[Occupymendocino] Fwd: ICELAND SHOWS THE WAY!

[Linda Jupiter]

>>
>> ICELAND SHOWS THE WAY . . . VIVA ICELAND!
>>
>> Subject: Iceland got over the recession fast—by jailing the  
>> banksters, and
>> bailing out the people
>>
>> From Jack Gordon:
>>
>> The current manufactured "financial crisis," which goes under
>> several names (e.g., "fiscal cliff") is nothing but wild
>> derivatives casino gambing by the elite, using your 401K, your
>> mortgage, and your pension, after they've slyly re-structured
>> financial "laws" so that they take all the winnings from the
>> casino gambling and you take their losses. Ergo, all the "debt" we
>> owe is phony.  Period. It's a beautiful system for the elite as
>> long as the people allow it.
>>
>> Well the people of Iceland reversed it.  Turned it around.  As the
>> article below says, Iceland made the "creditors of private banks
>> gone wild eat the losses."
>>
>> Gee. You'd think this would be huge news. Why aren't we hearing
>> anything about Iceland from our media?  Gee, take a guess why.
>>
>>
>> http://www.washingtonsblog.com/2012/08/top-economists-iceland-did-it-right-everyone-else-is-doing-it-wrong.html
>>
>> Top Economists: Iceland Did It Right … And Everyone Else Is Doing  
>> It Wrong
>>
>> Posted on August 25, 2012 by WashingtonsBlog
>>
>> ICELAND SHOWS THE WAY
>>
>> Nobel prize winning economist Joe Stiglitz notes:
>>
>> What Iceland did was right. It would have been wrong to burden
>> future generations with the mistakes of the financial system.
>>
>> Nobel prize winning economist Paul Krugman writes:
>>
>> What [Iceland's recovery] demonstrated was the … case for
>> letting creditors of private banks gone wild eat the losses.
>>
>> Krugman also says:
>>
>> A funny thing happened on the way to economic Armageddon:
>> Iceland’s very desperation made conventional behavior
>> impossible, freeing the nation to break the rules. Where
>> everyone else bailed out the bankers and made the public pay the
>> price, Iceland let the banks go bust and actually expanded its
>> social safety net. Where everyone else was fixated on trying to
>> placate international investors, Iceland imposed temporary
>> controls on the movement of capital to give itself room to
>> maneuver.
>>
>> Krugman is right.  Letting the banks go bust – instead of
>> perpetually bailing them out – is the right way to go.
>>
>> We’ve previously noted:
>>
>> Iceland told the banks to pound sand. And Iceland’s economy is
>> doing much better than virtually all of the countries which have
>> let the banks push them around.
>>
>> Bloomberg reports:
>>
>> Iceland holds some key lessons for nations trying to survive
>> bailouts after the island’s approach to its rescue led to a
>> “surprisingly” strong recovery, the International Monetary
>> Fund’s mission chief to the country said.
>>
>> Iceland’s commitment to its program, a decision to push losses
>> on to bondholders instead of taxpayers and the safeguarding of a
>> welfare system that shielded the unemployed from penury helped
>> propel the nation from collapse toward recovery, according to
>> the Washington-based fund.
>>
>>          ***
>>
>> Iceland refused to protect creditors in its banks, which failed
>> in 2008 after their debts bloated to 10 times the size of the
>> economy.
>>
>> The IMF’s point about bondholders is an important one:  the
>> failure to force a haircut on the bondholders is dooming the U.S.
>> and Europe to economic doldrums.
>>
>> The IMF notes:
>>
>> [The] decision not to make taxpayers liable for bank losses was
>> right, economists say.
>>
>> In other words, as IMF put it:
>>
>> Key to Iceland’s recovery was [a] program [which] sought to
>> ensure that the restructuring of the banks would not require
>> Icelandic taxpayers to shoulder excessive private sector losses.
>>
>> Icenews points out:
>>
>> Experts continue to praise Iceland’s recovery success after the
>> country’s bank bailouts of 2008.
>>
>> Unlike the US and several countries in the eurozone, Iceland
>> allowed its banking system to fail in the global economic
>> downturn and put the burden on the industry’s creditors rather
>> than taxpayers.
>>
>>          ***
>>
>> The rebound continues to wow officials, including International
>> Monetary Fund chief Christine Lagarde, who recently referred to
>> the Icelandic recovery as “impressive”. And experts continue to
>> reiterate that European officials should look to Iceland for
>> lessons regarding austerity measures and similar issues.
>>
>> Barry Ritholtz noted last year:
>>
>> Rather than bailout the banks — Iceland could not have done so
>> even if they wanted to — they guaranteed deposits (the way our
>> FDIC does), and let the normal capitalistic process of failure
>> run its course.
>>
>> They are now much much better for it than the countries like the
>> US and Ireland who did not.
>>
>> Bloomberg pointed out February 2011:
>>
>> Unlike other nations, including the U.S. and Ireland, which
>> injected billions of dollars of capital into their financial
>> institutions to keep them afloat, Iceland placed its biggest
>> lenders in receivership. It chose not to protect creditors of
>> the country’s banks, whose assets had ballooned to $209 billion,
>> 11 times gross domestic product.
>>
>>          ***
>>
>> “Iceland did the right thing … creditors, not the taxpayers,
>> shouldered the losses of banks,” says Nobel laureate Joseph
>> Stiglitz, an economics professor at Columbia University in New
>> York. “Ireland’s done all the wrong things, on the other hand.
>> That’s probably the worst model.”
>>
>> Ireland guaranteed all the liabilities of its banks when they
>> ran into trouble and has been injecting capital — 46 billion
>> euros ($64 billion) so far — to prop them up. That brought the
>> country to the brink of ruin, forcing it to accept a rescue
>> package from the European Union in December.
>>
>>          ***
>>
>> Countries with larger banking systems can follow Iceland’s
>> example, says Adriaan van der Knaap, a managing director at UBS
>> AG.
>>
>> “It wouldn’t upset the financial system,” says Van der Knaap,
>> who has advised Iceland’s bank resolution committees.
>>
>>          ***
>>
>> Arni Pall Arnason, 44, Iceland’s minister of economic affairs,
>> says the decision to make debt holders share the pain saved the
>> country’s future.
>>
>> “If we’d guaranteed all the banks’ liabilities, we’d be in the
>> same situation as Ireland,” says Arnason, whose Social
>> Democratic Alliance was a junior coalition partner in the Haarde
>> government.
>>
>>          ***
>> “In the beginning, banks and other financial institutions in
>> Europe were telling us, ‘Never again will we lend to you,’”
>> Einarsdottir says. “Then it was 10 years, then 5. Now they say
>> they might soon be ready to lend again.”
>>
>> And Iceland’s prosecution of white collar fraud played a big part
>> in its recovery:
>>
>> [The U.S. and Europe have thwarted white collar fraud
>> investigations ... let alone prosecutions.] On the other hand,
>> Iceland has prosecuted the fraudster bank heads (and here and
>> here) and their former prime minister, and their economy is
>> recovering nicely … because trust is being restored in the
>> financial system.
>>
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