Iceland is a remarkable success story – by going against the advise of some ‘smart’ bankers like the American bankers. There is a brilliant article in Bloomberg (so those who have access to Bloomberg please read ‘Iceland Resurfaces, by Yalman Onaran) -it is there in the printed version also with a brilliant photograph by Tom Wagner.
Unlike other nations, Iceland placed its biggest lenders on receivership. It choose NOT TO PROTECT its biggest lenders. This made a lot of sense – the economy was running away with the help of foreign capital. Protecting the banks was just a euphemism for protecting the people who had lent to these banks. Of course the economy is much smaller than even Ireland, but this small country of 328,000 people stuck to its guns.
Thanks to the continuous printing of notes by the USA, Iceland got a lot of money and that helped them lend money to everybody to buy these ‘boom’ price products as much as they wanted. Banks with excess money can create booms – and that is whatwas happening…
But Iceland has proved that bitter medicine works, and countries should not use ‘advisers’ and ‘bankers’ based in the US whose advise is at best biased, and at worst fraudulent.
Reminds me – a couple of days back I said on FB ‘it is difficult for a doctor to pray for the good health of all his friends and patients’ – conflict of interest that is all.
Moody’s Investor services role in Iceland too is a joke – and Mr. Buffet says there should be no further business competition….
Well it does not matter whether it is a doctor not being able to pray for his friends or Mr. Buffet defending Moody’s or SnP….it is a clear case of conflict of interest….
The numbers you see in this Bloomberg article are stunning. Iceland’s GDP which had banking at 4%, now had it at 9%!
I guess everybody would have wanted a job in a bank!
Car finance and house finance business boomed. 367 Range Rovers sold in 2007 – exceeded the number in Denmark and Sweden – the richer cousins!!
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