# Iceland - 4 years after €85bn default



## NorfBank (20 Feb 2012)

Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association. 

The island’s steps to resurrect itself since 2008, when its banks defaulted on $85 billion, are proving effective. *Iceland’s economy will this year outgrow the euro area and the developed world on average*, the Organization for Economic Cooperation and Development estimates. It costs about the same to insure against an Icelandic default as it does to guard against a credit eventin Belgium. Most polls now show Icelanders don’t want to join the European Union, where the debt crisis is in its third year. 

http://www.bloomberg.com/news/2012-...ebt-relief-in-best-crisis-recovery-story.html

Where has 3 years of austerity mesasures really got us compared to Iceland's resurgence 4 years after their default.


----------



## 44brendan (20 Feb 2012)

"Iceland’s approach to dealing with the meltdown has put the needs of its population ahead of the markets at every turn. "

Probably the most telling comment in this article. It certainly does give pause for thought on the flexibility that was available in Iceland and lack of same available to ourselves.
It would be interesting to delve into Iceland's specific solutions to the personal debt crisis in more detail to see how they are esolving the significant overhang of personal debt!!


----------



## elcato (20 Feb 2012)

I would also like to know did people with savings lose money in the bank default. Was there any guarantee given to a certain amount. I would be rightly ticked off if people had debt written down but my savings went west as well.


----------



## Chris (23 Feb 2012)

Iceland had a lot of austerity inb the form of soending cuts, but they did the right thing to not nationalise private debt and forced default on the banking creditors to a very large extent. Austerity means reducing spending and at the same time reducing the debt burden; it is the debt level that is the problem in the first place. What Ireland and Greece have done is "reduce" spending and massively increase debts, and that is the reason it is failing. The sooner the powers that be realise that it is the debt level that is crippeling the country the better. But all indication is that they have no comprehension of what the actual problem is.


----------



## Smart_Saver (24 Feb 2012)

Chris said:


> What Ireland and Greece have done is "reduce" spending and massively increase debts, and that is the reason it is failing. The sooner the powers that be realise that it is the debt level that is crippeling the country the better. But all indication is that they have no comprehension of what the actual problem is.



I don't think they have no comprehension of the problem. I think the problem is that their hands are tied.


----------



## theoneill (24 Feb 2012)

So the Icelandic government put the needs of it's people before the needs of international creditors???  That be witchcraft that be!!!


----------



## Chris (28 Feb 2012)

GoMayoGo said:


> I don't think they have no comprehension of the problem. I think the problem is that their hands are tied.



No more tied than Iceland's were.


----------



## Bronte (1 Mar 2012)

Chris said:


> . The sooner the powers that be realise that it is the debt level that is crippeling the country the better. .


 
Are we not still spending more than we earn, and borrowing to fund that spending?


----------



## Firefly (1 Mar 2012)

Bronte said:


> Are we not still spending more than we earn, and borrowing to fund that spending?


 
The sooner we can finalise our debt obligation for Anglo the better, then the focus will shift to the big white elephant in the room (which has cost us more in borrowing than the banks since Sept 08).


----------



## Bronte (1 Mar 2012)

Don't think we are allowed to talk about the white elephant  or this thread will go viral.


----------



## AlbacoreA (1 Mar 2012)

In Iceland there seems to be more focus on root cause, the irresponsible lenders, rather than just the symptoms, irresponsible borrowers.


----------



## Perplexed (4 Mar 2012)

elcato said:


> I would also like to know did people with savings lose money in the bank default. Was there any guarantee given to a certain amount. I would be rightly ticked off if people had debt written down but my savings went west as well.




Nobody answered this question.   Did savers lose their money?  I have a strange feeling they did... and if so would this not reward the reckless borrowers and penalize the prudent savers??


----------



## serotoninsid (5 Mar 2012)

Perplexed said:


> Nobody answered this question.   Did savers lose their money?  I have a strange feeling they did... and if so would this not reward the reckless borrowers and penalize the prudent savers??


See this article here.
"_Iceland compensated its savers, but those overseas faced losing all of their money, sparking the diplomatic row with the UK._"


----------



## jpd (5 Mar 2012)

The UK and Dutch governments compensated the savers in their respective countries and are now trying to get the money back from the Icelandic government - to no avail as of yet, I believe.


----------



## serotoninsid (5 Mar 2012)

jpd said:


> The UK and Dutch governments compensated the savers in their respective countries and are now trying to get the money back from the Icelandic government - to no avail as of yet, I believe.


According to that article, they have come to agreement once again - but it has to go to the Icelandic president for approval next...


----------

