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Busted Billionaires: How Iceland Recovered by Defaulting

Written by Gary North on March 19, 2013

Iceland, in 2009, let its banks default on foreign depositors. The nation suffered a brief recession. Now it is growing. Europe is in recession.

Default pays off.

The nation had six multi-billionaires in 2007. Now it has none. The lone survivor has left the country. He used to have $6 billion. He lost $5 billion. The other five lost all or most of their money.

It looked so easy in 2007. It looks so stupid today.

Inflation makes very rich people. Popped bubbles bring them back to earth, fast.

Ireland played by the bankers’ rules. The government bailed out the big banks. It is still mired in recession. Its people are permanently burdened with massive government debt — unless Ireland’s government defaults (It will.)

Iceland did not play by the bankers’ rules. Its recession is over, at least for now.

The experts in finance pretend Iceland isn’t there. It did better than the Eurozone nations have done. It refused to bail out the bankers. The idea that a nation can do well by not bailing out bankers is anathema in places of influence. In the view of bankers, whose ideas prevail, it is the first responsibility of all politicians to bail out big banks.

Today, the Parliament of Cyprus may decide to follow Iceland’s lead. The Eurocrats are wetting their Depends in fear. They keep issuing statements that none of this is relevant, that Cyprus is unique, that the contagion will not spread.

How do they know? They thought that the Parliament of Cypress would roll over and play dead. It didn’t.

When governments fail to back up big bankers from the results of their stupidity, billionaires lose money. The taxpayers don’t.

Continue Reading on www.bloomberg.com

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10 thoughts on “Busted Billionaires: How Iceland Recovered by Defaulting

  1. Bluesunny says:

    Mark Twain "The problem with common sense is that is not common" Iceland used common sense and let the banks fail. The U.S. and other nations not so much. Of course, common sense does not fit into a corrupt governments agenda. Kudos to Iceland.

  2. Huapakechi says:

    "It is well enough that people do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning". Henry Ford

    It's more true today than back in his day. Whe some banks are "Too big to prosecute", look for the criminal class to concentrate their efforts in the banking "industry".

  3. Burdened Taxpayer says:

    We bailed out GM and now our cars are made in China and the workers have retired. The Corporate Exectives bought themselves their own Privat lear Jets at our expense, not to mentions a hefty bonus. Solarium is gone, but the bail out is on us.Who got the money? Not the Tax payer, cause before the bail out it was agreed to that they had a guaranteed loan and would not have to pay back, but the Taxpayer does. How is that fair.

  4. Mr. Scott says:

    Burdened, that is just crazy talk. I don’t like the GM bailout any more than you do, but our cars are now made in China? Please. In my city GM is expanding one of its plants to bring production back from Canada, and they have added a shift at the other to keep up with demand. The Romney campaign gaffe about Jeeps being made in China and sold here was proven wrong as well. You are terribly misinformed, I’m afraid.

  5. With the old saying, "money is the root of all evil" I would add to it, "and the banks are the soil" is an understatement, just who do all the foolish folks out there think the "Fed is? (clue)it has nothing to do with our goverment, but a bunch of the greediest banks in the world! why do we as the taxpayers alow the gov. to loan OUR $$$ to the banks for almost nothing, and then alow the banks to rape us? just to borrow it back? Mr. Ford was correct! and to make matters even worst, when the banks make a mistake, and loan to folks that default, and then it catches up with them, we bail them out?

  6. Jack Marteville says:

    I am afraid that you are wrong; MOST (70%) of GM cars are built outside of the United States. Please don't take my word for it, check it out. This bailout bailed the labor unions, with taxpayers money. It will not stop GM from eventually collapsing in the United States, and eventually there will no longer be auto production in the USA because labor rates are simply uncompetitive.

  7. GM and Chrysler should have both been left to the bankruptcy courts, GM eventually did, Fiat took Chrysler and made it into a wonderful company again (most growth in manufacturing occurring at plants in Indiana.)

    Jeeps are being made in China, but only for sale in China. http://www.sunshinestatenews.com/blog/oh-my-polit

    Technically Jeeps are being made in China, but so long as they aren't being repatriated to the USA people won't care.

    Companies like GM, Ford, Chrysler, Caterpillar, John Deere are bringing plants back to the USA largely because of a cheaper cost of production (natural gas/electric.) However they are concentrating in right-to-work states (except when they choose to build additions on plants.)

  8. I'm looking forward to America's default. I am curious how a default will play out with the USA considering our differences with Iceland. The reserve currency obviously, but also the size of the welfare state, and the size of the bureaucracy for that matter.

  9. lilbear68 says:

    labor rates not competitive? the reality is that the avg uaw worker here in the us makes about 15-20/hr for making the identical car that when made in germany the auto workers there in germany make 60+/hr

  10. Actually, the CORRECT quote is the LOVE on money is the root of all evil. Some translations say the love of money is the root of all kinds of evil.