Unfortunately, no other country has considered the just and common-sense approach that Iceland took. From Bloomberg:
Iceland is betting its decision two years ago to force bondholders to pay for the banking system’s collapse may help it rebound faster than Ireland.
Iceland’s taxpayers face a smaller debt burden than their Irish counterparts, where the government’s guarantee of the financial system in 2008 backfired this year when the banks came close to insolvency. Iceland’s budget deficit will be 6.3 percent of gross domestic product this year and will vanish by 2012, compared with the 32 percent shortfall in Ireland, the European Commission estimates.
While analysts expect Iceland’s recession to extend into next year, the nation’s exporters are benefiting from a 28 percent drop in the krona against the dollar since September 2008. The decline may help the nation of 320,000 people rebalance its economy faster than Ireland, whose euro membership rules out a currency devaluation. With Iceland’s OMX share index up 16 percent this year, the third-biggest gain in Europe after Denmark and Sweden, Nobel Prize-winning economist Paul Krugman says Iceland may be an example of “bankrupting yourself to recovery.”
“The difference is that in Iceland we allowed the banks to fail,” Iceland President Olafur R. Grimsson said in a Nov. 26 interview with Bloomberg Television’s Mark Barton. “These were private banks and we didn’t pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks.”
That last paragraph is the key. Private institutions that make bad business decisions should FAIL. All this nonesense the banks want everyone to believe that the ‘economy would collapse’ without them, is just that, a bunch of baloney. Think about it. As opposed to the wonderful, glorious economy we have now?!! The proof that they are lying can be found in Iceland.
Instead here in the US and in other countries around the world the avenue being taken is to fleece the taxpayers to print the money to support the insolvent banks and for governments to ‘reign in’ spending by cutting any and all programs that actually support citizens (pensions, unemployment, medical care) and raising taxes. At the same time, governments are increasing the spending on their own salaries, benefits, pet projects and of course, lining the bankers’ pockets with newly minted cash and bending laws, rules and regulations to exclude the bankers, so that the banks will continue to show their gratitude by funding the government officials’ campaigns for reelection.
I think it should be obvious to anyone who has even remotely studied history. There’s a name for this system. It’s called communism.
Iceland has chosen freedom and so far, the rest of the world has chosen slavery under what now amounts to communist regimes.