It takes balls to stand up to the IMF and just say "no." And that's just what the people of Iceland did. Crippled with debt from their disastrous experiment with neo-Liberal finance, Icelanders broke with the EU and the America and refused to repay their debt. Instead of compliance with the international banksters there was a national uprising and the people forced their government to take action. They nationalized their banks and wrote a new constitution for themselves—online—and involving the entire population. Talk about participatory democracy.
This is the story no news media is reporting. You owe yourself a read.
Iceland is what the left should look like in times of crisis. (Of course, it's always impossible in America.) Sorry Barackistas, Demolition experts, Tea Partiers and Rape-ublicans, y'all seem to be way off track. It's no wonder Iceland's story isn't being reported...
I concur that this story should be featured in the news. I don't think that we share that belief for the same reasons. I definitely don't think that Deena Stryker's article should be the featured one. She caught my attention with her identification of Iceland as a member of the EU; Iceland is not nor has it ever been a member of the EU. It applied for admission in 2009 and until the nation defaulted on its debt, it appeared that it and Croatia would be granted admission to the EU sometime this year. Iceland is a member of the European Free Trade Area (EFTA), which is between non-EU European countries, but is integrated into the EU's European Economic Area (EEA) and the Schengen Area. Such a basic error makes me question her understanding of the issues and the reliability of her views.
ReplyDeleteI need to do more research on the developments that led to the country's citizens voting not to pay the country's debt because it was incurred by private banks. My understanding is that all of Iceland's banks were privatized in 2003 and that the country eventually took on debt that was 900% of its GDP. I can't help but wonder where the good citizens were when all of this debt was being acquired or when the banks were privatized. Their solution appears to be to simply refuse to pay the country's debt. I'm not clear as to how such a path is a direction for a country the size of the U.S. Iceland has a population of 320,000 and no army. We have cities with larger populations.
I definitely want to read more about what has transpired in Iceland.
Sorry, big typo, not GDP but GNP.
ReplyDeleteMy understanding is that all of Iceland's banks were privatized in 2003 and that the country eventually took on debt that was 900 times its GNP.
With a standing army and a MIC that takes up 54% (when all hidden costs are accounted) of the US federal budget, I'm pretty sure that America could stand up to a few pesky private banks, including its own Fed.
ReplyDeleteWhat is interesting in this news item is not the solution, but the citizen's collective and positively directed anger and their active involvement in the solution. Clearly, Iceland is a very different kind of country with a very different (read: well-educated and informed) citizenry.
And yes, a country as small as 320,000 people might be logistically easier to mobilize, but that small size also presents some huge challenges given their physical location and resources.
As to how the Icelandic banks got privatized in the first place: it was the same neo-Liberal, free-market ideological tide that has rocked the "free" world for the last 30 years.
Edge,
ReplyDeleteI agree with Sheria that the referenced article is too riddled with errors to be credible. As to whether or not this story deserves wider coverage, my question is: Whose version of the story? As a stickler for accuracy and academic rigor, I do not think the article deserves any coverage. Inaccuracies, faulty math, dubious conclusions, and uninformed and reactionary rabble rousing are what extremists such as the Tea Party trade on, and this has no appeal for me whatsoever.
If the Iceland story were uncoupled from the Great Recession of 2007-2011 and counting, it would merely be an amusing and inconsequential anecdote. The story of Iceland represents a tiny subset of what happened on a global scale. Here are the facts:
Three Icelandic banks accumulated a debt of $61 billion – 12 times GDP. How did a country of 320,000 people, about half the population of Las Vegas, dig itself into such a deep hole? From 2004 to 2008, the value of assets in the portfolios of these banks, which included US mortgage-backed securities, quadrupled … allowing these banks to borrow against the rising value of these assets. When the global market bubble burst, these banks found themselves with debt they could no longer pay. The web of illusion does not begin nor end in Iceland.
Capitalism is the victim of its own triumph over communism. After the fall of the Berlin Wall, capitalism came to be perceived as a perfectly functioning, infallible mechanism. Arrogant self-certainty convinced market operators, banks, corporations and the super-rich that they were perfect, above scrutiny and beyond regulation. In the decades after the fall of the Berlin Wall, classical capitalism devolved into a giant Ponzi scheme where the traditional hard work of making money was replaced by easy, get-rich-quick schemes predicated on over-leveraged debt. Trading floors replaced assembly lines, and brash young men in business suits replaced blur-collar workers. Capital became virtual, a series of green lights of computer screens, profitable low-hanging fruit ripe for picking. Except that it was FAKE!
Iceland tells us nothing about what really happened, and the reactions of its people tell us nothing about how to fix a global problem. That is why I object to this article. It represents a distortion and a distraction that, in my opinion, goes beyond irresponsible.
Pu-leeze. I didn't post this item for its "academic rigor." I posted it to stimulate discussion on a STORY (as opposed to "the article") that hasn't been addressed in the mainstream media.
ReplyDeleteI also know the general financial facts behind the story: the size of the debt and so on. I have also have had personal meetings with Glitner in 2007 about doing an unsecured loan for several millions, and they were eager to do the deal. (Our team took a pass...)
I also disagree with your blanket dismissal, Octo, that Iceland tells us nothing about the problem or how to fix it. The entire cast of characters and the plots are still in play in Greece, Italy and Spain as we speak.
The fundamental, and as yet unaddressed problem here, is how to detach from a failed ideology—free-market neo-Liberalism—without crashing confidence in the entire system. (Note the focus on the word "confidence.")
What we are seeing globally is a repeat of Ricardianism with China cast as the mercantilist (as was the US a century ago) and the US as the free-marketer (as England was). It didn't work for England then any more than it's working for the US today.
As for the fake economy, that's what happens when a nation's business elite hands over its production to an overseas competitor: short term gain for long term pain.
The real irresponsibility, my friend, is adhering to failed policies while the bottom end of society drops into financial free-fall, while the self-serving agents of such evade any scrutiny and reap windfall profits. If Iceland teaches us anything, it's that ordinary people still do hold some power, and that the elite can still be held accountable.
But as I mention, that appears to be impossible in the States.
Edge,
ReplyDeleteOnce can stimulate a better discussion that performs a valuable public service by presenting material that is accurate and error free. You need to approach your reading matter with a more critical eye and ask yourself, “Is this worthy?” Meaning, you need to ask your readers whether or not they think it is a good idea. Clearly, you are promoting an idea, not stimulating a discussion or asking for feedback. If the latter was your intent, you failed to position it properly. Don’t be shocked or surprised when the reader response turns sour.
LOL. We're all promoting ideas here. That's called human discourse. I didn't realize I needed to carefully consider everyone's possible agreement as to "whether or not they think it's a good idea" to post something here. Jesus, Octo. I find it extremely amusing that you'd attack my curiosity rather than addressing the actual story, that is: why and how did Iceland dismiss its debt?
ReplyDeleteSo far there's been no real debate on this comment thread about any of that... (such as, I'm also kind of interested in how Ireland is handling the draconian debt-reduction terms already meted out by the IMF.)
But hey, if you all want to slag me for keying into Ms. Styker's article, have it on. Personally, I don't think she was all that oblivious to the general facts. It wasn't, after all, written as some kind of in-depth study of the situation. It was an overview, a sketch piece. I've read far worse in the Times, not the mention the travesty called "news" coming from the sub-mainstream media in the States.
So back to the main theme, do think that TARP and all the rest of the top end bailout was a good idea? Did it really turn the economy around and create jobs? Are the American people happy and optimistic about their future?
BTW. Accurate and error-free? The first word in your last comment is a typo... I think my critical eye is just fine!
ReplyDeleteI find it extremely amusing that you'd attack my curiosity rather than addressing the actual story ..."
ReplyDeleteI am not attacking your curiosity. In my first comment, i presented my viewpoint which was not to your liking; so you decided to assume a more aggressive posture ... in a rather condescending manner. "Pu-leeze" is no way to start a friendly discussion, and pointing out a lone typo in an informal comment thread is frankly petty and hostile.
So far there's been no real debate on this comment thread about any of that ..."
And I suppose the beatings will continue until morale improves. As to whether or not TARP was a good idea, or whether or not it turned around the economy, my opinion doesn't matter here; and there is life outside of the blogosphere.
Well, right you are Octo. There is life outside... so here's to another Margarita before Irene hits...
ReplyDeleteSorry, Edge, but I can't separate the facts from any discussion of Iceland's actions. I think that the facts inform why Iceland has acted as it has and whether that action is valid. I'm not impressed that the people rewrote their constitution in and of itself. I would certainly hate to see a citizens' committee comprised of Tea Party members do the same in the U.S. This is a diverse country with not even a hint of homogeneity. Congress can't agree on much of anything. I can't imagine the populace at large getting on the same page about any issue. Size does matter. One of the elements that draws me to Hobbes, Rousseau, and the somewhat twisted concepts of Machiavelli is that the focus on the need for a centralized government as arising from the gathering of people to live in groups. In our single, solitary state we appear to be just fine in focusing on our needs and those of our immediate family. We run into problems, basic conflicts when we come together as groups and find it necessary to agree as to how we are to share resources. I think that Iceland's significantly small population is a major factor in evaluating the merits of its actions.
ReplyDelete"...the citizen's collective and positively directed anger and their active involvement in the solution. " Once again, a lot easier to accomplish with an insular, largely homogeneous society that ranks 176 in world population than with a country that ranks 3rd in world population. I use the same standards in evaluating anything; I want facts and I want comparisons to be based on factual realities. As for Ms. Stryker, she wrote about Iceland as if she were doing an analysis. She got basic facts wrong. I can't draw much of a conclusion as to the merits of he conclusions because her data is flawed. I don' know if what has happened in Iceland is significant or relevant to our economic issues in the U.S. I am certain that simply rewriting our constitution by committee isn't a option, neither is declaring that we will not pay our debts.
At last, a look at the issue. Certainly rewriting the US constitution would be an impossible, if outright unnecessary, exercise. It's now as much an embedded cultural document as it is a political one.
ReplyDeleteThe US does have several homogenous features, the most visible of which is the common faith in the American Dream, in the land of opportunity, and the constitutional right to pursue happiness. There is also the common notion that every man and every woman is directly responsible for his or her own success. The Nanny State is not in any way an American concept. There is a certain homogeneity to the American approach when viewed from the outside, especially when it comes to wealth, power and materialism. Try blocking Americans access to material wealth and you'll see the populace at large coming together PDQ. And that may be why most Americans see government as an obstacle rather than an ally.
Size does matter. So do resources. Iceland is forced by its isolation and relative lack of resources to be a community of cooperative and supportive souls. Much as are the Inuit in the far north. America with its vast resources, abundant geography and large population has no need of that type of community. Most people in the US rightly feel that they will survive nicely even if a few of their neighbours have been too foolish, lazy or unlucky to succeed. And yet, because of its abundant wealth, the US does need a common governance platform, especially if it's to function internationally. And when it comes to international affairs the US government, the Executive Branch, judiciary and Congress seem to cooperatively function quite well. It's the domestic side of the equation that seems to pose the problems.
But here's the real issue, which I've addressed before: instead of dealing with the financial crisis by bailing out the victims, successive American administrations have put the perpetrators into the ongoing positions of power and control. Talk about a Machiavellian approach. The Fed is still privately controlled, and has been since 1913. It was the end of Andrew Jackson's legacy to the American people. He, as you know, was the only president to have completely paid off the national debt.
ReplyDeleteIceland apparently did not do that. Its citizens changed the government, nationalized its banks and began prosecuting the private sector bankers who'd run up the enormous debt. They, unlike the US, put the responsibility on the businessmen who created the mess, and went on to re-regulate their financial sector.
This debt forgiveness is not new, as you know. The Hebrews practiced it every Jubilee year, the Hittites did much the same, the 6th Century Athenians enacted the seichachtheia, a set of laws to free beleaguered debtors, as well as the Muslims. Compassionate civilizations worked to free their citizens from the tyranny of debt.
The modern example of crippling debt is Haiti. Punishing debt isn't short term, it's long term and brings nations to their knees for multiple generations. The question becomes, is that what America is proposing for its lowest income classes?
Coincidentally, all of this comes at a time when not just America, but the entire world, must come to terms with the end of fossil fuel and the need to engineer a new energy system. There's work to be done and new fortunes to be made, but instead of doing this America's leaders have chosen to pursue and enshrine casino capitalism at the expense of its most vulnerable citizens. And the senior lawmakers and their corporate-financial partners are at the helm of this looming shipwreck.
Certainly refusing to pay the unspeakably large American debt may be out of the question. But not taxing the very people who grown phenomenally wealthy as a result of their own manipulation and re-rigging of the financial system seems downright ludicrous. And a recipe for social disaster, as the inequity become intolerable to the majority of the American people.
Raising debt ceilings to astronomical levels and cutting back on social services to the poor and working poor while running multiple wars and holding the line on taxing the wealthiest Americans is just national suicide. In that light I think the Icelanders did a far better job of protecting their own national interests.