Saturday, November 26, 2011

What ever happened to Iceland? Here's what happened

This is an old story (August 15, 2011) but it just came up on Truthout. It's short and worth a minute to see what happens when the 99% put their foot down. Of course, the 1% don't want anyone to know about this, so you won't read about in the media or see it on TV.

Why Iceland Should Be in the News, But Is Not
by Deena Stryker


Matt Franko said...

Let's not forget that Iceland took the IMF deal. Iceland took 2.1B from the IMF that is about $6500 per capita which is on par with the deal Greece took, with the guaranty of austerity provided to get the IMF loan.

The IMF is also claiming victory in Iceland.

Here are two economist heroes of the Left up there recently (Stiglitz and Krugman) talking it up at an IMF conference up there:

“Iceland’s heterodoxy gives us a test of economic doctrine,” Krugman said. Comparing Iceland to Ireland and Latvia (both members of the European Union), he argued that the former has fared much better than the latter in terms of growth and jobs.

And despite warnings that economic Armageddon would follow Iceland’s decision not to accept liability for the losses of private banks, credit default swaps on sovereign debt are now much lower in Iceland than in Ireland, where the state assumed full responsibility for bank losses, he said.

“Iceland has done fine in terms of regaining not total, but reasonable confidence in its sovereign debt. The idea that there would be a huge reputational penalty for allowing private sector parties to go bust and default on their external obligations has not turned out to be true.”

Another Nobel Prize winner in economics, Professor Joseph Stiglitz of Columbia University, also endorsed Iceland’s policy response. “What Iceland did was right. It would have been wrong to burden future generations with the mistakes of the financial system,” he said in pre-recorded remarks screened at the conference."

I guess it could have been worse for Iceland if they took on repayment of the external debt to foreign depositors in "their" banks that failed. But let's not forget that they still indeed took the IMF deal which came at a price of austerity just like Greece.

Krugman and Stiglitz here are being deceptive and claiming that Iceland's approach was "heterodox" when in reality it was a textbook IMF "loan for austerity" deal.

I believe that Stiglitz at least and maybe Krugman make money by helping to arrange IMF deals... they both have Nobels, etc... that is why they both are slow to/never will accept/endorse MMT.

The Left should just give up on them both (and others).


Matt Franko said...

If the nations of the world would all fully embrace their own currency sovereignty in the form of a FFNC , nobody would need the IMF ever again.

Therefore nobody who has the least relationship with the IMF will ever fully endorse MMT.

Look at Krugman here; he completely misses the difference between the Iceland, Ireland, Latvia situations, wrt monetary arrangements, falsely claiming it has something to do with Icelands policy choice related to deposit insurance, and this after he has had face to face discussions with Warren Mosler on MMT.

Left: Time to give up on this guy, perhaps use his notariety in some reverse way to help bring MMT to greater public attention, use him for this ends only but that's about it imo.


RODNEY said...