Not correct, Iceland is paying back. They were just fighting about the terms. Greece defaulted in a much worse fashion than Iceland. And yes the Icelandic krona crashed, which it should because they had a massive current account deficit. But I don't see what that has to do with austerity.Iceland shut down its three major banks and then told the creditors - "too bad, you ain't gettin' paid". Non-Icelanders who had deposited money in the closed banks were told - "Eh too bad." The value of the Iceland krona crashed on the international market, which then caused the price of imports to skyrocket but it made Iceland a much cheaper place to visit, which brought in money to the nation's economy.
As there are only about 330,000 Icelanders, trying to compare the US economy with its 320,000,000 population, does seem to be a bit off.
US would have gotten better terms than Iceland simply because of its power.Now, think about the difference in the amount of offshore money that is in US banks and the amount that was in Icelandic banks - Do you honestly think that if US banks told those depositors - "Eh, too bad, you lost it" - that there would not be serious repercussions, repercussions that would affect the world's economy?
I think you missed the word relatively. Not every news out of Ireland, or Iceland for that matter is going to be good.Ireland: from the Irish Times