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