Essentially Iceland is doing
what this blog recommended back in 2008 when this all fell upon us. Minor changes to my ideas leave no escape for
the banks for their real losses, but realistically, that was never plausible in
the Icelandic situation.
The bottom line is that the
customers have been saved and made whole and this is now driving a rapid
recovery and a swoon to be thriving economy.
In the USA, the right thing is
been done at a much slower pace from the bottom up and will eventually win
through but not before seriously impoverishing millions of Americans needlessly.
Ninety percent to the euro zone
is actually doing fine, in spite of the headlines. The drama is about attempting to establish
sound economies among the Southern countries.
This needs to be done by the
outright expedient of downloading all tax collection to the local level with statutory
remittances back up to the federal level.
At the local level, all citizens will have their remittances on the
public record were everyone can determine who is contributing and who is not.
Transparency and social climbing
will take care of the rest.
The Silent Revolution: Icelandic Anger, Debt Forgiveness and Activist
Triumph
25th May 2012
Contributing Writer for Wake
Up World
The situation in Iceland is something those of us outside of the
volcanic island nation hear about far too little, and when one examines the
story of how Iceland triumphed over massive debts, it makes a lot of sense why
this is the case.
Earlier this year, the Icelandic Financial Services Association
published a report showing that since the end of 2008, Icelandic banks have
forgiven the equivalent of 13 percent of the nation’s gross domestic product in
loans.
This has directly lifted the crushing burden of debt form the
shoulders of over one quarter of the Icelandic population, something which many
people around the world – but especially in the United States, Greece, Spain,
Italy and other nations struggling with massive debts – would likely appreciate
greatly.
In 2008, Icelandic banks defaulted on a whopping $85 billion in loans,
yet the nation has taken steps to recover and they are already proving to be effective.
“You could safely say that Iceland holds the world record in household
debt relief,” Lars
Christensen, the chief emerging markets economist at Danske Bank A/S in
Copenhagen, explained.
“Iceland
followed the textbook example of what is required in a crisis. Any economist
would agree with that,” he added.
Then why wouldn’t other nations follow a similar model instead of
pouring even more money into the black hole of debt, hoping that it will
somehow fix itself?
That is a question which cannot be answered with any degree of
certainty, but Iceland
has proven that endless bailouts are not the only way we can turn countries
around from the brink of collapse.
The Icelandic economy will outgrow the eurozone in 2012 and is set to
outgrow the entire developed world on average, according to estimates from the
Organization for Economic Cooperation and Development.
This growth is reflected in the fact that many polls are showing that
the people of Iceland
have no interest in joining the European Union, which continues to be wracked
by a debt crisis the likes of which have never been seen.
The solution Iceland
implemented involved an agreement between the banks and the government, which
entailed forgiving debt exceeding 110 percent of home values.
This is commonly known as “under water” mortgages (or more technically
“negative equity”), which have become far too common place, especially in the United States .
Indeed, a CNBC article from November of last year stated that one out
of two U.S.
mortgages is effectively underwater.
In addition to the debt forgiveness, the Icelandic Supreme Court
ruled in June 2010 that loans indexed to foreign currencies were legal, which
means that Icelandic households were no longer expected to cover krona (the
Swedish currency) losses.
The most important factor of their approach, however, is that every
step of the way they have put their own people before the markets. This is
essentially the polar opposite of what we have seen so many other nations do in
response to debt crises.
The Icelandic government basically left international creditors to deal
with their failed loans on their own, removing all responsibility from their
own people.
Now Iceland
is proceeding to actually prosecute some of their formerly most powerful
bankers and the Icelandic special prosecutor has stated that it very well
may indict some 90 people.
Meanwhile, over 200 people, including the former chief executives of Iceland ’s
three biggest banks, face criminal charges for their activities.
Maybe some other nations should take a page out of Iceland ’s book and think about
their people before the banks that caused the crisis in the first place.
About the Author
Madison Ruppert is the Editor and Owner-Operator of the alternative
news and analysis database End The Lie and has no affiliation with any NGO,
political party, economic school, or other organization/cause. He is available
for podcast and radio interviews. If you have questions, comments, or
corrections feel free to contact him at admin@EndtheLie.com
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