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Why Iceland Should Be In The News, But Is Not


Source: | Original Post Date: August 15th, 2011 –


An Italian radio program’s story about Iceland’s on-going revolution is a stunning example of how little our media tells us about the rest of the world. Americans may remember that at the start of the 2008 financial crisis, Iceland literally went bankrupt.  The reasons were mentioned only in passing, and since then, this little-known member of the European Union fell back into oblivion.

As one European country after another fails or risks failing, imperiling the Euro, with repercussions for the entire world, the last thing the powers that be want is for Iceland to become an example. Here’s why:

Five years of a pure neo-liberal regime had made Iceland, (population 320 thousand, no army), one of the richest countries in the world. In 2003 all the country’s banks were privatized, and in an effort to attract foreign investors, they offered on-line banking whose minimal costs allowed them to offer relatively high rates of return. The accounts, called IceSave, attracted many English and Dutch small investors.  But as investments grew, so did the banks’ foreign debt.  In 2003 Iceland’s debt was equal to 200 times its GNP, but in 2007, it was 900 percent.  The 2008 world financial crisis was the coup de grace. The three main Icelandic banks, Landbanki, Kapthing and Glitnir, went belly up and were nationalized, while the Kroner lost 85% of its value with respect to the Euro.  At the end of the year Iceland declared bankruptcy.

Contrary to what could be expected, the crisis resulted in Icelanders recovering their sovereign rights, through a process of direct participatory democracy that eventually led to a new Constitution.  But only after much pain.

Geir Haarde, the Prime Minister of a Social Democratic coalition government, negotiated a two million one hundred thousand dollar loan, to which the Nordic countries added another two and a half million. But the foreign financial community pressured Iceland to impose drastic measures.  The FMI and the European Union wanted to take over its debt, claiming this was the only way for the country to pay back Holland and Great Britain, who had promised to reimburse their citizens.

Protests and riots continued, eventually forcing the government to resign. Elections were brought forward to April 2009, resulting in a left-wing coalition which condemned the neoliberal economic system, but immediately gave in to its demands that Iceland pay off a total of three and a half million Euros.  This required each Icelandic citizen to pay 100 Euros a month (or about $130) for fifteen years, at 5.5% interest, to pay off a debt incurred by private parties vis a vis other private parties. It was the straw that broke the reindeer’s back.

What happened next was extraordinary. The belief that citizens had to pay for the mistakes of a financial monopoly, that an entire nation must be taxed to pay off private debts was shattered, transforming the relationship between citizens and their political institutions and eventually driving Iceland’s leaders to the side of their constituents. The Head of State, Olafur Ragnar Grimsson, refused to ratify the law that would have made Iceland’s citizens responsible for its bankers’ debts, and accepted calls for a referendum.

Of course the international community only increased the pressure on Iceland. Great Britain and Holland threatened dire reprisals that would isolate the country.  As Icelanders went to vote, foreign bankers threatened to block any aid from the IMF.  The British government threatened to freeze Icelander savings and checking accounts. As Grimsson said: “We were told that if we refused the international community’s conditions, we would become the Cuba of the North.  But if we had accepted, we would have become the Haiti of the North.” (How many times have I written that when Cubans see the dire state of their neighbor, Haiti, they count themselves lucky.)

In the March 2010 referendum, 93% voted against repayment of the debt.  The IMF immediately froze its loan.  But the revolution (though not televised in the United States), would not be intimidated. With the support of a furious citizenry, the government launched civil and penal investigations into those responsible for the financial crisis.  Interpol put out an international arrest warrant for the ex-president of Kaupthing, Sigurdur Einarsson, as the other bankers implicated in the crash fled the country.

But Icelanders didn’t stop there: they decided to draft a new constitution that would free the country from the exaggerated power of international finance and virtual money.  (The one in use had been written when Iceland gained its independence from Denmark, in 1918, the only difference with the Danish constitution being that the word ‘president’ replaced the word ‘king’.)

To write the new constitution, the people of Iceland elected twenty-five citizens from among 522 adults not belonging to any political party but recommended by at least thirty citizens. This document was not the work of a handful of politicians, but was written on the internet. The constituent’s meetings are streamed on-line, and citizens can send their comments and suggestions, witnessing the document as it takes shape. The constitution that eventually emerges from this participatory democratic process will be submitted to parliament for approval after the next elections.

Some readers will remember that Iceland’s ninth century agrarian collapse was featured in Jared Diamond’s book by the same name. Today, that country is recovering from its financial collapse in ways just the opposite of those generally considered unavoidable, as confirmed yesterday by the new head of the IMF, Christine Lagarde to Fareed Zakaria. The people of Greece have been told that the privatization of their public sector is the only solution.  And those of Italy, Spain and Portugal are facing the same threat.

They should look to Iceland. Refusing to bow to foreign interests, that small country stated loud and clear that the people are sovereign.

That’s why it is not in the news anymore.

Written by Deena Stryker of

  • Aanna1123

    I followed this from the beginning. It is quite a story with many more details than shown here. Please research it and you will see that what the citizens of Iceland did put the fear in ALL politicians around the globe because they knew if the word got out, they were done also!

    • dylanstefan

      writer of this article doesnt really know real story in Iceland

      • Joe Smith

        Well, why don’t you tell us the “real story”. If you don’t, you’re telling us that what was written here is the truth.

        • Random Icelander

          Our lying scumbag narcissist president is responsible for this bizarre misconception. We’re on the brink of fascism. Nothing gets funded except the police are getting armed to the teeth with submachine guns. Graft is rife, police corruption is reaching top levels and policemen rape children with impunity while getting their chums to cover up for them AND NO ONE DOES A DAMN THING ABOUT IT.
          Oh, and another thing: Everything we owned got poured into failing banks. That money has now mysteriously vanished, funds that previous generations toiled for decades to save.
          When they say: “we didn’t save the banks” it’s because they couldn’t, because all funds were depleted by pouring them into the banks, without any noticable result except that all funds were gone.

          • Sir Stewart Wallace

            Sounds like the United States.

          • Random Icelander

            No, your president is wonderful, at least on domestic issues. He’s of course a scumbag idiot on international issues, like all recent US presidents.
            Iceland is now governed by the Icelandic version of the Tea Party, i.e. ignorant, hateful wretches who are controlled by extreme right wing propaganda bankrolled by cynical billionaires.

          • Random Icelander

            Iceland was for a long time a banana republic (or a fish republic, if you prefer) until relatively recently. The old ruling class (who were also responsible for the spectacular crash in Iceland) is now finding that the new economy is their biggest threat and is trying desperately to turn back the wheel and in effect, impoverishing the nation. In the last elections they won a majority through a disingenuous campaign of promising impossible debt forgiveness and appeals to xenophobia. After one and a half year in power, nothing has happened, the press is being suppressed, they refuse to answer questions, lie repeatedly, spread disinformation through leaking forged documents and are generally brazen about it and say “Nyah, nyah, you can’t do anything about it because we won the elections.” Even though criminal activity has been proven, they don’t even consider stepping down but instead they arm the police to the teeth.

          • DaturaGhost

            oh, just like Croatia…

          • Sir Stewart Wallace

            The president doesn’t do shit. That’s the issue. Just like the last president, the country is controlled by paid-for politicians. And like Iceland, the “too big to fail” banking industry is allowed to play with your loans and mortgages as they see fit.
            Exhibit one: The near immediate decline in the realty industry when the banks decided to call in all mortgages, bankrupting hundreds of thousands and causing a collapse in the housing market. That put this country in downfall for the last decade or so.

          • Dominic Whiffen

            If you think the States is even close to Iceland,wake up and join the real world mate. Nobody just steals large amounts of your money from your bank in the States, your taxes are realistically some of the most reasonable in the world and you generally live a free life in a capitalist country. Do me a favour and go back to wishing you were Che Guevara instead of trying to comment on real issues.

          • Sir Stewart Wallace

            You obviously have no fucking clue about US politics and the issues here. And while they don’t just come to your bank and take your money, the bank can just take your house.

          • Bobba

            That bank owns “your” house… maybe “you” shouldn’t get upside down in “your” loan. I didn’t agree with the bailout, but that’s one thing that lots of “homeowners” needed to stay in their house. The US is fucked up as with anywhere else, but for the most part (Ferguson excluded) we don’t face “unique” or unfair problems.

          • Matt

            The problem is the bailout did not keep homeowners in their houses – instead it filled the hole in the banks capital reserves, but the portions that should have instead taken down homeowners’ debt were ignored or never passed.

          • SuperHappyCow

            Read my comment above. Furgeson is just a microcosm of what’s going on. The U.S basically went to war with the black population in the Reagan years. That’s what the Drug War is. It’s failed 100 percent. Drugs are easier to find, more potent, and cheaper than ever, yet the drug war is still going on. Why do you think we would continue a war for 40 years even if it is not achieving its primary goal? That is because it is achieving secondary goals that we simply do not talk about.

            We cannot even keep drugs out of prison with the largest prison population per capita in the world. Think about that. That means that if we arrest every single citizen, we still would not be able to keep drugs out of prison.

            Read my comment above and start understanding what is really taking place.

            Furgeson was nothing compared to what is going to happen if we do not wake up.

          • MississippiMan

            Under Reagan, the CIA flooded the country with cocaine. Reagan also privatized the prison industry. Reagan also sold weapons to what would become Islamic extreme terrorist. They created the drug epidemic in inner cities mostly among black people and then created the war on drugs to make sure more black people go to prison. There’s a reason crack hit the entire country at the same time. The CIA was behind introducing a cheaper more profitable alternative to pure cocaine. Pure cocaine could only be afforded by those who had the finances (mostly white) where as crack was made available to the poor black population. Crack is diluted cocaine yet carries a 5 times greater prison sentence. Even though black and white people use/sell drugs at about the same rate, black people are 7 times more likely to be targeted by law enforcement than whites.

          • Tlaxcalli

            Are you kidding me? Ferguson is unique? Police are better everywhere else? Get a clue.

          • MississippiMan

            Ferguson isn’t unique. The same thing is happening all over the country. Ferguson just has a spotlight now where as other cities don’t.

          • Dovette

            You are trying to bat above you pay grade on this one. You are derailing an interesting commentary from an Icelander by wanting to talk about how bad YOU have it when you don’t realise how GOOD you actually have it compared to Europe.

          • SuperHappyCow

            Read my comment above, and make sure you verify everything I posted in it. It’s pretty crazy how bad things are. You just don’t know it.

          • randomeuropean

            i live in europe and I’ve been to america. parts of america are like shanty towns gettos etc, we do not have vast ghettos in europe. we have a relatively rural small life that means, if you are poor you can walk to a shop, everything in america depends on being able to drive, theres vast amounts of homeless which we don’t have, we have free medical care in most countries and free social care, which means the poorest people in europe are way way way better off than the poor in america. they also have way more processed crap, europes towns and cities all have small farms, small cheese makers, markets, very few places in america offer an option that isn’t a global corporate giant chain store. we have way more food independence. way more independence in general. our protests are not as violently put down as in america. free speech in america just doesn’t seem to exist, there is way more coverage of left leaning politics, way more public debate on the tv, americas media is sewn up so tight its unreal. ok ours is corrupt and biased but its nowhere near as polluted as americas media. europe is a far better place to live for a poor person. perhaps for anyone. cos its smaller everyone knows each other, theres a lot of personal connection which you need if you become poor, everyone in iceland know each other, i know half of ireland, just by association, thats handy when shit hits fans. we also have a liberal religious middle in europe. we don’t have huge amounts of baptists who teach creationism. school is compulsory in some areas of europe for just this reason, to prevent religious brainwashing. we are also far better equipped to defy the corporate empire. we do not rely on it completely. we have a history if worst comes to worst we have castles and forts. we use to be quite self sufficient. you guys in america. well apart from all the shopping malls and banks and roads you have fuck all in the way that you can band together. even ideologically eruope is more cohesive a place. we don’t differ very much from one end to the other in our ideologies. america has two extremist ideologies that are completely opposed to each other in a most violent way. i could go on, americas way more fucked than europe, and if iceland can’t do it theres fuck all hope for the rest of us! they should renew their protests.
            before the buy tanks, {lots of countries literally don’t have tanks, or guns, america at any minute you protest could have six tanks and ten machine guns pointing to your head, we would have to have a tank shipped over or taken out of the museum. lol!! yeah usa is fucked.

          • PHI2004

            I agree with most of what you say.But there is not in America a left base media. There was prior to the bush admin. Now its right centre to far right. There has been a strong push to squash any sort of socialism except for the wealthy and the corporations. If we dont live in a city we have to drive to get food, ect. There are many, many places in the US where we can get food from small farms, dairies and cheese makers and eat well. There are whole towns which subsist in this way. But most do not. Medical is a problem and most people in the US do not remember what real nutrition is.

          • mediatorguy

            While there is not a large “left” media in the U.S., there are some excellent companies such as and that are probably considered left because of their humanitarian messages. A more populist/centrist yet humane media outlet is NPR which can be heard nationwide and is very much loved by moderate and liberal listeners:

          • Bryan Ford

            There is so much incorrect in this….I’ve been all over the USA… you’ve vastly over reached on describing shanty town ghettos… you are vastly out of touch with what its really like in America. One problem with your argument is how HUGE America is… actually within a region… people are generally very together on what they believe or how they feel…. yes, there might be a difference in thought from the people in Iowa and Nebraska compared to California, but having their own state governments they have the opportunity to shape their state government to how they want it…. it isn’t perfect, but it actually works pretty well no matter how much we complain. Now the federal government is more of a problem.. a bit too much power compared to what the constitution really had in mind…..but I think a lot of the country is getting fed up with the federal government getting away…. and some of that will continue to change over the next 8 years of elections. America: not perfect, but lets quit pretending Europe is… there are lots of problems with the Euro over there too…. believe me…. its easier for the people of the US to unite than uniting all of Europe together… I know my friends from Spain HATE how things are going and really want the european union to be disbanded…. feel they can do much better on their own….

          • Zootalaws

            “There is so much incorrect in this….I’ve been all over the USA…” and looked through the eyes of an American at his own country. Sometimes it takes foreign eyes to see things as they really are…

            I too have been all over America, except Alaska, including Central, Mexico and Canada, and I think he actually has a lot more right than he got wrong.

            I no longer live in the US, just get back a couple,three times a year, and haven’t lived there full-time for near on 25 years, but we visit a fair amount and still have the majority of our family and family businesses there and every time I go back I am struck by how it seems to be falling more and more into disrepair, how many more homeless people there are, how much more closed in and insular people are becoming.

            It’s coming up on retirement for us in the next few years and we need to decide what to do – do we give up our safe, happy, warm and friendly, low-taxed and low-stress lifestyle, or move back to rural SC with all the problems inherent?

            You know it’s getting pretty bad when you actually prefer living in a Muslim Shariah Law state, rather than in the land of the free… And they will have us, no questions asked. If we wanted to stay we will have been there long enough to register as permanent and buy property. There’s a few other US seniors like us that have worked in the region for a while and are so comfortable with it that they put down roots.

            You get a different perspective when you aren’t battered 24/7 with the flag and the idiots that parade in it.

          • Andrew

            I live in Europe too, There are ghettos and run down areas everywhere, especially in Eastern Europe, but even in Essen, Germany so what the hell are you smoking? Also, on the West Coast and even in upstate New York (I’m from NYC) there are a TON of non-corporate choices. You are a cherry-picking charlatan, sir.

          • randomdude

            American can’t unite? Excuse me? We may have our own internal problems, but you turn any external problem towards us and USA comes first. I live in Germany. I’ve also lived in Italy. Where is Europe coming to Ukraine’s aide? Why isn’t Brussels or any other European country (other than Iceland actually) doing anything to help Italy with their immigration problem? They say that’s a problem Italy has to deal with because that’s where they are landing and we are all independent countries. The list goes on. Europe is not yet united. They are not all on the same page. sorry. And when you say “a most violent way”… we’ve gone to war with ourselves and that’s not happening now, so no… it’s not in the most violent way. When the next civil war breaks out, then you can say that. For now, USA is like a loving family that is ok fighting with each other, but if there is a problem outside of the family, we can deal with that as one.

          • dominik

            Iceland is not a member of EU!!!! I stopped reading there

          • IBEW

            no the bank does not take YOUR house – it takes THEIR house you made a promise to repay the money they loaned you to move into it –

          • emilydickenson

            in europe even if they own your house they can t kick you out on the street. its human rights thing, you still have to repay it or make arrangements but they can’t just make you homeless.

          • IBEW

            and we all know how well Europe is doing economically – oh yeah – its not –

          • Jammydodger

            It is difficult to compare Europe to the USA as the culture and economies are so vastly different and many countries are not ready for the EU structure being forced upon them. Many people have quite recently gone from living in a society where the State owned everything to having to a more private / individual based economy. I often work in the USA and really like the people there and sure bugger houses, lots of food and such like but I am often amazed how openly corrupt the politics is, how racists the country can be and how law enforcement works and don’t get me started on the education system.

          • Jolie

            If you ever have some catastrophe push you from barely hanging on to destitute in America (the mode of most people here is “barely hanging on” since our wages and benefits are well behind our annual increases in the cost of living), the road getting back to stability is near impossible because the corrupt rich keep gutting and defunding all of the emergency assistance programs. Then you end up with the atrocious homelessness problems we’re experiencing. Instead of solving the problems making the homeless, they criminalize homelessness and make our jails for-profit businesses. America may have been a fabulous place to live once upon a time, but not so much since the corporations became “people”. Heck, in a lot of places, there’s no way for people to even grow their own food and we end up with what they call “food deserts” where the poor can’t get to anything remotely resembling nutritious food for miles and miles.

          • Robert Fulton

            And yet we can still manage to feed house people better than America and most places you can get ill, through no fault of your own, and it doesn’t ruin you financially

          • Zootalaws

            ‘Europe’ is a continent 1/3 larger than the US population wise. Lumping the likes of Sweden, France and Ireland with Greece, Spain and Poland under the same heading just shows how out of touch with reality you are.

            More so than any US state, each country of Europe stands alone, with their own benefits and drawbacks. Blaming the likes of Spain and Greece for their economic situation ignores the raping done to both countries by US banks – Greece especially. Goldman really did a number there.

          • mia

            Thats not true. Thousands of spanish families have been kicked out our their homes and are now in the streets.

          • Suzanna

            Yea the can in Ireland. sigh

          • SuperHappyCow

            After they make derivatives bets against you that cause your interest rates to skyrocket and you to foreclose.

          • jesse

            Only if you violate the contract that you and the bank agreed upon can they take your house…quit whining and pay your mortgage.
            We here in America are very fortunate. You can hate the bank all you want, but I would like to see what type of Shantee most of us would live in if there were no banks to loan us money to pay contractors.

          • Ohai

            Actually, no. In every loan agreement, there is a stipulation that allows them to recall a loan at any time. You’ve got 24-48 hours (depending solely on who your loan is through) to repay every bit of the money loaned. If you do not, you default on your mortgage and they kick you out.

            That is what happened during the great depression. It was a bank induced crisis rooting from the top-tier banks recalling their loans.

          • JR Ridings

            Actually this is a long time mosconception….obviously you have never actually read a deed of trust…..

          • JR Ridings

            I guess you never took the time to learn that during the depression all loans were “interest only” and 1 year terms….the loans had to renew and had zero standardization at all. The federal home loan act of 1934/36 standardized protections for the buyer including the foreclosure process….there are no “24-48″ hour call options on any recorded mortgage in the US….and hasn’t been for decades….

          • razzlebathbone
          • SuperHappyCow

            The U.S. has been a banana republic for decades, and most people do not understand it, that’s why we’re in such a world of shit.

            In the 1990s when blacks were talking about how the CIA had used drug cartels from Nicaragua to funnel cocaine into the U.S. and crack into poor neighborhoods, everyone abandoned them and pretended they were crazy and making things up. Gary Webb reported on this and was completely ostracized by the mainstream media for doing so, and his workplace fired him. They were so threatened by the truth, and that their ignorance of it would become visible to the public, and that their ability to divulge news was completely dependent on what the official government said, they had to shut him down.

            Mainstream America was exactly the same. When Frederick Hitz Inspector General of the CIA openly revealed that the drug trafficking by them was far worse than we even imagined, everyone ignored it, and still to this day people pretend that never happened, even though it has been public information for decades.

            At the same time crack cocaine hit the streets, Reagan made the drug 100 times more illegal than cocaine, a drug that is nearly identical. The result was, that since crack was mostly being sold in black neighborhoods they were the ones getting thrown into prison for decades, sometimes for life, for a drug that has absolutely no relation to crime or violence. To understand how ridiculous the idea is that crack has anything to do with violence, you have to understand the global clusterfuck General Motors and Thomas Midgley Jr. caused in the 30’s, when they patented tetraethyl lead, and began using it in fuel in order for themselves to turn a profit. Lead is an extremely dangerous neurotoxin that causes short attention span, violent behavior, a loss of impulse control, and paralysis in high enough dosages, and it was responsible for decades long spikes in violence as it got into our water supply, soil, and our food from decades of it being thrown into the air.
            Here is some of the research:

            Keep in mind, that all major black leaders that posed a real threat to the establish power that has recently obliterated our economy, were assassinated. MLK, Malcom X, the leaders of the Black Panther Party, which, unlike the KKK, was not a terrorist organization by action, but only by accusation. The threat of blacks enacting any change was so real that the California government went to such extremes as passing gun laws to prevent blacks from defending themselves, and constructing a domestic, private paramilitary group (SWAT) in order to raid their headquarters.

            If you remove all other ethnic groups from the U.S, and only blacks lived here with the powerful elite, you would immediately call it a police state, and a banana republic where corporations are people, but humans are private property. But since other groups superficially benefited, people do not. We do not acknowledge how horrible things are for some people, that’s why we do not acknowledge how bad things are going to be for everyone.

          • Dane

            “you generally live a free life in a capitalist country”? are you insane? there is nothing worse than living in a capitalist country, capitalism basicly means your entire life is controlled by money and owning things you don’t need provided to you by the bankers and corperations who control most of the money… and just so you realize, americans aren’t free infact you are one of the lesser free countries in the world but your nation is brainwashed by your media that keeps saying america is the best and most free country in the world while it’s really not like that lol, open your eyes

          • Gary in Texas

            Your characterization of the Tea Party in the US is laughable and a product of whatever leftist funnel that is attached to your brain. Are all Icelanders akin to the television show Lilyhammer? I support the Tea Party (although I have never been to a rally or given money). For me, it boils down to reducing the bloated size of the US government (by allowing each state to take care of themselves in whatever way they choose) and to not spend more money than we take in each year. That doesn’t sound “extreme” to me and is the farthest thing from ignorant and hateful.

          • D. M. Chapman

            There is a reason for federal law. It is to prevent US States from treating one-another like Middle Eastern countries do and, sadly, it is not far from it already – in spite of federal law. There is a reason they are called the UNITED States…and, these days, there is little or no unity. It would be a very small step from where you are going now to trying to mandate individual law for individual people, which is just absolutely absurd.

            If you think your idea is a solution, perhaps you might want to think again.

          • Ca JeffO

            Random Icelander … ?Our President is wonderful? Ha!!!!
            Our President (and Congress) has covertly made many illegal & UNconstitutional changes to America. … And America has been Hacked & Hijacked.
            See the changes listed here:

            These changes, Financed by the illegal Federal Reserve allows War Machine Companies to fund:
            – Military bases in over 150 countries.
            – Controlling our News Media outlets & resources.
            – Controlling our Elections.
            – Controlling all big industries.
            – Controlling our Water Sources.
            – Controlling our Food Resources with GMO’s.
            – Controlling & manipulating Law enforcement.
            – Controlling & manipulating Courts & Law makers.
            – Controlling & manipulating Education.

            . . . . America is Hacked & Hijacked →!!!!!!

          • SuperHappyCow

            Recent presidents have been scumbags on domestic levels as well. We destroyed our own economy by allowing banks to sell people ‘adjustable rate mortgages’ which were colloquially called ‘ghetto loans’ by the banks.

            They were called ‘ghetto loans’ because the entire purpose was to turn entire neighborhoods into ‘ghettos’ while turning a profit. What they would do is sell someone a mortgage with an adjustable rate, that began at a completely affordable percentage, then a year or so into the contract, they would make a huge derivatives bet with another bank or investor against the borrower. The most powerful measure of what your interest rate will be is how much the bank believes you can pay them back. And since the bank just made a huge bet against the bower, their interest rate would skyrocket, they would default, go homeless, or move somewhere else while struggling to pay the money they owed.The bank would then turn around and do it to someone else who was simply looking to own a home.

            They packaged these mortgages together with pensions and sold them to foreign investors all around the world. These were called Collateralized Debt Obligations.

            Since the banks are all conglomerates of investor, consumer, and insurance banks, when some of the huge CDOs imploded it started a chain reactions of bets, bets placed upon bets, insurance and loans that brought down a few banks, and could have imploded our economy if we didn’t bail them out.

            The bailout fucked us by giving taxpayer money to the banks, while the banks realized that if they fucked up again, we would bail them out again, because they were able to hold the entire society hostage and complicit in their crimes.

            Same story.

          • disgvnv

            there will not be anouther ‘bailout’ !, we are broke…nation and citizens alike…multi national corporations own and control All…perhaps you didn’t get the word, “we is all nigga’s now”, see , I thought Katt was just funny, the implications for our children and theirs are astounding

          • Daníel Már Magnússon

            Calm Down Man. How are the police being funded any other way than a reasonable one? The guns were given to the police. Given to them by Norway as it as been in the past. Policemen raping children… never heard that, Ever. So please share a shred of evidence my fellow Icelander. The banks and the money poured in, Im right with you there young sir. Not one stone will be left unturned. Theese fuckers will not get away with this!

        • dylanstefan

          Thankfully, somebody else gave you an answer to your question. What was written here is myth, but in a way to inspire more public initiative. Activist use these made up story to encourage social fight. Unfortunately, in this article everything is lie and misinformation. First paragraph have already one mistake. not to mention others. Factual mistakes.

        • Mat

          For starters, Iceland is not a member of the European Union…

        • Ricardo Jose Martinez Ramos

          For starters, Iceland is not a member of the EU.

      • Voodoo

        Apperently he didn’t even know Iceland isn’t a EU member. Very embarrassing mistake.

        • e.h

          The EU membership comes in phases. I know cause I am from Romania. Same story here. I will post a quote. It talks about negotiations for full membership. They have partial membership. wikipedia – “If negotiations are ever resumed, Iceland would face contentious issues on fisheries which could potentially derail an agreement, despite already being a member of the European Economic Area[5] and the Schengen Area. If you know what these two mean than you know a bit about EU.

          • Voodoo

            No, it’s not the same story. Iceland suspended its application. You are either a member, or you’re not a member. And Iceland isn’t.

            Thank God for that. I don’t want to see any more of the Nordic Countries get dragged into a union full of bureaucrat, free-riders and whiny conservatives.

          • Ari

            Iceland is part of the European Economic Area.

    • SamuraiEAC

      Hello Aanna1123. I am going to Google this for the information, but I would also like to ask if you personally have any websites that you particularly like to go to for such information. Any links would be appreciated. Thank you.

      • Aanna1123

        All I did during this was Google Iceland Finances. Now, Google Icelands rise from financial collapse and there are a lot. Also, Google how the people stormed their capital and the first female PM, who is an out Lesbian. The new government even forgave every homeowners loans that were from the financial institutions that started the collapse. I don’t know how to add links here. I have a FB page that is Anna Gregory. PM me and I can get them to you. Such a fascinating story and that’s the reason we have not heard of it here. It worked.

        • Soul Sanctuary

          You just cut and paste them in the message.

          • Aanna1123

            TY Soul Sanctuary. Us older birds sometimes forget about c&p LOL

        • Random Icelander

          Where did you get this? None of this is true! Also, the female PM got voted out of office one and a half year ago and the very people who caused the collapse and poured the entire treasury into “saving” the banks without any noticeble effect (except that someone, somewhere, got very rich) are now back in office and are trying to starve us into submission while collecting unprecedented amounts of submachine guns for our previously unarmed police.

          • Aanna1123

            Bull! ALL of it is true!

          • Dovette

            You are a loon Anna who knows fuck all about fuck all.

          • Aanna1123

            Is that right? Seems to me that if you think that, you would have some links to prove me wrong. Fuck you! I have been following this since the demonstrations started and the links I provided are all factual!

          • Land of Ice and Stupidity

            You must remember that we Icelanders are very quick to forget. Heck. most of us forget that it actually snows during winter. On top of that our memory is very selective. Left wingers will remember the bad deeds of the right wingers and vice versa. The government that came to power after the collapse was useless and it’s no coincidence they suffered record breaking losses in our last election. Don’t get me wrong though. Our current government is even worse so aren’t we all lucky. But we must not forget that the left wing government actually wanted to pay the Icesave debt in full with interest and they didn’t move a muscle for the people until this happened:

            (you actually see the white haired PM get hit in the head with an egg)


          • Land of Ice and Stupidity

            A year later and things had not much improved (except for the fences protecting parliament members from their people)…


          • Aanna1123

            Seems to me that years of research trump your ignorance!

    • Aanna1123

      Since it has been a while, I’m going to share the best articles I found. I hope I can add more than one link. This first one is how it happened

      Here is the timeline (the best I’ve seen so far)

      The first Lesbian Prime Minister

      Mortgage forgiveness

      Bankers arrested

      And the bankers jailed

      I hope you find these useful. ~A~

    • DeSwiss

      Anna1123, you’ve become a TROLL MAGNET!!!

      And that usually only happens to the people who speak THE TRUTH. The Dark hates TRUTH truth.

      Keep it up! :-)

      • Aanna1123

        Thank you DeSwiss, never thought of it that way :) Will remember that from now on

    • MewkaKazami

      Maybe when the article writer notices that Iceland isn’t in the EU and doesn’t have the Euro…

  • japandy 0407

    The first two banks mentioned were in fact called Landsbanki and Kaupthing.

  • Rob

    By the way, Iceland has never been a member of the EU…

    • Tukker

      And if it was a member it probably couldn’t have done what it did. Something to think about.

      • Fuck EU

        most Icelanders hate the EU because if we to we have to take in so many laws from the Eu that are total bullshit. it´s because of EU that now kids need to be 15 to work before we could get work only 12 that´s how it should be teach them to learn

        • TheAppleFritter

          You want 12 year olds to WORK?

          Fuck off.

          • https:[email protected]/ Tom

            If children want to work at 12, why not? I can imagine it would be great for those who study to be carpenters or plumbers

      • Random Icelander

        You’re being lied to. The banksters have infinite propaganda resources and a compliant idiot narcissist president who does their legwork for them. If Iceland had been an EU member, it wouldn’t have been able to let the banks get out of hand with 1000 times the GDP in debt. The simple idiots who can’t read foreign newspapers are getting whipped into a nationalist frenzy to reject the EU precisely for those reasons; so that the infinitely superior regulations of the EU can’t interfere with their corruption, graft and grand larceny.

        • nibbles

          yeah, those “infinitely superior regulations of the EU” sure did help to put a stop to corruption in Portugal, Spain, Ireland and Greece. Just a couple of months after the IMF left Portugal, one of the countries biggest banks (BES), witch belongs to one of the biggest financial groups in Portugal (Espirito Santo), crashed. And all under the supervision of the BP (Bank of Portugal), the IMF, ECB (European Central Bank) and the EU. So, yes, we should rely on international supervision if the goal is to maintain neo-liberal economies and corruption.

          • Random Icelander

            Corruption in Iceland is on a level unknown in any EU country, it just can’t be imagined by someone who doesn’t live here. Neo-liberalism isn’t the worst thing we’re facing, it’s rather some kind of a feudalism that uses neo-liberal arguments for self-justification.
            Child poverty has increased more in Iceland over the past 5 years than in any other OECD country. Doctors get paid the same as janitors do elsewhere. A huge number of healtcare workers have emigrated, the number of doctors has been slashed in half. Still we are refused information about the causes of the crash. Debts incurred at the crash are several times the GDP and we’re paying them now. While negotiating the debt, the president refused to sign a law necessary for the proceedings so it went to a referendum where it was rejected. This utterly meaningless gesture was then touted by this hideous charlatan president as a saving grace and every illiterate idiot believed him.

  • earthtracer

    Iceland is not yet in the EU, having suspended its application to join. The currency is the Icelandic krona, not the euro. Good article spoiled by sloppy fact-checking. Probably the main result of the ‘revolution’ has been the snubbing of the Freidmanite economics that has been used by the ‘chicago School’ of economists to boost neoliberalism so as to suck the blood of decent countries.

    • Solletico Ranting

      It mentions the Krona as being the icelandic currency…. “while the Kroner lost 85% of its value with respect to the Euro”

      the article uses the euro and the dollar to describe debt amounts and so on and presumabely does so to make it easier for more people to understand the figures involved.

      never mind fact checking you need to read the article. :D x

      • Solletico Mongo

        The first paragraph states that Iceland is in the EU and it’s not, nor has it ever been.

        • EU Citizen

          It should read “EEA” (European Economic Area), really. A lot of people get mixed up between the EU, the EEA and the EEC, probably due to all starting with the word “European”.

        • Solletico Ranting

          hahaha so it does. :D

          cheers for pointing it out in a way that’s sensitive to people with downs syndrome too! :D x

          • stacy t

            I think you mean dyslexia

          • Solletico Ranting

            the dude who pointed out my mistake had my first name and “mongo” as his/her second name. “mongo” is a pejorative term for someone with downs syndrome. :D

          • SamuraiEAC

            I saw that and knew what you meant right away. I also wondered if you two knew each other. haha I have never seen the name or word “Solletico”.

          • Solletico Ranting

            it’s italian for tickle which is my nickname and stage name.



          • Solletico Ranting

            i don’t know them it was just an anonymous log in being used by someone feart of being seen being horrible i think :D

        • daedalus_x

          It also says that Geir Haarde led a “Social Democratic government” despite Haarde being a member of the Independence Party.

      • DavidR

        The units used look wrong. Many should be stated as billions?

    • m0nty

      A country doesn’t have to use the Euro currency to be in the EU. UK is in the EU but doesn’t use the Euro, It kept it’s sterling currency. But unlike iceland, the majority of it’s people are ignorant to the corruption in the financial system and are like sheep.

      • Anna Teresa Borrero

        um yes that’s true, but Iceland is still not a member of the EU and never was. The UK is.

      • jasperwillem

        And the other way around too, there are countries outside the EU who have the Euro as national currency.

        • nibbles

          wich ones? in theory it is possible, but I don´t think there are countries outside the UE with euro as national currency. There are, however, countries that use euro as international currency instead of the dollar.

          • nibbles

            So I did some research and there are some countries that use the euro but are not part of the EU. Andorra, Kosovo, Montenegro, Monaco, San Marino, and the Vatican City do use the euro, but are not members of the EU.

          • jasperwillem

            Exactly ;)…

          • jasperwillem

            Maybe thats the case, but for example the Vitican and Andorra are no EU members, but have the Euro as currency.

    • naryan

      Yeah man you just read the article wrong.

  • Christopher K. Liew

    Interesting article, I will be reading more on this topic. Be careful when you use statistics, though. You wrote: “In 2003 Iceland’s debt was equal to 200 times its GNP, but in 2007, it was 900%.” but 900% means 9 times as large – so effectively you’ve said that the debt reduced. I assume you meant 900 times its GNP, unless I’m fundamentally misunderstanding the context.

    • Mare_Liberum

      900% means 10 times dude

      • Mark

        The OP is correct, here. 900% OF a value means 9 times that value, NOT 10 times. An INCREASE of 900% on top of some value would be 10 times. Percentages really should not be used in this manner as they have a habit of confusing.

      • Mia Person

        You seriously need a mathematics lesson.

    • Christian Taylor

      they probably meant 200% at first because 200 times would already be bankruptcy

      • Kyle A.

        Either way, would have simply preferred an editor. :

    • DavidR

      I think the correct term should be 9x or “900% of”

  • andychrist

    theres all that , but theres more , it wasall caused by men , so the women kicked them out and took over all the major stuff … check it out , its hard to find out about but iceland is now largely a matriarchal society

    • DavidR

      Iceland, like other Nordic countries, was already a country with many women in positions of power/influence.

    • Ryan

      You’re saying “Iceland is now largely a matriarchal society” yet it’s hard to find out info. That does not make sense.

    • Brian Smith

      Always was; the men can leave the women can’t/won’t/don’t.. Iceland tries to live the socialist model lived by its Scandinavian cousins but without the wherewithal, the wealth those countries have.
      Dreadful, dreary, was going to say frozen in aspic but probably frozen in some left-wing pipe dream would be more apt.
      God alone knows what the future holds for this tiny captured population.

      • Justin R. Van Dyke

        There are no socialist Scandinavian countries. Social democracy is not socialism, at all. Social democracy was introduced after WW2 largely to prevent the spread of real socialism from the East, and is the reason these countries have the highest standard of living and quality of life in the world.

        • KittenJuggler

          The Scandinavian countries have tons of oil and no people, that’s why the standard of living is so high. It’s not a model that say Mexico or America could follow.

  • Icelander

    Many factual errors, but some big truths there to. What is wrong is:
    – Not a member of the EU, otherwise refusing to pay the private loans would have been out of the question like the crushing weight is felt be the people Ireland today. What a difference a letter, and a membership, makes
    – The former government can hardly be called neo – anything, it was liberal-conservative that is true, but its economic program was hardly libertarian/classically liberal, as even though taxes were lowered, state enterprises were sold and the debts of the country nearly paid down in full, the government actually got bigger with huge swaths of the economy been taken over by government institutions as the increasing government wealth was also squandered into a bigger system.
    – The banks was and still is called Landsbanki…one s was missing
    – It is true though that the left-winged government (the most leftist one we have had) immeadially started behaving as the foreign power´s debt collector in the country
    – The president´s refusal to sign the debt paying agreement into law automatically puts the ratification into a national referendum, it is the only power the head of state has really…
    – The debt collecting leftist govenment tried to use the crisis to do a coup´deat basically, by trying to restructure the stable constitution that allowed us to save ourselfs from the debt burden, they created a carefully orchestrated “citizen” meeting (basically 100 small meatins in one room with one government loyal operative on each table taking what he liked from the other participants to the eventual drafts) and then electing through an alien and thus nearly non participated elections a bunch of celebrities, nearly all affiliated with the leftwinged and or pro-EU camp in the country (the independence minded majority that rejected paying of the debt didn´t show up) to finish the draft of a constitution that would have allowed the surrendering of our independence to the EU and thus made us subject to their laws of common responsibilities for private laws.
    – So the narrative here is in many ways wrong, but still has nuggets of truth. But the main point that is left out is that the only way any standing up to the corporatist amalgamation of big government and big corporations that is going on in the world is possible is because Iceland is still an independent country and will continue to be so by standing outside the EU. That is the danger you need to get out from, an undemocratic, heavily lobbied government of the elites preserving themselves at the cost of the nations and the nation states, the truly most succesful form of governance where people can feel responsibilty for their own actions, inside and outside the ballot box.

    • Andrew Buckley

      Big government swallowing private institutions is not inconsistent with neoliberalism. Though it appears a contradiction, neoliberalism only favours privatisation when there are profits to be made. If there are losses to be socialised, neoliberals don’t think twice.

  • eigil

    As well as not being an EU member Iceland became independent from Denmark in 1944. Facts are fun.

    • DavidR

      Facts are indeed fun. Iceland gained its independence in 1918. It became a republic in 1944.

      • T Roll

        As long as the danish king was the soverign , Iceland was not independent so the real year was 1944!

        • DavidR

          In Britain we still have as German family as sovereigns yet have been independent for many centuries. Canada is independent but still has our queen as soveriegn. I repeat, officially Iceland gained independence in 1918:)

  • tombeardshaw

    I thought that the crowd sourced constitution had NOT been ratified.

  • Mare_Liberum

    A somewhat more balanced article on Iceland. And date I say, from a probably more qualified author

    • AutoPsychotic

      I’m not sure you understand the definition of the word “balanced”.

      I read that other article by the “more qualified” author.

      Ok…so what have I learned?

      She went to Iceland (nice work if you can get it) and hung around with a bunch of what pass over there as hipsters. She got some free food- which she seems to want to pass off as some kinda subversive act of anarchic redistribution then went to a party.

      That isn’t a political piece; it is: “what I did on my trip to Iceland”. And it seems that what she did was to try and act really cool and radical by knocking about with a tiny subsection of Icelanders whose entire existence seems to revolve around trying to be extremely cool and radical.

      Well done etc.

  • SimonJonston

    did they pay the uk pensioners back who lost their savings in icelandic banks? it was roughly 2.5 billion pounds…

    • Dunbar

      The private banks based in Iceland did not, the UK taxpayer caught that falling plate. The Icelandic people bear no responsibility for the actions of private individuals.

    • Kaldi

      Sorry, I am not paying for private banks, I was not owner of these banks so why should I pay…
      greetings from Icelandi

      • Bob

        Completely agree, unfortunately my government decided to privatise the wins and socialise the losses

        greetings from the UK

        • DavidR

          Yes, ordinary Britons are paying for the bankers’ stupidity. Iceland was party to the same regulations that guaranteed compensating bank customers. They refused to do so which is why we froze Iceland’s sovereign accounts based in London and that’s why financial institutions were wary of getting involved further. The Icelandic politicians and regulators failed to supervise their own banks properly. Those in power must have known about it – it’s a small country.

    • DavidR

      Iceland had signed up to the same regulations to pay back bank customers up to a certain level per account but failed to do so. That’s why the UK froze one of its sovereign accounts based in Lonsdon when Iceland said it wouldn’t pay

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  • Dr John S. Partington

    Iceland is not a member of the European Union, as the article claims.

    • Frode Petrander

      Indeed! This is what stopped me from reading further. If the writer cannot even get his facts straight, what to think of the rest?

      Oh! And as a bonus: It refers to the Netherlands with its popular name of “Holland”!

      • DavidR

        Many Dutch refer to Holland too. Historically Holland was only part of the Netherlands. Have a look at what their national football team called themselves at the World Cup this year:)

  • Daniëlle Zana

    Is that a real man getting hung ?

    • DavidR

      It’s the writer of the article, hanged for crimes against accuracy.

  • Gene Callahan

    “Geir Haarde, the Prime Minister of a Social Democratic coalition government, negotiated a two million one hundred thousand dollar loan, to which the Nordic countries added another two and a half million.”
    The amount of these loans was actually around 5 BILLION dollars.
    “Some readers will remember that Iceland’s ninth century agrarian collapse was featured in Jared Diamond’s book by the same name.”
    It was the 11th century collapse of GREENLAND that Diamond discussed.

    • Paul

      You are right about Diamond discussing the collapse of Greenland, not Iceland. However the Greenland colony didn’t die out until the 15th century, not the 11th.
      And yes, the debt figures should have been in billions, not millions.

    • DavidR

      And the book name seems hard to discern from this article.

  • Desdemona’s bane

    Member of the EU? I think not. Diminishes the seriousness with which I take the writer of this article. If Deena Stryker cannot get even the most basic facts correct, how can I believe anything else?

  • Peedie

    There are a a few errors you might want to correct. 1) Iceland has never been part of the the European Union. 2) You state that in 2003 Iceland’s debt was 200 times GNP – this is 20000 %, but was 900 % in 2007 – 9 times GNP. You really need to stick to the same metric, as it makes the statement clearer to understand for the audience and the writer. 3) 320000 people paying 100 euro gives 32 M euro per month – you state that the Icelanding government agreed to pay 3.5 million euro. You need to check you figures before you post. Iceland is an interesting situation and it should be in the news – please make the corrections so that others can’t condemn your message, as your message is important.

  • james

    so much misinformation in both the article and comments. whatever happened to homework?

  • Sam

    Nicely written but have to point out:
    People should note: A government that issues its own soverign fiat currency cannot go bankrupt. That is a black and white fact.

    What iceland did correctly is NOT impose austerity measures on the population as that always increases unemployment and reduces GDP.
    In general the ‘media’ likes to talk about government debt in the eurozone/america/uk/australia etc.

    The real issue is private debt. (business, households etc)

    The reason iceland is recovering is because the private sector is not exposed to the debt from the collapse of the banking sector, the economy can grow, real wages can grow, peoples desire for savings growth. Hence normal return from a private sector deleveraging.

    Likewise if we juxtapose to greece its private sector is deleveraging and is made many ultitude times worse because it does not issue its own currency. Furthermore monetary and fiscal policy is done in the ECB.

    Should governments try to run a surplus?

    Whats wrong in the eurozone?

  • Shrike

    Hopefully someone can explain my confusion on this topic. The Icelandic people voted their government into power and that government governed its banks and allowed those banks to recklessly invest foreign money put into those banks. Those Icelandic banks were ‘protected’ by national and international banking regulations and guarantees and they then lost all of that money. I don’t understand why the common citizens like you and me from other nations that innocently put their life savings of maybe £15,000 into one of those banks should be the ones that lose it all and pay for it. Rather than primarily the Icelandic government and secondarily the Icelandic people who voted them into power. As to the issue of Icelands revolution, id suggest that it’s a lot easier to change and rebuild a country when there are only 320k people in it.

    • Bob

      Icesave were offering returns far higher than other banks, it was obvious something was fishy. You want to gamble, that’s fine, but why should I have to pay for your losses?

      • Shrike

        Putting money into a bank under international banking laws is not a gamble, don’t be silly. They didn’t collapse because they were “fishy”. Anyway, as i understand it now, all those monies are being repaid to those that invested money there.

  • Thomasinwonderland

    Jailing banksters for playing fast and loose with other people’s money-what a concept! This idea has not and probably will never come to the USA.

  • Kevo

    3.5 M would b 10.94 one time payment from each person. Ur math is way off & bs article

  • Kevin Stephen

    This article is rampant with mistakes, which makes the story less credible. The Icelandic currency is the Krona, not the Kroner. Iceland is not a member of the EU. And, 900% is 9 times, much less than 200 times. Very careless and worse than the mainstream journalism that the article is condemning.

  • Heiða

    Well it’s been 3 years since this article was written and I see most of the things that are incorrect have been corrected by people here below.

    Just to let the story go on: We don’t have a new constitution, and with the right wing goverment that is now in control don’t want to vote on it and then send it into national vote as according to law. In the new constitution for instance privatization on national resources is banned and there is pressure to get this through.

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  • Mike Hunt

    62% of icelanders believe in elves. No lie but nuff props to them if they can oust the banksters.

  • Jón Tryggvi

    we didn’t get a new constitution… It was put to sleep in the good’ol parliament…

  • nashvillebassist

    ” In 2003 Iceland’s debt was equal to 200 times its GNP, but in 2007, it
    was 900 percent. The 2008 world financial crisis was the coup de grace.”


  • Zeok

    Pretty amazing. Especially when considering how the States are beginning to fall more in line with Nazi Germany. Not surprised this wasn’t televised or covered by the American press. The powers that be do not want any sort of influence seeping into their dumbed down, couch potato culture. The majority of folks in the States really have no clue just how screwed they all are. And the ones that do speak out or try to initiate change are seen as criminals, lunatics and extremists. Anyone with an opinion that’s against the establishment is silenced. Orwell’s 1984 is upon us.

  • Jnz Nop

    in other words, they are thieves who stole everyone elses money and pussied out of paying it back, not the best example , id like to see your dream world run on THAT principle; but you can hardly blame the people for voting against THEM paying it back, instead of the so-called money men who got it wrong

  • Stu

    Iceland aren’t in the EU. There’s a huge difference between the EU and Europe.

  • Ken Priority

    Well done to Iceland’s people for refusing to pay the bankers debts. In Cyprus the government did not give the people that option but stole huge sums from the bank accounts of ordinary people. Many politicians were found to have moved their savings out of Cyprus before the robbery commenced and not one of them got prosecuted or even sanctioned. Perhaps the people of Cyprus could learn from the Icelanders and dismiss their thieving and corrupt politicians and write a new constitution which would enforce the repayment of the stolen funds.

  • Joseph Lizak

    Strange? Not a word of this on Fox news. (sarcasm)

  • ATG

    Jared Diamond’s book Collapse used Greenland, not Iceland, as one of its primary examples. The premise of this article is interesting, but it seems like it was tossed together by a student desperate to submit an essay on time.

  • Steesh

    Another mistake people haven’t seemed to have picked up on are the uses of “Holland” and “Great Britain”. Both are only parts of the Netherlands and the United Kingdom respectively. Akin to using Texas to describe the USA. I know Holland is often used synonymously with the Netherlands to describe the same thing but Great Britain is only the island of which most of England, Scotland and Wales is located.

  • Mark o

    It is not EU member. It is a wonderful country full of honest rational people. It is blessed with huge natural resources. From economic standpoint it is not an example others to follow. Its citizens didnt ruin their own country by cheating on taxes, stealing EU subsidies,

  • LolCommies

    It is far more complicated than this simplistic article suggests, typical left wing “economics”

  • toddlevin

    Despite being so widely memed on facebook, Iceland is not a story of model economic recovery. It’s a story of how to fool people. And for now, it’s working.

    Iceland was the first place to go bust during the sovereign debt crisis that unfolded across the world, crumbling under the weight of a credit-fueled boom that brought down most of the country’s banking sector and sent the currency into free fall. Banks either went bust or got nationalized. And investors around the world suddenly woke up to a sobering reality of a major default – something that had been considered preposterous only months earlier. The situation got so bad that the British government (whose taxpayers had much to lose from Iceland bank defaults) used their anti-terrorism legislation to seize Icelandic bank assets in the UK. It was a spectacular collapse. And the first of many. Ireland, Greece, Cyprus, etc. were soon to follow.

    Yet, as suggested in the article above, and unlike the bankrupt countries of southern Europe, Iceland dealt with its economic emergency in a completely different way. Politicians there are proud that they never resorted to austere budget cuts that are so prevalent in Europe. Instead, they imposed capital controls. They let the banks fail. And, as is so commonly trumpeted in the press, they ‘jailed their bankers and bailed out their people.’

    Today, Iceland is held up as the model of recovery. It turns out, most of these claims are dead wrong. For example, some facebook memes in have said that Iceland ‘bailed out its people and jailed the bankers.’ Not exactly. A few bankers were investigated and charged with fraud. The CEO of one of Iceland’s biggest failed banks was even convicted, and sentenced. Now, how long of a sentence does someone get for railroading his nation’s economy? Life? 30-years? 10-years? Actually nine months. Six of which became probation.

    Meanwhile, the government ended up taking on massive amounts of debt in order to bail out the biggest bank of all – Iceland’s CENTRAL BANK. This was a bit different than the way things played out in the US and Europe. In the US, the Fed conjures money out of thin air and funnels it to the government. In Iceland, since the Kronor is not a global reserve currency, the government had to go into debt in order to funnel money to the Central Bank, all so that the currency wouldn’t collapse. As a result, Iceland’s state debt tripled, almost overnight, in 2008. And from 2007 until now, it has increased nearly 5-fold. Today, the government is spending a back-breaking 17+% of its tax revenue just to pay interest on the debt. And this is real interest, too. Iceland’s central bank owns very little of the government debt. The rest is owed to foreign creditors, putting the country in an extremely difficult financial position.

    At the end of the day, the Icelandic people are responsible for this. They were never ‘bailed out.’ They were stuck with the bill. Meanwhile, although unemployment in Iceland is low (around 2% – 4%), wages are even lower. And the weak currency has brought on double-digit inflation. So while people do have jobs, they can hardly afford anything. This is most prevalent in the housing market, most of which is underwater. Interest rates have jumped so much that many Icelanders are now on negative amortization schedules, i.e. their mortgage balances are actually *increasing* with each payment(!). Meanwhile, home prices have been falling dramatically. So each year, mortgage balances are going up, and home values are falling. Hardly the picture of recovery. The freshly elected Prime Minister is now promising everyone relief from their mortgage debts via a special state ‘debt correction fund’. The only problem is that the state doesn’t actually have any money to do this… and they’re running a budget deficit every year. The only way this can happen is if Iceland defaults – which is becoming a much more likely scenario.

    A few years ago, Iceland’s banking system was nearly 10 times the entire country’s GDP. And it collapsed. You don’t paper over a crisis of that magnitude with PR like this.

  • Girl’s Day

    A++++, Iceland.

  • Chris

    “Some readers will remember that Iceland’s ninth century agrarian collapse was featured in Jared Diamond’s book by the same name.”

    Uhm… what name?

    • dc_rez

      Collapse: How Societies Choose to Fail or Succeed

  • Harry Bamilton

    Not a member of the EU

  • André Castro

    320 thousand people ( a small town by any standards), being compared to countries with tens of millions… Enough said.

  • Einar Baldvin

    I’m Icelandic and I can tell you that there is a lot of misinformation here.

    – There was no “neo-liberal regime” but rather a democratically elected center-right government.

    -We are not members sof the European Union

    – Iceland did not declare bankruptcy, that happens when one defaults on one’s debts.

    – We did not receive a new constitution – the election was deemed illegal by the supreme court and the whole push for one as well as the execution was a fiasco

    – The government did not resign – the Social Democrats broke their coalition with The Independence Party

    – The resulting government, a far-left one was the one that tried to push the debt onto it’s citizens not Haarde’s government even though one can’t say what they would have done had they stayed in power.

    – There was no ongoing revelation, some protests yes but no revolution.

    – The big thing here and the article gets that kind of right is that the people refused to shoulder the private debt.

  • Matthias Miller

    Good article indeed but bad math. Where he states “millions”, he means “billions”. A debt of 4 million Euros could have been paid off by each citizen chipping in the equivalent of about $15.

  • the5th

    Nice story, but Iceland isn’t in the European union, contrary to what you say in the first paragraph. In fact they probably don’t even want to be, given that there’s no way they would have have been able to do what they did to the county’s finances with the Germans beating down their necks. Those of us stuck with the Euro will be passing for German bankers’ gambling debts for generations

  • Penis

    ICELAND an EU member? That’s interesting news to me!

  • K

    It was “200 times GNP, it went up to 900 percent” #badmaths

  • Cibouwat Horsifomidom

    This is why you can’t trust any old website with providing factual information. Just an awful, nonsensical article.

  • Sir Arthulf

    bla bla bla so much unfounded hogwash. The European Union has recovered and is doing fine. Oh you so jelly, americlaps.

  • Jorge

    So the “revolution” consists of first making a promise (deposits with Icelandic banks are guaranteed by the taxpayer), then breaking that promise on payday. Impressive, countries like Argentina could learn from that!