in the Fed Reserve (a private, for profit, primarily foreign owned entity), the enumeration of people as property of the government through the SSA and “marriage license” requirements, and the communization of our formerly republican government. History, folks. Pure historic fact will show that our country has pissed on the graves of our founders, lost sight of what made us great, and is spitting in the eye of every soldier who has ever fought for what our country is supposed to represent by allowing these fascist tyrants to dictate our lives and ruin us for their own profit and that of their corporate buddies.

  • dacii

    Whereas I do agree that banks like BoA, JPM, … should be broken up now it would have been disastrous to allow them to fail. The unwinding has to be an orderly breakup.

    http://www.linkedin.com/answers/finance-accounting/economics/FIN_ECO/1055568-11255707

  • Jon Lehti

    They are keeping this out of mainstream news. That alone should tell us something.

  • http://www.facebook.com/jeehoo.ahn G-Who 지후게 Own

    As far as Krugman goes, i really don’t give a crap what he says. He’s a proven Keynsian, and I was able to spot the glaring flaw in the babysitting coupon analogy he uses in the first chapter of his book to tout printing (aka quantitative easing) as the cureall to economic problems, when the problem was actually price-fixing. Free markets, not central banks, folks.

  • FUBAR2013

    Unless the owner’s of all the main banks and their families are slaughtered, as well as the Global 1%, and the politicians they own, and their families, are erradicated, and a Global public and private DEBT JUBILEE, IS IMPLEMENTED, there will be no hope or chance for humanity!

  • FUBAR2013

    Unless the 1% are erradicated, and An International Public and Private Debt Jubilee, etc. is implemented-Humanity will be doomed!

  • Caspin

    Everyone is going conscious

  • Mike

    Just out of curiosity, did you mean to have the title say, “Top LIBERAL Economists….”?

  • Mohammed Mahmud

    America is mother of all corruption around the whole World.

  • steve berg

    two years later, damage mounts and few reference this policy or these facts – interesting. there are less mistakes than calculated actions of devastation.

  • EricWainaina

    Banks should pay for their own mistakes. I am surprised the economy is doing well. Many of them abandoned fishing and went berserk to financial services industry only to return after the recession.

  • Smith’s Hand

    Iceland’s financial sector isn’t the United States’s financial sector. It’s like comparing Bank of America with a local bank in suburban Atlanta. One has much larger effects and influence than the other. This isn’t to say that the U.S. and the Fed should have bailed out the banks as they did (or to the extent they did), but that looking at Iceland as a model for a much bigger entity like the U.S. is inapt.

    Further, when people throw a lot of credit towards Iceland and its great recovery, they typically ignore the draconian monetary and capital controls the government placed on the country, controls that would be utterly untenable in the United States or any other decently-sized economy. Those controls have gone far in artificially propping up the Icelandic economy, but will restrict its growth in the future, and neither the government nor the central bank is real sure how to roll them back without causing massive problems.

  • James

    Adriaan van der Knaap works for UBS who were bailed out by the SNB to the tune of $60Bn. Careful what you wish for Adriaan

  • Ranjitus

    I have a very simple question, to me it seems simple maybe its not to someone who is more learned. i am not an economist so the question is if a bank takes money it cannot pay back or has recklessly invested money into assets it should not have touched and this act has exposed other banks to same risk who owns that risk? The bank is not an organism that can pay back so who owns the risk? The share holders in the bank? The people who have kept money in the bank? The people who took the money from he bank? The employees of the bank? The government of the country where the bank has been established? The government of the country where the branch that did the fraud is located?

  • Dennis Richardson

    New York banks will do it right, but it will happen on a day that will surprise many. It will be on a day where the entity in charge that does it will be able to claim this is MY day at MY time. It will be quite certain whose day it will be. Sorry New Agers your Gaia goddess will not be able to do it or even claim that it was done on her day. It will not be on Earth Day, in April. Want to make a wager it will not be on Earth Day

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  • JohnnnyRebel

    The “Corporate State of America” and our corrupt congress have conspired to continue our economic model of Neo-Liberalism {with Ayn Rand style “free markets”} and keep financial criminals out of prison. Yes, free market Capitalism is loved and adored………..until “casino gambling” losses within unregulated markets cause the banks FAIL. Ultimately, the US citizenry has been forced, against their will, to “provide bail outs” with taxpayer money. If the “losses” are to be “socialized” then the profits should be socialized as well. And, Bankers who committed fraud should be jailed…..as was done in Iceland.

    The future success and prosperity of the US Economy and the “lessening” of the wealth and income gap between the top 1 percent and the rest of us, depends on our country becoming more like Iceland and embracing “social democracy.” Neo-liberalism as economic policy is a “failed experiment.” Wall Street and the Corporate State’s guiding principle of “GREED IS GOOD” must be stamped out!!!

  • saabit

    Yes – Glad to see this Article n felt at the time this ‘crisis’ was flowing thru our economies that I didn’t know all the details yet it felt like Icelanders were looking after their peoples; which should be the first priority.

    Also remember passing on an Article to others, called “Sweden – The Rock Star of Economic Recovery.” or named quite close to that.

    Forced Austerity does not create n help to form growing Economies – Money and Jobs and Buying Local does . . .

  • Bill Wesley

    lets apply this to other areas of life, if thieves steal so much jewelry the stores are going out of business the answer is to give the thieves jewelry so they don’t steal, If murderers are killing victims at random the solution is to direct them to targeted killings so they stop acting at random. Normally when people commit crimes they are not payed to stop committing crimes, they are incarcerated. When foolish untrustworthy and selfish manipulators bring your affairs to ruin through a lack of ethics the solution is to pay them more money to develop some ethics, then they will stop doing bad things, if someone is incompetent double or triple their pay, that will make them competent. We PAY people for failure then wonder “why aren’t things getting better?” Perhapes if you gave the money to people who have NOT failed yet it might help build a new future but not if it s given to they who have every advantage and still manage to fail!, it seems the public is in a co dependent relationship with the banks, the public fuels the banks economic abuse with a blank check no questions asked., they participate in the system that abuses them, they love their abuser, they love Big Brother.

  • Dennis Richardson

    Contrary to what many misguided people are wrapped up in, this is the death of the Old World Order. Beware the New World Order, it is still future with even greater deceits coming for humanity. Not very long into the future, people. A very brief period of false peace and real but deceiving world prosperity before the New World Order comes into being, to lay upon you all, New Age lies.

    The Phoenix Bird will rise from the dead. Did not the Olympic games managers say so.

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