Could Iceland be a model for debt-ridden Europe?

Mickeroo

I came acoss this on reddit theI find it interesting that the country which was probably shafted most in the economic collapse seems to be recovering so well.

Iceland was hit hardest by the credit crunch in 2008. Its current recovery is why Iceland is being held up as the model for an alternative way to deal with the debt that plagues so many economies.

That is because when Iceland's banks went spectacularly bust, instead of pouring in billions of taxpayers' money to shore them up, Iceland just closed them down.

Their debts were so huge that, in truth, the country had little choice. Nevertheless, it was a radical strategy. Iceland effectively said "stuff you" to the banks' creditors.

Foreign debts were written off - including $8bn (£4.9bn) of deposits from savers in the UK and Holland. "Bankrupting your way to recovery," it has been called.

Now the article clearly states that they are by no means back from the brink, there are some pretty bleak situations mentioned here but they seem to approach the situation with more of a "**** happens" kind of attitude rather than the doom mongering we seem to have here. I don't really know enough about finance to fully grasp how different our situation was from theirs but do any of ye think this could be the way to go? It's too late for us to do that now I suppose? OR are we better off in the situation we're in?

Full article HERE

charlemont

I don't think the people of Iceland starved when they refused to cover the bondholders.

My name is URL

I dunno.. Iceland is a pretty unique country compared to the rest of Europe. It has a population of only 318,000, so there's not as much pressure on them to get back up and running. They've some amount of natural resources too, which is basically an insurance policy for the future. Ireland on the other hand is giving that away right now.. lol

Toby Take a Bow

I think the main difference would be them not being in the EU while we are. I don't think we'd be 'allowed' to do what Iceland are doing. Having said that, when the crisis/sh*t was really hitting the fan over there, they seemed to be desperate to join the EU at any cost. Not sure if they've backed away from that course of action.

Would the fact that we already have poured billions to prop up the banks not rule this course of action out for us? Even if this wasn't the case, I would think we'd have to leave the EU.

Mickeroo

Toby Take a Bow wrote: »

I think the main difference would be them not being in the EU while we are. I don't think we'd be 'allowed' to do what Iceland are doing. Having said that, when the crisis/sh*t was really hitting the fan over there, they seemed to be desperate to join the EU at any cost. Not sure if they've backed away from that course of action.

Would the fact that we already have poured billions to prop up the banks not rule this course of action out for us? Even if this wasn't the case, I would think we'd have to leave the EU.

Yea, I would have thought that would be the case.

Countries not in the EU seem to be doing a lot better than those that are, I was in Norway this time last year and I could not get over the amount of construction and development going on, it was like here or 7 years ago.

orourkeda

Perhaps a suitable role model would be a nation who can control their debt

syklops

Another poster said it. Iceland is a unique country.

Ireland has a population of about 6 million and the island of Ireland is about 84,000 square kilometres.

Iceland is about 100,000 km squared, but has 5% of the population of Ireland at 318,000.

If Ireland had volcanoes, we would moan about the feckin yokes. Iceland pumps the heated water from the underground lakes near the volcanoes to the cities, as a cheap and carbon-friendly source of heat for homes and offices.

Ireland fishermen fish for fish. Icelandic fishermen fish for whales.

Put another way, the total number of Icelandics, is less than what Ireland has on the dole. To use Iceland as a model, we would need to kill 95 percent of our fellow country men, start pirating Spanish fishing fleets near our waters, and start thinking of ways to get free heat.

7Sins

syklops wrote: »

Another poster said it. Iceland is a unique country.

Ireland has a population of about 6 million and the island of Ireland is about 84,000 square kilometres.

Iceland is about 100,000 km squared, but has 5% of the population of Ireland at 318,000.

If Ireland had volcanoes, we would moan about the feckin yokes. Iceland pumps the heated water from the underground lakes near the volcanoes to the cities, as a cheap and carbon-friendly source of heat for homes and offices.

Ireland fishermen fish for fish. Icelandic fishermen fish for whales.

Put another way, the total number of Icelandics, is less than what Ireland has on the dole. To use Iceland as a model, we would need to kill 95 percent of our fellow country men, start pirating Spanish fishing fleets near our waters, and start thinking of ways to get free heat.

Alot of people in Iceland are inbred :pac:

syklops

Ah yes, that good old After Hours wit! Or lack of it.

Hunchback

They're a bit mingin aswell like. All squinty eyed and pudgy facial features. Not an island of models anyway

aligator_am

Wasn't Iceland the only country to put it to a public vote on whether or not they should take an IMF bailout? I think they basically told the IMF to go shove their bailout, along with the investors who made bad bets.

Hunchback

aligator_am wrote: »

Wasn't Iceland the only country to put it to a public vote on whether or not they should take an IMF bailout? I think they basically told the IMF to go shove their bailout, along with the investors who made bad bets.

It does seem, even now, a shockingly brave thing to do , and a 'citizen first' approach to the crisis that, even if we weren't shackled by the ECB, our government prolly couldn't muster anyway

catbear

They still have their problems, a quarter of households are in arrears according to this link; http://news.bbc.co.uk/2/hi/programmes/from_our_own_correspondent/9550667.stm
In or out of the EU or Euro I think our biggest problem is social transparency when confronting debt issues. Icelands total default allowed it to at least access the scale of the losses, three years later we're still fiddling around with NAMAs ever decreasing long term value of its assets.
Plus the political culture there got an enema where as here even after a landmark election we still have essentially the same cliental government culture; although I"ll reserve judgement until the next budget.

aligator_am

CKonetheonlyone wrote: »

They're a bit mingin aswell like. All squinty eyed and pudgy facial features. Not an island of models anyway

Right, like Ireland is the model hub of the world, sure aren't we all stunners

aligator_am

CKonetheonlyone wrote: »

It does seem, even now, a shockingly brave thing to do , and a 'citizen first' approach to the crisis that, even if we weren't shackled by the ECB, our government prolly couldn't muster anyway

From what I understand, their president / prime minister had ignored calls for this right up until the very end, and at the last gasp decided to give the citizens the chance to vote, no fear of our elite to do the same.

Hunchback

Their debt situation, and it's creation were very nicely summarised in a documentary in the cinemas a few months back. Fecked if i can recall its name though:rolleyes:

Chuck Stone

The free market? Let banks fail?

Oh good lordy no - now we couldn't be having that.