What we should have learned from Iceland’s economic meltdown, but didn’t

Iceland is a cold country with a very hot economy. Like us, it suffered a housing-related financial crisis in the Fall of 2008. Its stock market plunged, the country’s largest banks collapsed and were nationalized.

Unlike us, Iceland declined to bail out the bank bondholders (no TARPs in Iceland!)

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The economy isn't the only thing that's hot in Iceland (This cheesy photo and caption brought to you by IHTM)

Three years later, we’re flirting with a double dip recession and still have double-digit unemployment. And Iceland? Well, let’s hear from their Central Bank:

The Monetary Policy Committee of the Central Bank of Iceland has decided to raise the Bank’s interest rates by 0.25 percentage points.

…newly released data and the updated Central Bank forecast, published in Monetary Bulletin today, indicate that domestic demand and employment will grow more strongly in 2011 than was assumed in the last forecast.

“Unexpectedly” good results.

In view of the growing momentum in the domestic economy, as is described in the Bank’s updated forecast, the risk that a modest interest rate hike at the current juncture will derail the economic recovery is low…

Ben Bernanke and Barack Obama would kill for that kind of economic news, but won’t do something sensible like butting out and letting the private sector work.

Maybe because Wall St. banks donate big to Democrats and Obama (more so than to Republicans) and are really just welfare cheats in power suits.

Maybe because the collapse gave pols an excuse to create big pots of money (“The Stimulus”) and power-grabs (“Obamacare”) which became sources of goodies for their cronies and themselves.

Or maybe because just they’re idiots who can’t find their villages.

Regardless, Iceland is now sailing along like a Senator’s yacht while we’re headed for the rocky shore.

– Written by Bonfire of the Absurdities

Source: Sedlabank.is

This post was last modified on January 26, 2021

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editor:

View Comments (29)

  • A default is exactly what is needed, be it in the US, Germany, Russia or France.

    No more welfare and no more bank bailouts.

  • Me like cheesy. Melty, gooey cheesy.

    This story brought me '“Unexpectedly”... growing momentum'

  • OMG - I've gotten no work done since you posted this picture. Editor: your single act has destroyed more productivity than Obama and his economic stink tank.

    If I find out either of them are anti-liberal to boot I'm cashing out my 401K, my kids 529's, bank accounts, leaving my wife and kids and moving to Iceland.

    • Hour and a half since last post. Still staring at picture. Havem't moved. Haven't eaten. Haven't blinked. Growing weak.

  • The only problem is they still owe something like $900K per person. Iceland got caught up in the whole financial crisis as bad, or worse, than any nation. They just didn't have a large enough economy to print their way out of it temporarily. And I suppose they were too small and white to be on the RADAR to get money from the Bernanke. At some point they will tell everyone to F-off and default.

    • I think you missed the point.
      They do not owe anything. They let the bank collapse and take its debt with it. No different to a company collapsing and all the creditors have to fight over the scraps. If WalMart collapsed, would you pay for their debt?
      The tax payers voted not to give up their liberty to the criminal banksters.

      • Um, you do realise that debt is owed to someone else? When a company or bank "collapses" the debt doesn't go away -- other people suck it up.

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