What's Really Happening in Iceland Since The Crash ?

[C. Flower]

There are a lot of happy-clappy references by Keynesian economists to Iceland as a state that has handled its crash well, written debt off and avoided the kind of damage that Ireland and Greece have undergone.

Reading blogs from Iceland, it is clear that people there continue to go through agonies of debt and loss of income, unemployment and emigration.

This blog by a "free market" writer has a serious go at Krugman for painting Iceland in unrealistic colours.

http://www.icelandreview.com/iceland...8997.news.aspx



Incomes are down, inflation up 30%, personal debt is a nightmare, unemployment and emigration continue and last year Iceland's GDP contracted faster than Ireland's.

The idea that there is a simple solution to the current crisis - print money and increase public spending - as put forward by Krugman and others - is clearly a delusion, and a dangerous one.

There aren't any simple and easy solutions at Keynesianism lulls people into a false sense that a quick fix is possible. We either continue to live in an economic disaster zone, under capitalism, or undertake the difficult task of building a completely new, non-profit based system.

[Ephilant]

The idea that there is a simple solution to the current crisis - print money and increase public spending - as put forward by Krugman and others - is clearly a delusion, and a dangerous one.

This idea is the logical conclusion if you start from the idea that capitalism is the only possible system on which a society can be constructed and flourish.
As long as we insist on praying to the "God of More", we will have to keep devising ways of fooling ourselves into not seeing that we are in fact digging our own grave. Consumerism being one of the most effective ways of achieving that blindspot.
What is needed is a complete new foundation on which to build a society, a foundation based on social recognition, equality and coherence, where an economy plays second fiddle to the social needs of a society, and does what it is supposed to do, sustain the society instead of dominate it. That can only be achieved by dismantling the systems as they exist. This should not be done by blowing them to kingdom come (although admittedly gratifying ) and creating a vacuum, but by implementing a thoughful, carefully planned but urgent transition towards the goal of an adequate and sustainable social infrastructure being all important.
It will also necessitate reprogramming people's minds to stop them from having that capitalist knee-jerk reaction that everything must be done with the ultimate, and only goal of financial gain.
The struggle currently ripping Europe apart is the first step in this process, and the next few weeks will decide whether we end up using pyrotechnics or our brains. People, Joe Soap, are at the end of their witts, and anybody who can come up with a convincing argument to make them think they have the solution is going to get their support. The mandarins in Europe are as guilty of pretending to know the way out as the Neo-Fascists in Greece, Britain, Flanders, Holland, France and anywhere else are. And as destructive. The mistake both power hungry groups of maniacs make is that they insist that the solution has to be given from the top down instead allowed to develop from the bottom up.

[coolvr]

Michael Hudson had a recent post about Paul Krugman who is or at least was involved in a petty spat with Steve Keen who I have a lot of time for along with Michael Hudson.

http://michael-hudson.com/2012/05/pa...omic-blinders/

There aren't any simple and easy solutions at Keynesianism lulls people into a false sense that a quick fix is possible. We either continue to live in an economic disaster zone, under capitalism, or undertake the difficult task of building a completely new, non-profit based system.

And you've pretty much summed it up in a nutshell, the current ruling class are so wedded to capitalism and so blinkered that they can't even conceive of a different system.

Our own dear leader thinks it's some sort of a badge of honour to say that "we will pay our debts" when the very thing that is dragging us down is our debt level which will eventually sink us.

"Iceland received aid and advice from the IMF" is pretty much all we need to know about Iceland to understand why we shouldn't exactly promote Iceland as the right way to deal with a banking and economic crisis

Krugman like most economists is also wedded to a particular ideology and economic theory so no different to politicians is happy to bend and twist facts to support those ideas/theories and knock opposing ones, I think we in Ireland have learned enough about the fallacy of listening to economists without examining the facts ourselves.

So long as the banks, financial markets and bondholders take precedence over citizens then there is no easy way out of this disaster and for a lot of countries there is no way out at all just a slow and painful death spiral.

Printing more money and creating more debt might ease things in the short term but as we have seen with the ECB's LTRO earlier this year it just creates more problems in the long term with the banks taking that "free" money and betting/gambling on the situation getting worse in Spain and Italy so the very institution (the ECB) that is supposed to be one of our saviours is actually giving these money junkies the ammunition to make the problem even worse.

And our politicians tell us that voting Yes is a vote for Stability you couldn't make it up if you tried.

[fluffybiscuits]

Michael Hudson had a recent post about Paul Krugman who is or at least was involved in a petty spat with Steve Keen who I have a lot of time for along with Michael Hudson.

http://michael-hudson.com/2012/05/pa...omic-blinders/



And you've pretty much summed it up in a nutshell, the current ruling class are so wedded to capitalism and so blinkered that they can't even conceive of a different system.

Our own dear leader thinks it's some sort of a badge of honour to say that "we will pay our debts" when the very thing that is dragging us down is our debt level which will eventually sink us.

"Iceland received aid and advice from the IMF" is pretty much all we need to know about Iceland to understand why we shouldn't exactly promote Iceland as the right way to deal with a banking and economic crisis

Krugman like most economists is also wedded to a particular ideology and economic theory so no different to politicians is happy to bend and twist facts to support those ideas/theories and knock opposing ones, I think we in Ireland have learned enough about the fallacy of listening to economists without examining the facts ourselves.

So long as the banks, financial markets and bondholders take precedence over citizens then there is no easy way out of this disaster and for a lot of countries there is no way out at all just a slow and painful death spiral.

Printing more money and creating more debt might ease things in the short term but as we have seen with the ECB's LTRO earlier this year it just creates more problems in the long term with the banks taking that "free" money and betting/gambling on the situation getting worse in Spain and Italy so the very institution (the ECB) that is supposed to be one of our saviours is actually giving these money junkies the ammunition to make the problem even worse.

And our politicians tell us that voting Yes is a vote for Stability you couldn't make it up if you tried.

The printing of more money to save us from doom was what happened in Zimbabwae and looked what happened!

http://en.wikipedia.org/wiki/Zimbabw...Hyperinflation

The value of their currency fell drastically!

[Dr. FIVE]

Iceland holds some key lessons for nations trying to survive bailouts after the island’s approach to its rescue led to a “surprisingly” strong recovery, the International Monetary Fund’s mission chief to the country said.

Iceland’s commitment to its program, a decision to push losses on to bondholders instead of taxpayers and the safeguarding of a welfare system that shielded the unemployed from penury helped propel the nation from collapse toward recovery, according to the Washington-based fund.

http://www.businesspost.ie/#!story/H...6-216f08284830

[Dr. FIVE]

Stephen Kinsella

http://irisheconomy.ie/index.php/201...and/?wpmp_tp=1

[fluffybiscuits]

Stephen Kinsella

http://irisheconomy.ie/index.php/201...and/?wpmp_tp=1

That Dr Five is one of the best articles yet on the recovery and its written so simply that even someone like myself can grasp it who has only a rudimentary understanding of economics at its best. When Geir Haarde the former prime minister was put on trial for the mismanagement of the country there was a ripple of feeling around the world that the Icelanders took the correct decision. Landsbanki crashed and burned and they are now on the road to recovery. We here in contrast have sold our souls to the bondholders who now own our ass. Im all in favour of now burning the bondholders but we wont and will continue on to bring misery upon the poor working class of Ireland, creating a new poverty class (which I might raise in a new post). Icelanders are to be admired for their tenacity and letting the bondholders sod off.

[Holly]

Iceland has big problems still but it did two things right:
1) Refused to national the debt of speculative bankers and
2) Concentrated on rebuilding its economy from home with fishing and tourism.
Ireland, in contrast continues to pay money for Anglo-Irish or whatever they are calling it these days and its only plan for growth is to hope a couple of American outsourcing multinationals.

[MPB]

Iceland has big problems still but it did two things right:
1) Refused to national the debt of speculative bankera and
2) Concentrated on rebuilding its economy from home with fishing and tourism.
Ireland, in contrast continues to pay money for Anglo-Irish or whatever they are calling it these days and its only plan for growth is to hope a couple of American outsourcing multinationals.

The only reason there is a financial deficit in Ireland is because their is a deficit in the ability of Govt to create the jobs needed to increase the taxes paid and lower the social welfare paid.

Every job created doubles the ability to reduce the deficit.

Increasing taxes and reductions in employment, is an act of cowardice and an admittance of failure.

Amazing that this country is bankrupt and yet we still have the same amount of TDs and Councillors as we always had, yet have less nurses, guards and teachers.

Stupidity is alive and well and living it up in Ireland.

[Dr. FIVE]

[ame="http://www.youtube.com/watch?v=51-Jfh6ADH0"]Olafur Ragnar Grimsson Iceland president 'Let banks go bankrupt' - YouTube[/ame]


Do we believe the politician?

[Ephilant]

Do we believe the politician?

At your own peril, as we all know, Icelanders, Irish, Greeks, Spanish, German,...
Look for the puppetmaster and you'll see to which tune the politician dances. His/her job is to make the people dance to the same tune, nothing else.