PhD student at the University of Exeter, UK, researching financial instability. Minsky and Keynes influence my economics. Love France, especially her people! Writing a book, Bad Economics, about the structure of the Icelandic economy and the financial crisis.
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There are truths and untruths in the media, the blogosphere and in the minds of people when it comes to what really happened in Iceland and its, acclaimed, economic recovery. To some extent, it has gotten the stamp of some sort of an economic “Wunderkind” by defying all probabilities and becoming a poster child about how to respond to major economic crises. But to spill the beans already: the picture is not as rosy as it has been painted.
Let’s start with some of the claims. According to a less than five minute search on the internet, Iceland:
- - Screwed the creditors of the banks and let the banks fail, then nationalised them
- - Jailed the bankers of the failed banks
- - Kicked out the Austerity supporters, the Troika and the IMF in particular
- - Gave huge debt reliefs to the public
- - Set up capital controls which will be abolished very soon, even as soon as this year
- - Is now, consequently, growing and, especially in comparison to debt-laden Europe, doing quite fantastically!
- - Furthermore, not only is it growing but the prospects of the future are wonderful
So the lesson, following Iceland’s example, is to let the banks fail, nationalise them, increase government spending, shut the capital inside the economy and give debt reliefs to the people instead of the creditors of the banks.
Too bad this is not entirely the truth.
Read on and I’ll show you how deep the rabbit hole really goes.
To read the whole article, click here