Iceland Shows that Default doesn’t lead to Deep Freeze

Discussion in 'Media' started by hvactec, Jul 2, 2011.

  1. hvactec
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    hvactec VIP Member

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    here's the thing: While default would be a disaster for Europe, it wouldn't necessarily be a lengthy tragedy for Greece or Ireland. Rather than being sentenced to a long stay in a debtors' prison, as Argentina was, they might find that they'll simply be put into the penalty box for awhile. Consider the case of their neighbor to the north who recently defaulted in spectacular fashion: Iceland.

    Last decade, Iceland's deregulated banks stormed out of the North Atlantic like Vikings, amassing huge deposits and liabilities all over the world — some $85 billion in total. When Iceland's banking industry capsized in the fall of 2008, the government nationalized the banks. It then faced the question of whether its 320,000 citizens should make the banks' global bondholders and depositors whole. The answer was something of a no-brainer. Iceland's banks had assets that amounted to ten times the country's Gross Domestic Product. And so while the country received an IMF-led bailout, it let the bondholders suffer losses. "Bondholders should not rely on the government stepping in and bailing them out," Iceland Central Bank Governor Mar Gudmundsson said last December. "They should do their due diligence." The Icelandic banks had also taken lots of deposits from savers in the U.K. and the Netherlands, who were lured by competitive interest rates. These savers were bailed out by their own governments. But in 2010, the question as to whether Icelanders should reimburse some $5.3 billion to the governments of the U.K. and Netherlands was put to a referendum. And the answer was a resounding "no." In April 2011, even as Iceland was put on notice that failing to step up would inhibit its ability to borrow on international markets, the referendum failed again. As Bloomberg noted: "This will force the government to postpone its plans to enter the international bond markets."

    read full story http://dcoda.amplify.com/2011/06/30/iceland-shows-that-default-doesnt-lead-to-deep-freeze/

    Note the bankers in Iceland were fleeing in droves - they jailed their banksters
     
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  2. hvactec
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