How Iceland survived the 2008 crisis

derryb

The Icelandic Success Story

Justacommeman

Yes, priceless

cladking

The smartest person I know about economic matters was saying we should let the banks
fail and investigate for wrong doing back in '08. It was one of the few times I disagreed with
him but now it's apparent he was right. I knew there was wrong doing but didn't suspect
its magnitude at the time. I thought that the economy would tank if the banks went down.

At least the crooks wouldn't still be getting bonuses and government protecting them from
higher taxes today.

roadrunner

With 300,000 people and a country 199 miles square, it was far easier to do what they did than with a much larger, networked nation like the USA, UK, Germany, etc.

Iceland is only 10% larger than Maine, but with 25% of Maine's population. We could probably have done the same thing with Maine. But doing that on a scale of all
50 states would have been a load. How many otc derivatives was Maine tied into? I bet it wasn't much. Basically, even Sinclair agrees that telling the bankers to take
a high in Sept 2008 would have resulted in a catastrophic depression....probably world wide. Iceland was a tiny pimple on the 800 lb gorilla. It's good that he got that removed.

While I applaud Iceland's actions, doing that in nations with huge financial centers would have been a true shtf event. It would have been lights out...literally for months, maybe
years. I could compare the pain to amputating all 4 limbs to "save" the patient. We're still going to end up limbless, but it will be one finger, one hand, at a time. We'll get used
to it.

derryb

Iceland Sentences 26 Corrupt Bankers To 74 Years In Prison




eight years later and they are still hunting them down.

ricko

A shining example of how it should be done.....and truly exposes the corruption of

government...Cheers, RickO

Justacommeman

Originally posted by: ricko

A shining example of how it should be done.....and truly exposes the corruption of

government...Cheers, RickO

I think exactly one guy went to prison during our crisis



mark

jmski52

Bankruptcy law worked just fine until the bankers gained control. It's all about control. There's no longer any consequences if you're a big banker tied in with the Fed (if there ever really was).



You don't have to worry about bad loans or malfeasance. You get free money if you fail to keep up on your reserves. You get free money every time you create a loan, bad or good. Buy your very own senator! Keep the debt system going. A better skimming operation has never been conceived.

cladking

If the people ever take back the country the bankers will likely end up in jail along with half the Congress from both sides of the aisle.

DoubleEagle59

roadrunner.....a great explanation and an even better analogy.

derryb

Originally posted by: Justacommeman

Originally posted by: ricko
A shining example of how it should be done.....and truly exposes the corruption of
government...Cheers, RickO

I think exactly one guy went to prison during our crisis

mark

Probably because he refused to share.

roadrunner

When Iceland’s three major banks collapsed, it resulted in defaults totaling $114 billion in a country with a gross domestic product (GDP) of only $19 billion. In October, 2008 the parliament passed emergency legislation to take over the domestic operations of the major banks and established new banks to handle them. They did not, however, take over any of the foreign assets or obligations. Those stayed with the original banks, right into bankruptcy



The same ratio applied to US GDP would have resulted in $100 TRILL in defaults. That's probably in the ball park for what really needed to be accomplished to clean the slate. As it was, credit default swaps were reduced/defaulted/netted down by approx $20-$30 TRILL and MBS about $4-$7 TRILL, give or take.

Justacommeman

RR's analogy on the size of Maine and population was good . The biggest difference of course is that they have their own currency. It often yieldied over 10% and was used as a carry trade instrument. People got wiped out in some trades.



mark