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View Diary: Icesave: Today Iceland Learns Whether It Gambled Right On Refusing A Repayment Deal With The British (177 comments)

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  •  Based on the 15%+ interest promised (3+ / 0-)
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    BYw, svboston, mrkvica

    Interest rates rose to 14-15% in Iceland apparently to fight inflation. When that happened the Banksters there advertised  15% insured returns on savings. Many dollars flowed from the UK and other European places. So now that they had built up this  onerous bottomless pit of liabilities that banks built to get returns on the order of the dot.com days here in the US while  also using some of the billions  to enrich themselves personally. This is similar in some respects to the S&L  crisis here.

    In other words they had many obligations to Europe as American Banks did. Instead of coddling the Banksters they took them into receivership as their crimes became exposed and prosecuted executives. The economy suffered for one year and a few months before bottoming and started to make a recovery.

    There was no depression. There was no bullshit heroics by govt to avoid it. This is exactly what we needed to do here and we didn't.

    Boiling it down to the basics, the Icelandic govt didn't save the banks and their management by making people who couldn't afford it pay for through currency debasement which has caused inflation to rise and by taking the trillions of dollars printed and using them to bail out the banks . So how did this work out for us?

    As of third quarter 2012, there were approximately 5,600 commercial banking organizations in the U.S. The bulk of these—roughly 5,500—were community
    As of third quarter 2012, there were approximately 5,600 commercial banking organizations
    in the U.S. The bulk of these—roughly 5,500—were community banks with assets of less than $10 billion. These community-focused organizations accounted for 98.6 percent of all banks but only 12 percent of total industry assets. Another group numbering nearly 70 banking organizations—with assets of between $10 billion and $250 billion—accounted for 1.2 percent of banks, while controlling 19 percent of industry assets. The remaining group, the megabanks—with assets of between $250 billion and $2.3 trillion—was made up of a mere 12 institutions. These dozen behemoths accounted for roughly 0.2 percent of all banks, but they held 69 percent of industry assets.  
    Terrific, they made the gamblers more powerful and prosecuted no one.

    Watch The Untouchables on PBS. See more from FRONTLINE.

    •  Oh there was a depression. (1+ / 0-)
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      Dburn

      And we're still climbing out of it, long way to go.  You'll know when we're finally recovered when the exchange rate stops being half of what it was before (aka, ordinary people have half the buying power on imported goods, aka, most goods, aka, it's like earning dramatically less).  And we did pump a bunch of money into the banks, but only after they were in receivership, to reorganize them into solvent entities when they emerged.  Took on a ton of debt too, which we're slowly paying back.  Also, overwhelmingly, most of the executives who caused this mess got off scott free.  Unfortunately, it's not a crime to crash the national or global economy.

      But we are recovering. And a few people who deserved it did get jailed.  

      And we won Icesave.  :)

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