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Ear to the Ground

No TARP in Iceland

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Posted on Nov 26, 2010
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Iceland’s President Olafur Grimsson sums it up: “How far can we ask ordinary people—farmers and fishermen and teachers and doctors and nurses—to shoulder the responsibility of failed private banks?”

Iceland’s President Olafur Grimsson, surveying the global financial mess, including the pending $112 billion bailout of Ireland’s shaky banking sector, can gloat a bit. His country, he says, is in better shape because it let private banks fail two years ago. —JCL


“The difference is that in Iceland we allowed the banks to fail,” Grimsson said in an interview with Bloomberg Television’s Mark Barton [Thursday]. “These were private banks and we didn’t pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks.”

Ireland’s Prime Minister Brian Cowen said this week his government has discussed an 85 billion-euro ($112 billion) bailout with the European Union and International Monetary Fund after the country’s banks threatened to bring the euro member to the brink of bankruptcy. Iceland’s banks, which still owe creditors about $85 billion, were split to create domestic units needed to keep the financial system running, while foreign liabilities remained within the failed lenders.

As a consequence, “Iceland is faring much better than anybody expected,” Grimsson said.

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By Paul Johnson, December 10, 2010 at 4:09 pm Link to this comment

Oh, well!  So much for this story.. .

“Iceland to repay Britain $3.45 billion debt due to Icesave Bank failure.”
Iceland to repay Britain $3.45 billion debt due to Ices
ave Bank failure

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By Paul Johnson, November 29, 2010 at 3:15 am Link to this comment

Dale, Michael Hudson’s article uses the US experience circa 1937 with FDR’s debt
repudiation as the justification for Iceland (and other European countries) to
repudiate their debts.  I am sympathetic to people with underwater mortgages,
but the example he uses is terribly unrepresentative of the current situation.  The
US economy fell into a double-dip second recession in 1938, and if it hadn’t been
for the wartime stimulus of the US selling stuff to the Europeans starting in 1939
and then the adoption of a command economy starting in 1942, things would
have gotten worse. 

Unless we start a third world war with Iran, I don’t think that European debtor
countries can count on selling equipment to combatants as a way out of their
current problems.

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By Dale, November 27, 2010 at 4:45 pm Link to this comment
(Unregistered commenter)

Michael Hudson of UKMC. Keywords Iceland, Latvia.

James Galbraith. Keywords Predator State.

Warren Mosler. Keywords Innocent Frauds.

Bill Mitchell. Keywords Billy Blog.

We don’t need a whole new economics. We need to bring back the kind that
actually works.

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By Martin, November 27, 2010 at 11:47 am Link to this comment
(Unregistered commenter)

Lincoln asked if Americans are too stupid and lazy, Samosamo muses that only total breakdown with wake up the people.
Guys, the US has 2% of the population either in jails or in the judicial process, by far more than any other country in this world.
It is not stupidity or laziness, it is oppression. I mean if you can’t prevent federal agents from touching your genitals, then we are close to feudal practices where the lord had the right of the first night of any pretty bride.
Just repeating the mantra of the free and the brave does not make it so. Americans are scared into submission. So yes, I do agree with Samosamo, that only the total breakdown will free us from this gilded labor camp.

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By PatrickHenry, November 27, 2010 at 10:16 am Link to this comment

Ron Paul stated the same thing.

The bankers have their lackeys in Congress vote for bailouts of poor business decisions.

The too-big-to-fail banks failure will create voids in business which in turn create opportunities for smarter and more innovative up and comming businesses.

Opportunity will feast on the carrion of what remains.

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By Paul Johnson, November 27, 2010 at 2:55 am Link to this comment
(Unregistered commenter)

These stories about Iceland’s response to the debt crisis are very one-sided.  No
one seems to ask what will happen when the world recovers from this recession as
a result of the Icelandic people’s unwillingness to guarantee any of the bank debt. 
Iceland will have no access to international credit facilities, which means very little
foreign trade will be possible.  Young people will be leaving Iceland in droves.

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By samosamo, November 27, 2010 at 2:31 am Link to this comment


It does seem that the bankers are in total control
of the world by managing the money, so it seems.
What I see is that the people are just too willing
to let the bankers get away with grand larceny
and the only way for that to change and at the
same time show that the bankers are not in
control is for the bankers to just drive economies
into the ground and leave NO scraps for the
peons. That should get the people motivated, but
then again, it is amazing to see how docile the
people are, kind of like they really like the abuse
being dumped on them.

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By lacefish, November 26, 2010 at 7:48 pm Link to this comment

Yes, Olafur Ragnar and his buddies to whom the
government gave the banks to begin with are all doing
just great. The “left” administration (made of the same sawdust, apparently, that Chris Hedges describes so well in his new book, Death of The Liberal Class), which promised
to clean up after the capitalists-on-steroids, has
done nothing but send the bills to the public. The administration pumped billions of taxpayer money into the “new” banks (we don’t even know who owns these institutions now) and
kept the criminal classes there; almost all
the bankers that enabled the swindle that went on
before the collapse are still sitting pretty (and
prettily paid, in a banking system that is 10 times
bigger than the country needs)there, giving special treatment to their buddies and writing off debts of their friends and families, but giving the
finger to ordinary folks who’re losing their homes.
Gloat all you will, Mr. Grimsson, but fundamentally
nothing has changed: Society is still being run for
the benefit of the bankers and the corporate class, 
and working men and women are stuck with the bill. Shame on you.

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Fat Freddy's avatar

By Fat Freddy, November 26, 2010 at 7:03 pm Link to this comment

You must watch this video. If you can handle the truth.

Just who the hell do you think you people are. You are very, very dangerous people indeed: your obsession with creating this Euro state means that you are happy to destroy democracy, you appear to be happy with millions and millions of people to be unemployed and to be poor.

-Nigel Farage MEP (UK Independent Party)

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Fat Freddy's avatar

By Fat Freddy, November 26, 2010 at 6:55 pm Link to this comment

There is one group of economists, who have consistently said the banks should be allowed to fail. These are the exact same people who predicted the crash in 2006 and 2007. Anybody know who they are? They are the ones who want to protect the rich, or so I’m told by liberal progressives. They are the ones that want the poor to go without food, water, clothing, shelter and air. They are the ones that want “unfettered Capitalism”. They are, of course, the Austrian School libertarians. Economists like Peter Schiff and Jim Rodgers. Perhaps you liberals should take a second look. Here’s Peter jsut the other day. (Don’t worry, I won’t tell any of your friends that you watched Fox Business News.)

Before anyone says anything, Austrians are not Reaganomics, trickle down economists. Here is Peter arguing with one of Reagan’s top economists, and creator of the “Laffer Curve”, Art Laffer. This is when he accurately predicts the crash:

Ben Stein publicly apologized to Peter after the crash.

So, you liberal/progressives have a choice. Stick with Pauly Krugnuts and his bailouts and Stimulus and all that Keynesian horseshit, or embrace the free market and the Austrians. Their arguments are sound, and their predictions are accurate. What more do you want, a Rubber Biscuit?

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By Tobysgirl, November 26, 2010 at 6:11 pm Link to this comment

Yes, Americans are too stupid and lazy. They seem to want to elect people who will steal from the public faster than the last bunch.

I am reminded of Arendt’s thoughts regarding the desire to destroy. Hitler did an excellent job of destroying Germany, and it seems our politicans and their corporate sponsors are looking to do the same to the U.S.A.

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Queenie's avatar

By Queenie, November 26, 2010 at 3:59 pm Link to this comment

What a decent and humane way of caring for it’s citizens.

What a stark contrast with the utter contempt in which most of us are held by our own government.


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By Lincoln, November 26, 2010 at 3:11 pm Link to this comment
(Unregistered commenter)

Of course “NO” tarp works.  Robbing the people is just a transfer of wealth to the have-too-much-already.  Thirty years of trickle down and then we got Raygunomics on steroids.

Greatest heist in the history of mankind.  Brought to you by both Democratic and Republican Parties.  Sold by Bush and Obama.

One would think the pitchforks would come out to take care of the criminals.  Are American too stupid and lazy?

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