Ultimately, regardless of whether you bail out the banks or liquidate them and capitalize fresh new ones, it won’t help individuals and businesses if they’re not fulfilling their fundamental role as lenders. But going forward, Iceland’s economy will be more stable with a banking system less focused on gambling.
Unemployment under 6%. Their GDP is down considerably from what it was at the heyday of their banking sector, but it’s still almost doubled from 2000, when the banking sector took off. Iceland seems to have done alright. Certainly better then Ireland or Cyprus, which had similarly inflated banking sectors.
Their banks being a “shadow” of their former selves is probably a good thing. “Island banking” in places like Iceland and Cyprus was a terrible idea, both for the countries and investors, so its a good thing its over.
As to the original issue, I kind of lost track of what happened. Iceland decided they wouldn’t repay foreign depositors, despite their guarantee, so the UK and Netherlands covered their own citizens. They asked for the money to be paid back, but a referendum squased legislation to do so. Then an EU court decided Iceland didn’t have to repay the money.
But I think since then the the “foreign” bank where the government threw all the assets they weren’t going to cover has since recovered to the point where it can pay the insured deposits. Is that right?
There’s nothing about that last part in the linked article.
Which ones should’ve been convicted, and on what charges?
“In 2012, Breuer spoke at the New York Bar Association and mentioned that he loses sleep at night thinking about the impact a high-profile lawsuit could have on financial institutions.”
Lanny Breuer was the head of the criminal division at the DoJ and was one of Eric Holder’s partners at Covington & Burling (a top tier DC law firm) where they represented all the Wall Street banks (to be fair, all the top tier law firms in the world represent all the wall street firms at some point or another).
I thought it was folly for Obama to pursue health care before he dealt with the economic collapse and got our recovery underway. He’s generally been a big disappointment, probably because I had unrealistic expectations.
I recommend you read Matt Taibbi’s series on the Wall Street meltdown for some insights. Taibbi’s book Griftopia would also be useful.
Thanks for the update. In the few minutes before I noticed it was a zombie I was wondering what the outcome would be like in a few years and behold! There it was.
The problem is I can’t determine from the article whether the results are good, bad, or other. I presume it is some of both but what is the general consensus (if there is one) of economists? Did Iceland do the right thing?