Go Vikings!

You have to ask yourself, why give free money to Banksters?

Iceland makes fledgling recovery from its economic meltdown

By Brady Dennis, The Washington Post

Published: January 16

Iceland did what the United States chose not to do – allow its biggest banks to fail and force foreign creditors to take a hike. It did what troubled European nations saddled with massive debts and tethered by the euro cannot do – allow its currency to remain weak, causing inflation but making its exports more desirable and its prices more attractive to tourists.

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Realizing the peril – and perhaps the fallacy – of trying to rescue the banks, Iceland’s government ultimately let them collapse. “No responsible government takes risks with the future of its people, even when the banking system itself is as stake,” the prime minister said in an unprecedented address to the nation in October 2008.

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In the wake of the catastrophe, officials guaranteed deposits of Icelandic citizens but refused to pay off many foreign investors – a controversial move that remains a sore spot here and in Europe. The government created new banks made up of the domestic operations of the failed firms. The old banks, which held foreign assets, are being dismantled and their assets sold, with proceeds going to pay off creditors.

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The country’s debt grew to more than 100 percent of GDP in 2011. But even as government officials made budget cuts in an effort to return to a more sustainable path, they deliberately safeguarded its already-generous social safety net, adding and expanding programs targeted to the most vulnerable groups. In part to offset those measures, the country put in place new taxes on the banking system and on wealthy individuals.

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Allowing the krona to remain weak has hastened Iceland’s return to stability. The country’s exports, which feature fish and aluminum, were running about 11 percent higher last year, and the tourism industry also showed an 11 percent increase through November. But struggling countries bound together by the euro, such as Greece and Portugal, don’t have the ability to let their currency fluctuate to more favorable levels.

Judging by economic data and by the workaday scenes of life in the capital, the economic engines are turning again. “For a country whose entire financial system collapsed, Iceland is doing remarkably well,” said Julie Kozack, the IMF’s mission chief for Iceland, adding that the country “is not out of the woods yet.”

But wait ek you say, what about all those scary bad no good things the Post reports are the evil consequences of kicking the Bankster’s asses out on the street corner to sell apples like, like, like…

LIKE POOR PEOPLE!

Oh, you mean like-

Iceland has weathered the worst of the financial crisis, but its society has yet to solve the identity crisis that followed in its wake.

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The crisis scarred Iceland’s national psyche, and citizens are wrestling with profound questions, not only about how to return to better financial footing but also about what kind of society should emerge.

Well-

Inflation has fallen. Consumers are spending more money. There are new investments in geothermal energy, and the fishing waters remain plentiful. Hammers and power saws have become a familiar sound again in Reykjavik. Fewer Range Rovers clog the streets, but there’s no lack of Audis and Mercedes or BMWs.

But ek- SCARRING THE NATIONAL PSYCHE!

Businessmen came and went from Reykjavik in private jets. They bought showy yachts and multimillion-dollar vacation homes. Bankers became a popular and swaggering breed; after all, they were handing out a slew of high-paying jobs and providing a fortune in tax revenue.

“You had to be crazy not to want to become a banker,” said Heimir Hannesson, a student council member at the University of Iceland. “You went to college, studied business. You became a millionaire overnight. That was the dream. And for a few years, it was the reality.”

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“What we had before was some sort of irrational exuberance. That has left, and maybe that’s a good thing,” said Gylfi Magnusson, an Icelandic economist who served as minister of economic affairs after the crash.

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“The smaller the country gets, the bigger the national pride, the bigger the soul. Here we are on a tiny island, with nothing but our pride,” said Hannesson, the student council member.

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“The modern-day financial Vikings, I think we feel scarred by the reputation they gave us,” he said. “Especially among the younger population, there’s a desire to do things better and more honorably.”