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View Diary: WHY WE’RE SCREWED (232 comments)

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  •  Isn't Iceland doing pretty well? (2+ / 0-)
    Recommended by:
    Jim Domenico, FarWestGirl

    And didn't they nationalize the banks?

    Force is the midwife of every old society pregnant with a new one. Marx

    by Marihilda on Wed Jul 25, 2012 at 09:16:15 AM PDT

    [ Parent ]

    •  Sort of, and no. (2+ / 0-)
      Recommended by:
      hmi, FarWestGirl

      Iceland is recovering faster than most of Europe.  But it also fell a lot further, sooner, so it'd be hard for that not to be the case.  Iceland is a small fraction of its former economic strength.  The currency being cut in half means people have half the buying power they used to; it's like having salaries dramatically slashed.  On top of this you add in the decline in home values, compounded by the crazy foreign-currency mortgage disaster that was only partly undone, the complete collapse of the Icelandic stock market and the loss of values of all króna-indexed savings, etc, plus ~30% austerity, and well...   Oh, and we're still being sued in the EFTA, after taking on debt to pump money into the banks to restructure them so that they could be worth enough to sell off enough assets to pay off their debt obligations.  Thanks a bunch, UK and Netherlands.  :Þ

      No, the banks were not nationalized, any more than the US auto industry was - that is, they went into receivership, the government poured in a bunch of money and then got a stake, which they're working to sell off.  They're still private companies.

      •  Iceland is not part of the EU and not subject (0+ / 0-)

        to EU financial regulation. So Iceland had freedom to move that the EU nations do not have.

        •  Could you be more specific? (0+ / 0-)

          What "financial regulation" are you talking about?  It was Iceland's lack of financial regulation that caused this mess in the first place.  And if you mean "freedom to move" as in "freedom to have the currency collapse", that was devastating for people here.  It only sounds painless to people outside the country who don't have to deal with it.  It hits ordinary people, hard, like a massive across-the-board salary cut.

          •  Iceland was able to force foreign investors (0+ / 0-)

            to completely eat their losses. The Icelandic banks ran a series of investments paying high interests rates that were quite attractive to outsiders. But unlike other countries, like Ireland when these investments failed the government did not guarantee all the investors. If you were not in Iceland you lost everything you invested. Various governments tried to get Iceland to backstop these investors, like the British government. But because Iceland was not in the EU nothing could be done to protect these investors. the government of Iceland held a referendum to decide the issue and the people voted to not recompense any of the foreign investors.

            That is what I meant by "freedom to maneuver".

            •  False (0+ / 0-)
              Iceland was able to force foreign investors to completely eat their losses
              False.  Icesave was first off a program largely for retirement accounts and municipal accounts, not institutional investors.  Secondly, they were quickly bailed out by tbe British and Dutch governments.  And third, even said governments are getting paid back.

              Please stop spreading myths about Iceland.

          •  Yes you guys are hurting but in Ireland we are (0+ / 0-)

            hurting also. And our government decided foolishly to guarentee the banks at the cost to the taxpayers. Ireland had a balanced budget before the financial collapse. It would have a balanced budget now if not for the financial collapse. Iceland did not issue a blanket guarantee the way that Ireland did. And that was a smart move. Iceland is on the way back. And hopefully so is Ireland. But we will be paying for this mess for a long time.

            Iceland's economic policy is not being dictated to by the British and the Germans. There is much to be said for not depending on others financially.

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