View Poll Results: Does the article present realistic alternative bankruptcy options

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  • Pull the plug, bankrupt the USA

    3 37.50%
  • Bankruptcy is not an alternative in the USA

    1 12.50%
  • Too big to bankrupt

    3 37.50%
  • Banking in Iceland does not relate to banking in USA

    4 50.00%
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Thread: Why Iceland Should Be in the News, But Is Not

  1. #1
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    Why Iceland Should Be in the News, But Is Not

    Why Iceland Should Be in the News, But Is Not | Truthout

    Five years of a pure neo-liberal regime had made Iceland, (population 320 thousand, no army), one of the richest countries in the world. In 2003 all the country’s banks were privatized, and in an effort to attract foreign investors, they offered on-line banking whose minimal costs allowed them to offer relatively high rates of return. The accounts, called IceSave, attracted many English and Dutch small investors. But as investments grew, so did the banks’ foreign debt. In 2003 Iceland’s debt was equal to 200 times its GNP, but in 2007, it was 900 percent. The 2008 world financial crisis was the coup de grace. The three main Icelandic banks, Landbanki, Kapthing and Glitnir, went belly up and were nationalized, while the Kroner lost 85% of its value with respect to the Euro. At the end of the year Iceland declared bankruptcy.


    This article would indicate that there is an alternative solution to problems of huge National debt. I notice that huge numbers of jobs were not lost because these financial houses of cards do not create jobs. The stimulus monies pissed away in this country can verify that along with the TARP funds. No jobs created. These financial groups seem to build mountains of money and paper but not jobs. Does that mean we should pull the plug?

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    Re: Why Iceland Should Be in the News, But Is Not

    Our nation and people will grow, and grow up, after we dismount our high and mighty horse and begin to learn from the little nations on this planet..
    end of to be ignored message, particularly by the conservatives.
    And, again, "no vote".

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    Re: Why Iceland Should Be in the News, But Is Not

    Quote Originally Posted by DaveFagan View Post
    Why Iceland Should Be in the News, But Is Not | Truthout

    Five years of a pure neo-liberal regime had made Iceland, (population 320 thousand, no army), one of the richest countries in the world. In 2003 all the country’s banks were privatized, and in an effort to attract foreign investors, they offered on-line banking whose minimal costs allowed them to offer relatively high rates of return. The accounts, called IceSave, attracted many English and Dutch small investors. But as investments grew, so did the banks’ foreign debt. In 2003 Iceland’s debt was equal to 200 times its GNP, but in 2007, it was 900 percent. The 2008 world financial crisis was the coup de grace. The three main Icelandic banks, Landbanki, Kapthing and Glitnir, went belly up and were nationalized, while the Kroner lost 85% of its value with respect to the Euro. At the end of the year Iceland declared bankruptcy.


    This article would indicate that there is an alternative solution to problems of huge National debt. I notice that huge numbers of jobs were not lost because these financial houses of cards do not create jobs. The stimulus monies pissed away in this country can verify that along with the TARP funds. No jobs created. These financial groups seem to build mountains of money and paper but not jobs. Does that mean we should pull the plug?
    No
    It means we should study and learn, with an open mind.
    And, the truth is vital for this to be of use.

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    Re: Why Iceland Should Be in the News, But Is Not

    In total agreement that the failure of the Iceland experiment should be front page news here. Some are trying to get the word out

    Iris Erlingsdottir: Libertarian Experiment in Iceland Fails

    The article is written by a journalist from Iceland and is titled LIBERTARIAN EXPERIMENT IN ICELAND FAILS.

    Obviously many here who subscribe to such randroid nonsense do not want to be associated with this failure.
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    Re: Why Iceland Should Be in the News, But Is Not

    I like Iceland is a good example of not paying the debt of the banks or bailing them out. Here is a older thread on the subject.



    http://www.debatepolitics.com/breaki...s-and-imf.html
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    Re: Why Iceland Should Be in the News, But Is Not

    Quote Originally Posted by haymarket View Post
    In total agreement that the failure of the Iceland experiment should be front page news here. Some are trying to get the word out

    Iris Erlingsdottir: Libertarian Experiment in Iceland Fails

    The article is written by a journalist from Iceland and is titled LIBERTARIAN EXPERIMENT IN ICELAND FAILS.

    Obviously many here who subscribe to such randroid nonsense do not want to be associated with this failure.
    Iceland was far from a "libertarian experiment." The government explicitly promised to bail out the banks if they failed, as opposed to the US government which merely implicitly said it would, and it backed enough crappy mortgages by competing with private banks as to make Freddie and Fannie look like the Swiss bank. Like the United States, the financial industry and general economy may have been "deregulated" in a few areas, but the government still had more than enough influence to create a massive moral hazard.
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    Re: Why Iceland Should Be in the News, But Is Not

    Quote Originally Posted by DaveFagan View Post
    Why Iceland Should Be in the News, But Is Not | Truthout

    Five years of a pure neo-liberal regime had made Iceland, (population 320 thousand, no army), one of the richest countries in the world. In 2003 all the country’s banks were privatized, and in an effort to attract foreign investors, they offered on-line banking whose minimal costs allowed them to offer relatively high rates of return. The accounts, called IceSave, attracted many English and Dutch small investors. But as investments grew, so did the banks’ foreign debt. In 2003 Iceland’s debt was equal to 200 times its GNP, but in 2007, it was 900 percent. The 2008 world financial crisis was the coup de grace. The three main Icelandic banks, Landbanki, Kapthing and Glitnir, went belly up and were nationalized, while the Kroner lost 85% of its value with respect to the Euro. At the end of the year Iceland declared bankruptcy.


    This article would indicate that there is an alternative solution to problems of huge National debt. I notice that huge numbers of jobs were not lost because these financial houses of cards do not create jobs. The stimulus monies pissed away in this country can verify that along with the TARP funds. No jobs created. These financial groups seem to build mountains of money and paper but not jobs. Does that mean we should pull the plug?
    Iceland's solution appears to have worked out relatively well...for Iceland. But I'd be careful about reading too much into Iceland's example. As the article notes, it has a population of 320,000...which is less than even a moderately-sized US city. A country like Iceland can declare bankruptcy without many widespread ramifications on the global financial system, but the same is not true for larger countries like Italy, much less a huge country like the United States.

    The lesson to be learned from Iceland is not the one that the article wants to teach: The moral of the story is that banks should be more closely regulated so that they don't take on huge risks in the first place...not that we should withdraw from global finance and stop paying our debts.
    Last edited by Kandahar; 11-27-11 at 02:26 PM.
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    Re: Why Iceland Should Be in the News, But Is Not

    Quote Originally Posted by DrunkenAsparagus View Post
    Iceland was far from a "libertarian experiment." The government explicitly promised to bail out the banks if they failed, as opposed to the US government which merely implicitly said it would, and it backed enough crappy mortgages by competing with private banks as to make Freddie and Fannie look like the Swiss bank. Like the United States, the financial industry and general economy may have been "deregulated" in a few areas, but the government still had more than enough influence to create a massive moral hazard.
    As a self admitted Libertarian it is understandable you would want to distance your self from that complete failure of libertarian thought and practices.

    This is part and parcel with libertarians. They advocate for something and when they only get 90% of what they wanted, they are ready to say that if it fails it is not their fault because it was not done their way.

    It is akin to somebody going to Eurpoe and seeing some highways with unlimited automobile speeds. They come back to the USA and begin to advocate for the same thing. The government decides that there is merit in the concept and builds a highway with a 95 MPH speed limit. The number of accidents and loss of life soars far beyond a normal expressway and soon fingers at pointing at the advocate who wanted a unlimited highway. What does he say

    "don't blame me. It wasn't my idea. I wanted unlimited speeds and you put in 95 MPH."

    The libertarian fails to understand that in the real world, there are no virgin pure ideas put into political action. And they like it that way since it always gives them a way out of responsibility for lousy ideas like Iceland experienced under the libertarian experiment a few years ago.
    Last edited by haymarket; 11-27-11 at 02:31 PM.
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    Re: Why Iceland Should Be in the News, But Is Not

    Quote Originally Posted by DrunkenAsparagus View Post
    Iceland was far from a "libertarian experiment." The government explicitly promised to bail out the banks if they failed, as opposed to the US government which merely implicitly said it would, and it backed enough crappy mortgages by competing with private banks as to make Freddie and Fannie look like the Swiss bank. Like the United States, the financial industry and general economy may have been "deregulated" in a few areas, but the government still had more than enough influence to create a massive moral hazard.
    First of all, ANY bankruptcy procedure (whether there is a taxpayer bailout or not) inherently creates a moral hazard, because it lets the debtor bank off the hook for some of the risks they acquired. There is no way to avoid this. Furthermore, banks WILL be bailed out as long as the government in question can afford to do so, because our financial system is too interconnected. One big bank failure can create a domino effect, as seen with Lehman Brothers. Financial institutions need to be regulated so that they don't put the taxpayers in the position of needing to bail them out in the first place.
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  10. #10
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    Re: Why Iceland Should Be in the News, But Is Not

    Quote Originally Posted by Kandahar View Post
    First of all, ANY bankruptcy procedure (whether there is a taxpayer bailout or not) inherently creates a moral hazard, because it lets the debtor bank off the hook for some of the risks they acquired. There is no way to avoid this. Furthermore, banks WILL be bailed out as long as the government in question can afford to do so, because our financial system is too interconnected. One big bank failure can create a domino effect, as seen with Lehman Brothers. Financial institutions need to be regulated so that they don't put the taxpayers in the position of needing to bail them out in the first place.

    I have read that the USA has $142 trillion of unfunded liabilities. Now if the currency loses value to about 120th of its current value we might be able to pay it back. Otherwise, I think bankruptcy is inevitable. I wish common sense and logic did not force those thoughts, but that is where they come from.

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