Icelands economy stands stronger than Ireland after no bank bailout
By EvanHunter
@EvanHunter (4026)
United States
February 28, 2011 3:04am CST
After millions of homes were foreclosed on last year I believe we should have took the better actions.
"Iceland’s President Olafur R. Grimsson said his country is better off than Ireland thanks to the government’s decision to allow the banks to fail two years ago and because the krona could be devalued."
“The difference is that in Iceland we allowed the banks to fail,” Grimsson said in an interview with Bloomberg Television’s Mark Barton today. “These were private banks and we didn’t pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks.”
http://www.bloomberg.com/news/2010-11-26/iceland-faring-much-better-after-permitting-banks-to-fail-grimsson-says.html
On the other hand some have pointed out that Iceland was able to do this because other countries like the United States picked up the slack and if we had done the same than there would have been a far worse world wide economic melt down. I myself don't buy into this house of cards idea and think it would of not been necessary to completely let them fail but steps should of been insured to make sure that banks were obligated to pass on the relief they got to homeowners instead of the current system which makes it more profitable for banks to foreclose on homeowners than short sales or working with them.
2 people like this
3 responses
@michaeldadona (5684)
• Malaysia
28 Feb 11
But Iceland still needs IMF loan money whilst passing up the burdens to bond holders. Bond rate is inversely proportional to interest rate. Meaning that, the people also shouldering huge load of problematic financial disaster. The Iceland's President, Grimsson, should mention about the status of the current government reserve fund.
@EvanHunter (4026)
• United States
28 Feb 11
Hard to say which is worse devalued money or loss of home. I don't know how things are in Malaysia for you but personally I think I would choose devalued money over loss of my house. Either way the tax payers are picking up the tab but to me it seems that here in the U.S. we got the worst end of the deal because we not only picked up the tab and made banks richer but they than turned around and used the money they were given to force people out in the streets instead of working with them.
2 people like this
@michaeldadona (5684)
• Malaysia
28 Feb 11
It's not about which country we reside, it's all about hoe the government efficiency manage, handle, and control the flow of reserve fund. Money devaluation not only occur during economy slump, it also can be done during economy perking. Look what thing had been done by China! China devalue their currency during enjoying economy perking to increase the export value.
Increasing export value means to rise up GDP value. In general, GDP is equals to;
GDP = private consumption + gross investment + government spending + (exports - imports)
So, without adequate or sufficient reserve fund, how could one government continue spending in generating rapid money cycles. The main thing now is to generate money changing ownership from one hand to another among the people and if possible 100 times in an hour! This is the importance of having strong reserve fund.
@EvanHunter (4026)
• United States
28 Feb 11
"The main thing now is to generate money changing ownership from one hand to another among the people" Exactly but what happened was during our bank bailout the money was still restricted by the banking industry even after they got their money to deal with the economic situation. So they cut back on loans based on the devalue of properties and foreclosed on properties instead of refinancing causing a shortage of the reserve fund. On top of that the federal reserve (private bank) which controls the money flow made trillions of dollars in loans that the tax payers are liable for and refuse to report who the loans were given to and what collateral they were guaranteed. So as you say the money was not put into circulation by people but was given to a select few who than hoarded it causing a shortage.
1 person likes this
@JenInTN (27514)
• United States
2 Mar 11
I think the bank bailouts should have been handeled a bit differently. There dynasties were built on the fact that they loaned money to people they knew could not pay it back. Get the downpayment..closing costs...a few months of payments...interest..then foreclose and do it all over again. I looked at their "wheel of eligibility." The little wheel that rotated to the income bracket and what that person could afford. I went home and started calculating my expenses and thought..ok but how do I pay for food..LOL...anyway..I think that the bailout isn't all bad, but it sure isn't all it could have been.
@flowerchilde (12529)
• United States
1 Mar 11
I have a tendency to think anything government exerts control over gets worse. I'm for government doing things like protecting the border, etc. Not slowly inserting themselves into every facet of life and enterprise.
