Iceland: Recovery and reconciliation

For quite a while now, Prof. Paul Krugman has been looking at the way Iceland handled their financial crisis, as opposed to the way the Eurozone has been handling theirs. One of his comparisons has been Latvia vs. Iceland. In every case, it appears Iceland has done much better.

Why Latvia? Well, because the VSP's (Very Serious People) have held up Latvia as the shining example of the wonders of austerity. Actual FACTS seem to make little (if any) difference.

Tn fact, even the verdict of history means little to VSP's. Just because the policies they support, policies that "heal" the economy on the backs of the 99%, have never worked, means nothing. This is the triumph of ideological economics. An economic theology embraced by our "conservative" economists.

Dr. Krugman pointed to an article at FinancialTimes.com where "policy makers" worldwide are now looking at Iceland.

I guess they are beginning to understand that beggaring (buggering?) the huge majority of their populations is not a plan for long term stability.

Here is an excerpt from the FT article -- please follow link to the original.
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Iceland: Recovery and reconciliation

By Michael Stothard in Reykjavik
The crisis-hit country’s improving outlook is being studied by policy makers worldwide

A visitor seeking a sense of how Iceland’s clique of powerful financiers saw themselves before their empire came tumbling down need look no further than Reykjavik’s Harpa concert hall. The extravagant steel and glass structure, which has more seats than London’s Royal Opera House, looks like a futuristic beehive glowing above the grey buildings that make up most of the capital.

It was commissioned by Bjorgolfur Gudmundsson, one of the “Icelandic oligarchs” who exploited cheap credit following the aggressive financial deregulation of the early 2000s to create a billion-dollar empire. He set out in 2007 to build a cultural venue to match the country’s new found wealth – but when the global financial crisis hit the next year, and Iceland’s overleveraged banks collapsed, he went bankrupt, leaving the state to complete the project.

The Harpa finally opened last May amid grumbling about the cost to overburdened taxpayers. But nearly a year on, like Iceland itself, it is proving surprisingly successful. A source of growing national pride, it has played host to musicians including Vladimir Ashkenazy, Bjork and Yoko Ono, as well as half a million visitors.

Now, in a month where the country has put on trial Geir Haarde, the former prime minister, begun legal proceedings against its once almighty bankers, and received a steady stream of good economic news, many in government and beyond argue that the Harpa should serve not as a symbol of hubris but as a monument to a nation putting the past behind it.

Iceland’s recovery from the shock of the crisis matters more than its small size and 320,000 strong population would suggest. Formerly one of the richest nations in the world in terms of income per head, it won the dubious honour of being the first and among the most calamitous victims of the crisis, a prime example of the risks of financial deregulation. Today Iceland is not only the first country to put its political leader on trial for the crisis but it also offers a test of the advantages of indebted nations simply letting their banks collapse and default on their loans. ........................................... go to original for the rest.