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Beware exemplars.

by Colman Thu Jan 17th, 2013 at 05:05:34 AM EST

I’ve long shouted about the nonsense being spouted about Ireland’s economy by people looking to use it as the poster child for their mad plans: for ‘reform’ when it was booming and (strangely enough) for reform and austerity now it’s in depression. Here is something similar about Iceland

Since people continue to spread the factually dubious statement that Iceland ďtold creditors & IMF to go jump, nationalised banks, arrested the fraudsters, gave debt relief and is now growing very strongly, thanksĒ I find I have to write this here thing.

[…]

Because, for some reason, people wonít believe Icelanders when they say that the above is not quite the reality as most Icelanders experience it.

He describes an economy thatís still in a lot of trouble and a political system that hasnít done half of what itís purported to have done.

Iíve heard a couple of places that the story about Icelandís economy thatís doing the rounds isnít entirely accurate - inaccuracies helped by Iceland being far away and not in English, though being English speaking doesnít help a true picture of Ireland escape.


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Is Iceland the anti-Ireland?
by Colman (colman at eurotrib.com) on Thu Jan 17th, 2013 at 05:06:40 AM EST
by Colman (colman at eurotrib.com) on Thu Jan 17th, 2013 at 05:14:06 AM EST
Iceland is supposed to have told the IMF to get lost? He says the IMF country page on Iceland shows that Iceland actually "followed the IMF's advice to a tee".

As for flipping off the creditors, he says yes and no:

What is actually going on in Iceland | Studio Tendra

Iceland didn't bail out the collapsed banks, but that wasn't for the want of trying. If you read through the Report of the Special Investigation Commission you'd find out that the Icelandic government tried everything it could to save the banks, including asking for insane loans to pay off the banks' debts.

A summary of the report he cites is available in English.

The true story, according to Bjarnason, is that Iceland did everything it could to save creditors. "The only reason why we didn't is that the Icelandic government, then and now, is completely incompetent." There follows a list of stupid things attempted or done by the Icelandic government. And some that were corrupt.

Nationalisation of the banks? Bjarnason says two out of the three major collapsed banks are now owned by the (supposedly shafted) creditors (the third, Landsbanki, is involved in litigation concerning Icesave and is still government-run). Nationalisation itself, he suggests, is in any case a misnomer for the emergency control process used.

Debt relief?

What is actually going on in Iceland | Studio Tendra

There has been plenty of debt relief here. The the top 1% has had almost all of their debt written off, for example. Wasn't that nice of the banks?

For the rest of us, the picture is a lot more complicated.

Strong Icelandic growth? He admits there may be discussion on this point, and goes into it in some detail. His take is that growth is at 2.7% but inflation at 4-5%. But of course you could always have inflation at 2% and no growth at all.

All in all, he backs his arguments up fairly solidly.

What is actually going on in Iceland | Studio Tendra

This isn't a blog post on economics. Pointing people at the public record, what legislation was actually enacted and what wasn't, what court cases were won and lost, who was prosecuted and not, what actions the government took and not, is not economics and not open to interpretation. You can debate about the long-term effects of the legislation that was enacted (and there's a debate to be had there) but you cannot debate the basic facts of what was actually done and what wasn't.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Jan 17th, 2013 at 09:30:40 AM EST
afew:

Nationalisation of the banks? Bjarnason says two out of the three major collapsed banks are now owned by the (supposedly shafted) creditors (the third, Landsbanki, is involved in litigation concerning Icesave and is still government-run). Nationalisation itself, he suggests, is in any case a misnomer for the emergency control process used.

But at least they managed to take the banks into receivership (even if it was through incompetence). So that is a plus.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Thu Jan 17th, 2013 at 02:01:26 PM EST
[ Parent ]
Also there is some mixing by him of the actions of two different governments, which kind puts me off his tone of righteous correctness.
by Metatone (metatone [a|t] gmail (dot) com) on Thu Jan 17th, 2013 at 02:32:29 PM EST
[ Parent ]
Surely an important point is that while Iceland may still be in trouble, there are places like Latvia which followed a different policy direction - the austerity direction we associate with the Troika and IMF, even if Blanchard and Lagarde are now moving towards saner concepts.

And those places, like Latvia are doing significantly worse than Iceland, in ways that match predictions of Keynesian-types.

by Metatone (metatone [a|t] gmail (dot) com) on Thu Jan 17th, 2013 at 02:34:45 PM EST
[ Parent ]
Sweden is a country that is also often featured in the mythological realm. I had a strange experience reading Catch 22 in the aftermath of the FRA legislation, when parliament despite public outcry voted for mass surveilliance. In the end of Catch 22, Yossarian has a vision of one of the other soldiers reaching a well-organised, rational and above all sane place: Sweden. And I felt I wanted to go to that Sweden instead of the one I was living in.

Anyway, I think the myths are spread because the myths are needed. All relation to actual places are entirely coincidental.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Thu Jan 17th, 2013 at 01:59:27 PM EST
Iceland denies death of EU accession talks | EurActiv

Iceland's ambassador to Brussels has denied reports that accession talks with the European Union were dead, telling EurActiv that only the thorniest negotiating points are on hold until after upcoming elections.

"The correct message is that we are slowing down the negotiations, and we are not disbanding them. That has never been an issue," Ambassador Thorir Ibsen told EurActiv on Wednesday (16 January).

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Jan 18th, 2013 at 02:33:31 AM EST
bound to be controversial, and so it remains, on both sides of the ideological fence. I confess that it took me a long time to see that what they were doing was the correct path, in large part because even if my ideological sensitivities are a bit to the left, my economics training was very conventional.

And still...I am sceptical, though all the same hopeful that the math will prove itself in a larger economy. Fortunately, Japan appears to be voluteering to be the next guinee pig.

by redstar on Mon Jan 21st, 2013 at 07:53:37 AM EST


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