Booming Iceland makes second early loan repayment to IMF

[hack89]

Source: The Telegraph

Iceland, whose economy has recovered rapidly following the 2008 collapse of its banking sector, on Friday repaid $483.7 million in loans to the International Monetary Fund.

The early repayment, which follows another one of more than $900 million in March, is a symbolic step for the country of just 320,000 people as it works its way out of a financial meltdown that ravaged the economy.

The Icelandic government was forced to seek aid from the IMF and its fellow Nordic countries to stabilize its economy, and it imposed rigid capital controls to avert a complete collapse of its currency.

Read more: http://www.telegraph.co.uk/finance/financialcrisis/9350580/Booming-Iceland-makes-second-early-loan-repayment-to-IMF.html

---

I post this because Iceland is often brought up when discussing what Greece should do in regards to its fiscal crisis. Iceland borrowed billions, implemented austerity measures and applied to join the Euro. Just some food for thought.

[marmar]

1. Iceland prosecuted banksters and negated fraudulent mortgage debt .....

....... seems like you're leaving out some key points.

[Rosa Luxemburg]

2. We need to do more of that too

[hack89]

5. I agree. nt

[hack89]

3. They only prosecuted domestic bankers. They ran to international banksters for loans.

perhaps Greece should emulate Iceland?

[newthinking]

59. They also nationalized the failed banks

It is difficult to use iceland to draw any conclusions as they are a very small population and their policies and approach was no simply what we think of "austerity".

This ecomist makes the case that the miraculous recovery basically was because they let their modern banking industry completely collapse. I tend to believe that may be the case.

http://reason.com/archives/2011/10/27/iceland-loses-its-banks-finds

"So what’s causing the recovery? The plain-sight answer is the one nobody will consider. Iceland is coming back specifically because its banks went out of business. That happened in spite of strenuous public efforts, but the removal of the tiny nation’s colossally bloated financial sector turns out not to have eliminated all that much value.

It bears repeating that banks are not creators of wealth. They are places where you store the surplus value generated by productive enterprise. In very narrow circumstances that surplus value can be loaned out at a profit, but a financial sector is the icing, not the cake. This should be common sense, but apparently it is wisdom so rare it can only be learned in countries small and remote enough to avoid the deadly medicine of the global financial markets. "

[Psephos]

4. Absolutely - it signals that Iceland is serious.

That eases the uphill fight to re-establish trust with would-be future creditors.

The fiscally responsible recovery plan, which eschews debt and emphasizes true investment instead of generic spending, is what's put them back in the black, however.

[newthinking]

66. Along with letting the bad banks die and progressive "two-way" Democracy

Unfortunately, Iceland, like most western countries, fell into the libertarian IMF world view and sufferred a hit. "Austerity" in itself, as it is being propagated, is a reaction to the darwinian libertarian capitalism that is causing structural problems, and they "cure" is quite different, Iceland is not doing the "shrink government" libertarian austerity, they will adjust over time, fix programs, and then if they are wise, continue progressive policies which will again include their population in future prosperity. That is not "Austerity".

Yes, eventually all countries will need to pay for that hit. But that is quite different than the libertarian "slash government" view of "Austerity" that is being mostly talked about.

[tsuki]

10. A lot of details. The former PM was

prosecuted, they did not sell their commons or privatize everything. And they did not bail out banks who were under the regulation of the city of London, Wall Street or the Netherlands. They stopped the carry trade. They refused a Technocrat, and took the bail-out proposal to referendum. Wrote a new constitution while they were at it.

[Guy Whitey Corngood]

15. Hmmm. Curious that. nt

[hack89]

17. But they still had to implement austerity and borrow billions.

should Greece do what Iceland did? All I am asking.

[Igel]

54. True.

But the prosecution didn't restore anybody's finances and they didn't privatize because the government borrowed a lot.

They could do that because their debt load had been not so great. In other words, they were in a different position. Iceland was very much not Greece.

They didn't bail out foreign banks. On the other hand, they also didn't nationalize the foreign banks' holdings. The banks took a haircut, lopped off the last 1/2" of the banks flowing locks; it was not a buzzcut. You can only take off 1/2" so many times until you're into dura mater.

They did other things which did little, directly, to fix the economic problem.

Writing down debt was a big deal.

But each side only sees the facts that their personal bias filter lets through. Critical thinking skills are intended to puncture and slice through these kinds of filters; most people use them to buttress the filters. This isn't good, but it's damnable when one side is put forward as being the whole story--with the additional claim that there is and can never be any additional story.

In Iceland a lot of people lost lots of money. They wrote down debt. Once you know what your debt is worth, once assets have been liquidated, once you've hit bottom, you have a nice stable floor to build on. If you have an economy that can work--there's something there that people want to buy--and you have people that can and will build, you get an economy rebuilt. If they have capital and the necessary resources.

Iceland borrowed and made sure they had capital--this was an infusion of capital from outside the system. Important local institutions were bailed out. It's important that Iceland had resources and was small: The society wasn't riven by self-righteous factions that held each other in such open contempt and for whom "cooperation" on anything important could only mean "do it my way."

You also need to know where the system boundaries are. My kids in class always have trouble with system boundaries. If you apply a conservation law in a system, there's no change in work or enthalpy. They always miss this: If you use a bomb calorimeter to burn a sample of a compound, the total energy of the system is unchanged (at least in the very short term). No work's been done on it and no work's been done by it. In Iceland, money was added to the system.

In Iceland, money came from outside the system and went to help rebuild an economy that had taken hefty write-offs at all levels. This didn't happen in the US, not at first: the money that was created in the system replaced money lost in the system. The goal was to keep the system stable, not to let it crash and then get rebuilt. If you want stability in order to avoid all risk, you get stasis. If you don't have a solid foundation, you can't build; unless you clear out old buildings you can't put up new ones. We insisted on stability. We got a kind of stasis. The components of the system show change, and so we focus on the components: Private job growth, government job preservation, etc., etc. But overall, while GDP's been up the system's been pretty flatlined.

Greece is very much not Iceland. (Then again, the US is neither Greece nor Iceland.)

[clang1]

19. +1000 n/t

[woo me with science]

87. Thank you. nt

[Rosa Luxemburg]

6. I think someone has to overhaul the world's financial systems

It obviously hasn't been working with all this deregulation and sub prime loans etc?

[hack89]

7. I am not sure there is a "someone" with those kinds of powers. nt

[Rosa Luxemburg]

8. I wish!

[stockholmer]

23. each individual sovereign nation-state needs to tailor-make a ground-up democratic response

to claw back power from the bankster's systemic control. Iceland formed a model that works for them, and SYRIZA in Greece has a model that can work for that country (albeit they need to have a more anti-bank control posture).

People simply cannot wait around for a 'knight-on-a-white-horse' overall global leader. This will never happen. Unfortunately for the USA, where (along with the UK) the core of bankster control is the strongest, most deeply infused, this is going to be a very long, very hard slog.

If the US cannot even start to make baby-steps by bringing back Glass-Steagall, and roll back the horrific Commodity Futures Trading Commission Act of 2000, then the battle will still-born.

[suffragette]

57. Great points stockholmer

Last edited Sat Jun 23, 2012, 06:46 PM - Edit history (1)

Individual solutions based on the situation and needs of the different places and people.

[rootProbiscus]

9. Also repaid $892 million from nordic countries

And they have now repaid 53% of the IMF loan and 59% of the loans from Nordic countries
more http://www.icelandreview.com/icelandreview/daily_news/Icelandic_State_Treasury_Repays_Part_of_IMF_Loan_0_391086.news.aspx

[JackRiddler]

11. The power of selective perception. Now that's spin!

Iceland defaulted on a large portion of debt, prosecuted banksters, and put austerity to a referendum.

Anyway, don't you have enough schadenfreude yet? Even though the Greek majority voted against the Troika memo, by a percent and a half, the party primarily responsible for the Greek disaster has been returned to power so that they can complete the disaster of austerity. They will crack heads now. What's your need to keep kicking from here?

[hack89]

18. They did not default on sovereign debt

I heard time and time again that Iceland and Argentina should be the models for Greece. Well - should they? They raised taxes, implemented austerity, cut wages and borrowed billions - and it appears to have worked. Should Greece emulate Iceland?

[newthinking]

61. The primary feature was throwing out and replacing the government

They also killed the corrupt banks.

I also think they were fortunate because they have a very small population. Not sure that it would work the same in other countries.

[hack89]

77. I don't think it will work for Greece.

two completely different situations. I don't think there is a good solution for Greece.

[JackRiddler]

79. Greece thanks you for your concern and fear-mongering.

Thanks to the international fear campaign and threats, and of course thanks to the idiot rules of Greek elections, your side - the parties responsible for the odious debt in the first place - won the last election, although a majority again voted against them. Congratulations! For now we don't get to see "what works for Greece," since it will be more of the same.

[hack89]

80. The Greek system, like many European systems, is designed to promote minor political parties

and allow all voices to be heard. What an idiotic concept!

That odious debt exists because the Greek people demanded certain things that politicians were more than willing to promise even if there was no way to pay for them. The voters got exactly what they wanted and deserved.

I don't think the European plan will work with Greece. But it is also hard to imagine any plan working when the Greeks are so fragmented politically and socially. What they really need is someone or something that will unify them.

[JackRiddler]

81. Nonsense on all counts.

The Greek system is a proportional voting system, except that the first party gets 50 extra seats, even if it is only ahead by a single vote. (Stable Germany has a straight-up proportional voting system.) It is a complete falsehood to say that the Greek system "is designed to promote minor political parties." There is a threshold of 3 percent for representation in the parliament.

Thanks to the bonus, a 1.5 percent advantage for ND, the party of odious debt, translated into a majority with PASOK, the party of collaboration. The majority who voted against these parties and the Troika memo are not in the government.

From the perspective of the US, where we elect one front man of a vast empire and national security state, large parts of which are secret, I can see why the concept of even that much democracy is a foreign one. Try harder.

Note that the power of lies (which you are pushing, whether intentionally or not) is such that correcting them takes two paragraphs for each of your false sentences!

In your second paragraph, you push the Wall Street version of what happened with the debt. You leave out the buying of the Greek politicians by German corporations who got fat contracts, and the lying by the Greek politicians about the extent of the debt (in which they cooked the books together with Goldman Sachs and JPM Chase).

Propaganda for the banksters, contempt for the people. That's your formula. Shame on you.

[hack89]

82. I don't care how the Greeks solve their problems - it has no impact on me.

But I reject the notion that the Greek people are completely innocent in this. With the shadow economy making up 27 percent of the Greek GDP it is impossible to argue that everyday Greeks are not complicit in their fiscal mess.

No matter what choice they make, the Greeks will suffer and it will be decades before they regain what they had. If telling the EU to fuck off and going it alone makes the coming hard times more palatable for the Greeks, then more power to them.

[JackRiddler]

86. That's why you post anti-Greek propaganda weekly, sometimes daily.

The ruling elites are strangling peoples around the world. Are the peoples complicit? Very often. Did they fall for a line of bullshit during the scam ("boom&quot years? Sure. That doesn't change the primary responsibility. Your specialty is to produce apologia for the banksters, however. Thanks to the prevalence of anti-Greek prejudices (and because this particular form of racism is acceptable in US society), Greece has been chosen as a convenient general scapegoat, even though the economic crisis that has hit so many different countries is global and originated with bankster scams.

[hack89]

88. This is a disussion board, not an echo chamber

I like rigorous discussion. Greece is a great topic to generated those kinds of discussions.

[JackRiddler]

89. This is a discussion board, not a dumping ground.

[hack89]

90. Unfortunately you have to put up with disagreement here.

no matter how desperately you try to smear those who disagree with you.

[JackRiddler]

91. Unfortunately you have to put up with others' opinions of...

Last edited Thu Jun 28, 2012, 07:56 PM - Edit history (1)

the misleading, anti-Greek propaganda you regularly post.

[hack89]

93. If you are unwilling to assign at least partial blame to the Greeks

then you have a pretty warped perspective on human society.

No - you just ignore shades of gray to push your simplistic political agenda.

[JackRiddler]

94. Strawman and false definition.

Certainly, I'm willing to assign a great deal of partial blame to Greeks, especially the specific Greeks who are most responsible for what occurred, such as those in the ND government prior to 2009, and those in the PASOK government that followed it. Or the capitalists who keep their money abroad, or a number of corrupt politicians, businessmen and bankers. Or Lucas Papademas, who as head of the Bank of Greece conspired to commit accounting fraud with Goldman Sachs and JPM Chase. He was rewarded for it by a temporary appointment as unelected prime minister, rather than receiving the prison term he earned. And he, like you, took the privelege of blaming the majority of Greeks who were far less responsible for the debt than he was.

Your contempt for the facts and blanket blame of the Greek people are simplistic, and odious.

[hack89]

95. No - I blame the Greek politicians

I also blame the Greek people. With 27 percent of GDP in the shadow economy to avoid taxes, the Greeks have shown an unwillingness to pay for what they get from the government. The amount of due taxes equals their debt - think about that for a second. There would be no crisis if everyone paid their taxes.

[hack89]

83. I would love to have 7 independent political parties seated in Congress. nt

[newthinking]

60. They let their banking industry die. And imagine, it did not sink the rest of their population

Maybe we should learn from them after all.

They also have a small population that is fairly progressive and a fair tax structure. Their population was able to take control of government, throw out the corrupt bureaucrats, and the population has the largest place in the decisions around cuts to programs. So in reality what seems to have happened there:

1. Broke (much) of the power international financiers had over their government
2. Changed governments and got rid of corrupt politicians where they could
3. Nationalized the broken banks to control the damage

Yes, they took the loans but the people want to pay those off and break those ties as quickly as possible.

I think what that shows is what is most important is not "austerity vs..." but who is in control and to who's benefit are the decisions being made.

[shaayecanaan]

12. Iceland wasn't within the Eurozone...

they still conducted their trade in Icelandic krona. Hence, when the wheels came off, they were able to drastically devalue their currency, which is how that surge in tourism and whatnot came about. Greece can't do the same, or at least they can't yet.

The other difference is that Iceland is one of the most developed civil states in the world, whereas Greece is a racket where its citizens evade more tax than they actually pay.

[hack89]

20. So what do you think of their desire to join the Euro?

it is being done to bolster their standing in the international financial markets - they appear to view a sovereign currency as a long term liability.

I agree with you assessment of the difference between Greece and Iceland. I post that story because I have been told many times here that Greece should do what Iceland did and "fuck the banksters". People want to gloss over the fact that Iceland in fact did implement strong austerity measures that were very painful. And yet look at the results.

[newthinking]

62. BIG Mistake!

You keep promoting the idea that it was "austerity" that saved them. It was "Democracy" and nationalizing the corrupt banks that saved them.

This was not "austerity" as it is being termed in use throughout the world. This is a well functioning, small progressive state, that us using some austerity to resolve short term problems. That is quite different than cutting government and social programs as a way of "fixing" economies.

[shaayecanaan]

78. I think the mistake was Europe's

they agreed to accept a bunch of doddled-up figures cooked by Goldman Sachs ostensibly showing that Greece wasnt the fiscal basketcase that it so clearly was.

Bizarrely, they didnt even blink when Greece decided that the size of the black market amounted to 25% on top of their nominal GDP, so they just added that on top so they could leverage their little basketcase economy even more. Italy pulled the same trick, incidentally.

Iceland isnt a basketcase, but they're basically a bunch of overeducated Nordes who decided they were all too smart for fishing and tried their hand at making overleveraged real estate loans to Britain instead. Icelanders are incredibly highly educated, but their workforce is too small and highly paid to be competitive at anything besides pulling in fish. They'll still have to fish pretty hard to pay off their debts but they're doing all the right things.

This is what Greece has to do:-

1) Withdraw from the Euro and reconstitute their own currency
2) Make it a paperless currency so that their habitually tax-evading people will finally have to actually pay tax
3) Try and form a relatively non-corrupt public service that can actually go out there and tackle the huge Euro-trading black market that will inevitably develop

Icelanders are educated. They're a rational people. They figured out what they needed to do and they did it. Greece is culturally a world apart. They're a fractious people, too used to gaming the system.

[Festivito]

13. Oh my, your OP comment is distressingly bad. DUer replies are good.

Iceland dethroned their money-managing elite and now can repay.

That is what Greece, Italy, Spain, and ilk should see.

[hack89]

16. So Greece and ilk should borrow billions and implement austerity?

because that is what Iceland did. They could always pay their sovereign debt - that was never an issue.

[magical thyme]

22. only if they can also prosecute their banksters and devalue their currency...

oh, wait a minute. Never mind.

You are leaving out the largest parts of the Iceland story.

Borrowing and austerity only could work within the larger framework, most of which is not available to Greece.

[hack89]

24. So Greece's problems are purely a domestic banking crisis like Iceland?

Funny - I thought Goldman Sachs were the villains here. Learn something everyday.

You do realize that Iceland has asked to join the Euro?

[magical thyme]

27. I never said or implied that. In fact, I said 'only if they can jail the banksters'

and do other things that Iceland did. Which they cannot.

You clearly have an agenda here, which I am not interested in feeding.

Have a nice day.

[hack89]

31. My agenda is simple

I post that story because I have been told many times here that Greece should do what Iceland did. People want to gloss over the fact that Iceland in fact did implement strong austerity measures that were very painful. And yet look at the results.

[Festivito]

42. Hiding banker prosecution by repeating austerity seems to be your simple agenda.

Start with step one for Greece. Then, one moves on to step two.

[hack89]

48. Do you think Iceland is a good model for Greece? nt

[hack89]

53. The Greeks can decorate Athens with the heads of bankers

and still have to face austerity.

No matter what the Greeks do they will have austerity - there is no way to go back to the way things were. They couldn't afford it then and they certainly can't afford it now.

I posted the OP because I have have Iceland thrown in my face as to how Greece can fix their problem. I just wanted to point out just how ignorant so many are of what exactly happened in Iceland.

What worked in Iceland will not work in Greece - two completely different cultures facing completely different problems.

[newthinking]

69. "They couldn't afford it then"

Thats where the bullshit comes out of Neo-Liberal" brain washing. The Neo-Liberal viewpoint you have (subconciously?) partaken in is trying to populate the idea that life cannot get better for the general population despite HUGE increases in productivity and global wealth. That is bullshit.

What is really behind this, and why so many fight these ideas, is that the rich and powerful do not want to see the general population get the same benefits of the rising global economy, rising productivity, and rising living standards.

50 years ago there was indeed not enough resources (food, productivity, etc) to feed the world. That is no longer true. Productivity and the wealth of the western world has grown dramatically in the last 50 years. In my high school text they talked about a future where we all worked 30 hour workweeks due to the benefits of productivity increases that were coming (along with a good standard of living). Was that prediction wrong? No, those productivity gains have been realized and more. It is only waste and greed along with accumulation by a small portion of society of most of those gains.

There is nothing wrong with what the Greeks have. But that is what the "Austerity" talking points, like yours are trying to say and many believe. The Greeks will eventually need to tighten their belts. But not because they expected to much from the benefits of modern economies, but because they partook in the bandit economy and are now under attack because they represent what the elite don't want the people to understand and expect!

[hack89]

74. The Greek government hide massive debt so they could borrow more.

for the past 10 years they have funded their way of life with massive borrowing. We are not talking theoretical economic theory here - we are talking about what actually happened.

Yes - Greece had the potential give their people a better life. So what went wrong? Why couldn't they fund public services with the money and resources available? Why was the massive borrowing even necessary?

[newthinking]

68. +1, Exactly. Hack is purposely propagating a siimple meme that does not accurately

describe what happened.

More power to him though because on this site people are very educated and have already fully considered Neo-liberal" Austerity solution. They know it doesn't work. They know that the Neo-liberal" push is what got us to where we are today. And they know that there is a big difference between rationally strengthening and progressing and using budgetary adjustments as a tool vs implimenting a political austerity program designed only to continue the downward spiral of the general welfare and enhance Neo-liberal dominance in all economies.

[newthinking]

67. +1 Thanks!! You get it.

Of course the powers that be want everyone to believe simple slogans and ideas like what is being propagated in parts of this forum. Trimming and expanding parts of any budget. But that is also not what the powers that be are talking about when they push "Austerity".

[newthinking]

63. They are taking advantage of it and paying it back quickly. Big difference

You seem to want to sell everyone on austerity. But people on this site are smart enough to know that complex ecosystems are involved and they are also smart enough to know that the libertarian "Austerity" that is currently being pushed around is a particular *type* of austerity that does not define what Iceland did.

They just prove that how the IMF and our neo liberal owners want to frame everything is not really how the world works. Nor is it good for us. And that is why people are arguing with you.

[hack89]

76. I do not support austerity for Greece - even though they will have it regardless of what they do

I just want to point out that Iceland is not a good model for Greece to follow after continuously hearing that Greece should emulate Iceland and Argentina and "fuck the banksters" - I just want to highlight why Greece and Iceland are completely different.

I don't know what will fix Greece but they will have austerity no matter what they do. But right now they are so fragmented socially and politically that I can't see a way forward for them.

[DCBob]

14. Iceland and Greece are different animals but clearly there are similarities.

The solution to Greece is not going to be as "easy".

[hack89]

21. My point is that people don't understand what Iceland actually did to solve their mess.

I post that story because I have been told many times here that Greece should do what Iceland did and "fuck the banksters". People want to gloss over the fact that Iceland in fact did implement strong austerity measures that were very painful. And yet look at the results.

[stockholmer]

25. Iceland did not do what has now been termed 'ponzi-austerity', which is what the Eurozone is doing

Yannis Varoufakis on Ponzi Austerity

http://monetaryrealism.com/yannis-varoufakis-on-ponzi-austerity/

“ Max (in particular) suggested that, by shifting debt around (between the EFSF, the ECB, insolvent states such as Greece and Spain etc.), some ECB bankers or functionaries were profiting. I do not believe they were. Take for instance what happened last month: Greece borrowed 4.2 billion euros from the EFSF so as immediately to pass it on to the ECB so as to redeem Greek government bonds that the ECB had previously purchased in a failed attempt to shore up their price. This new loan boosted Greece’s debt substantially but netted the ECB a profit of around 840 million (courtesy of the 20% discount at which the ECB had purchased these bonds). That’s all true and accurate. But it is incorrect that ECB bankers pocketed that 840 million. Who did? No one! It was lost inside the ECB’s balance sheet! Without a trace. So, the situation is worse than Max assumes. For if some unscrupulous characters in the ECB were to profit from Greece’s pain (or Spain’s), at least there would be a logic (however sinister) to what they are doing. But there is none! All that we witness is organised madness, guided by an ideological commitment to an unworkable status quo!” [Bold mine]

The crazy part about this mess is that there are very few winners from the status quo. Even the Germans are getting hurt by their policies. There are no bankers making a mint from pushing out this crisis.

The Germans would be better served by embracing the solutions and loading all of the debt on a common euro structure. This would push the euro much lower – think EURUSD .9000 – and turbocharge the German export machine.

snip

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Further informations about topics addressed are available in favourites, play lists on this and my main channel: http://www.youtube.com/user/sundrumify RT "In this episode, Max Keiser and co-host, Stacy Herbert, the european short change con in which debt and debt facilities are created and swapped at ever increasing speeds in order to defraud the population. In the second half of the show Max talks to economist Yanis Varoufakis about the ponzi austerity screwing Europeans right down to the ground with more debt."

[hack89]

26. I don't know what it will take to fix Greece

part of their problem is that the people don't appear unified on what is the best path forward. Without popular support any attempt to fix the problem will most likely fail.

I just wanted to point that austerity is can work. It worked in Iceland and Germany for example. But the people supported it and accepted it. I admit that it would most likely fail in Greece because it will not be accepted. But the same can be said for any solution at the moment.

[muriel_volestrangler]

32. The austerity measures in Iceland had limits

For instance:

Iceland  The 2010 and 2011 budgets—while entailing expenditure cuts in some areas—have added new programs to deal with specific issues (for example, youth unemployment and overly indebted households).  Engagement with social partners and consensus building have facilitated agreements on key budget issues, including a framework for household debt workouts and the recently concluded tripartite stability pact, which entailed a substantial increase in social benefits.

http://www.imf.org/external/np/exr/facts/pdf/protect.pdf

JULIE KOZACK, IMF MISSION CHIEF FOR ICELAND: Well, Iceland has achieved quite a lot since the crisis, as you noted. The entire financial system collapsed in 2008, and there's been tremendous progress made between now and then.

The economy is growing again, public finances have been put on a sustainable path. Iceland was able to re-access international capital markets.

And of course, there's been a lot of fiscal belt-tightening, all the while preserving the social safety net. So, there's been quite a lot of progress and achievements made.

http://transcripts.cnn.com/TRANSCRIPTS/1203/16/qmb.01.html

As, of course, it did in Germany, years ago. Greece's austerity is making its health system fail: http://uk.reuters.com/article/2012/06/15/uk-greece-health-idUKBRE85E07520120615

[hack89]

34. Iceland had political and social unity.

it will take many things to fix Greece - assuming it wants to be fixed. Greece has to make fundamental changes to it's government and society - and I am not sure they are willing to do that.

[stockholmer]

43. Greece can start by cancelling many of their huge weapons purchases from Germany/France/USA, etc

German 'hypocrisy' over Greek military spending has critics up in arms

Athens' fondness for weaponry, and willingness of Germany and France to feed it, under fire as Greece struggles with debt crisis

http://www.guardian.co.uk/world/2012/apr/19/greece-military-spending-debt-crisis

A few months before submarines became the talk of Athens, Yiannis Panagopoulos, who heads the Greek trade union confederation (GSEE), found himself sitting opposite Angela Merkel at a private meeting the German chancellor had called of European trade unionists in Berlin. When it came to his turn to address the leader, he instinctively popped the question that many in Greece have wanted to ask. "After running through all the reasons why austerity wasn't working in my country I brought up the issue of defence expenditure. Was it right, I asked, that our government makes so many weapons purchases from Germany when it obviously couldn't afford such deals and was slashing wages and pensions?"

Merkel's reaction was instant. "She immediately said: 'But we never asked you to spend so much of your GDP on defence,'" Panagopoulos recalled. "And then she mentioned the issue of outstanding payments on submarines she said Germany had been owed for over a decade."

Greek profligacy may be blamed for triggering the debt crisis that now threatens to tear the eurozone apart, but if there is one area where Berlin is less excoriating of state largesse it is in Athens's extravagant taste for arms. Behind the frequent exhortations that Greece rein in spending after living "beyond its means" – admonishments made most loudly by Merkel and her finance minister Wolfgang Schäuble – there is another reality that paints Germany in a less than flattering light, according to MPs, military experts, economists and scholars.

"If there is one country that has benefited from the huge amounts Greece spends on defence it is Germany," said Dimitris Papadimoulis, an MP with the Coalition of the Radical Left party.

snip

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Greece Spends Bailout Cash On European Military Purchases

http://www.zerohedge.com/news/greece-spends-bailout-cash-european-military-purchases

As Greek standards of living nose-dive, loans to households and businesses shrink still further, and Troika-imposed PSI discussions continue, there is one segment of the country's infrastructure that is holding up well. In a story on Zeit Online , the details of the multi-billion Euro new arms contracts are exposed as the European reach-around would be complete with IMF (US) and Europe-provided Greek bailout cash doing a full-circle into American Apache helicopters, French frigates, and German U-Boats. As the unnamed source in the article notes: "If Greece gets paid in March the next tranche of funding (€ 80 billion is expected), there is a real opportunity to conclude new arms contracts." With the country's doctors only treating emergencies, bus drivers on strike, and a dire lack of school textbooks and the country teetering on the brink of Drachmatization, perhaps our previous concerns over military coups was not so far-fetched as after the Portuguese (another obviously stressed nation), the Greeks are the largest buyers of German war weapons. It seems debt crisis talks perhaps had more quid pro quo than many expected as Euro Fighter commitments were also discussed and Greek foreign minister Droutsas points out:"Whether we like it or not, Greece is obliged to have a strong military".


From Zeit Online: Fine Weapons For Athens Via Google Translate


Frigates, tanks and submarines: A Greek military passes any savings package. And Germany benefited.

The Gift of the Greek Ministry of Defense has the man in the head: up to 60 fighter aircraft fighter for maybe € 3.9 billion euros. French frigates for about four billion, patrol boats worth 400 million euros, as much is the necessary modernization of the existing Greek fleet. Then it still lacks of ammunition for the Leopard tank , also would have two American Apache helicopters will be replaced. Oh, and one would like to buy German U-boats, total price: two billion euros.

What the man who goes in and out of Greece's Defence Ministry, in an Athens cafe is because of the sounds absurd. A State which is on the verge of bankruptcy and is supported by billions of the European Union wants to buy tons of weapons? The man in the café is often seen in photos next to the generals of the Army or Defense, he phoned often with these people, so he knows his way around. He knows how sensitive the issue, and would therefore - like most other party - are not named in the newspaper. He even holds for arms purchases currently not communicable. But could soon change that, he says: "If Greece get paid in March the next tranche of funding of € 80 billion is expected, there is a real opportunity to conclude new arms contracts." If only one billion staying left, so the man could be, for example, the first Euro Fighter frigates or a binding order.

Really incredible: This spring, decides whether Greece survives in the euro area or the drachma back . On the morning of the internals in the café are freely divulged, physicians treat in Athens hospitals only in emergencies, bus drivers on strike, are still missing textbooks in schools and thousands demonstrate against state officials announced their dismissal. Greece's government announced a new savings program that barely spared a Greek.

Unless he works for the military or the armaments industry . On these two areas is in fact still almost passed without any austerity. Under Greece's EU partners, there are few who speak out publicly in favor, stop the project immediately and Greek armor for a long time. One is Daniel Cohn-Bendit, leader of the Greens in the European Parliament: "From the outside, access to EU countries in practically all the rights of Greece. Nurses will cut the wages and everything should be privatized. Only in the defense budget, it means a sudden, it was a sovereign right of the state. It's surreal."

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[hack89]

47. I agree.

They need to live within their means and take care of their people.

[DCBob]

49. They need to get their tourism business back up to speed.

That will require some semblance of stability. They should start running some ads worldwide showing the cool things to see and do in Greece with some special deals for those that book now and with some reassuring images of people having fun in various locations around the country.

[clang1]

29. Heh heh: 'Ponzi Austerity' good one n/t

[newthinking]

70. +1, "Ponzi Austerity" - False austerity due to "Ponzi" Neo-liberal Capitalism

Exactly.

The Neo-liberal establishment has completely destablised world prosperity and put in place greed based ideologies. Certainly most countries are paying a price for that. But what they want to have everyone do is take on their "Austerity" plans, which are simply built to further propagate the inequities and destroy the benefits of productivity and growing prosperity for the masses. It is a false choice.

The world and especially most western countries are more prosperous than ever before, but they want us to believe we are too poor to improve quality of life????? Bullshit, only under the systems they want, where they get to realize all the promises of modern progress to themselves!!

[clang1]

85. Look at Michigan

School districts are being sold there. Schools, the prisons, government services, infrastructure, everything is for sale.

[DCBob]

41. Yeah, I get your point and I agree.

Many choose to see only what they want to see to help prove their idiology.

[clang1]

46. +1 n/t

[newthinking]

64. No hack. Problem is *you* don't fully understand. It wasn't "austerity"

What they did was very different. See my other posts for why.

Or see this article for deeper analysis:

http://reason.com/archives/2011/10/27/iceland-loses-its-banks-finds

[hack89]

75. They raised taxes. Cut wages and pensions. Saw a large a huge decline in individual wealth.

and a huge jump in personal debt.

And borrowed billions. And applied to join the Euro.


Things are a little more complicated than you present.

[clang1]

28. Why European Austerity Fails

Why European Austerity Fails
Charles Kadlec, Contributor
I cover economic/political issues with liberty as my polar star.

http://www.forbes.com/sites/charleskadlec/2012/05/07/why-european-austerity-fails/

Voters in Greece and France on Sunday voted decisively against the austerity policies of their governments – and for good reason. European austerity has failed, producing higher unemployment while doing little to repair the fiscal imbalances it was supposed to fix.

The reason European austerity has failed is not because of the reductions in government spending, but because those spending cuts have been paired with tax increases. The Europeans are struggling to reduce government spending by less than 5% of GDP. But unlike the U.S., which paired extreme budget cuts with across-the-board reductions in personal income tax rates, the European austerity combines spending cuts with massive tax increases. The result is a toxic brew which shrinks both government and the private sector, producing recession, rising unemployment, and massive budget shortfalls.

The solution to Europe’s sovereign debt crisis is the policy mix that worked in the U.S. after World War II: monetary stability, reductions in government spending that shrink the size of government, and reductions in marginal tax rates which permit the private sector to expand.

----

Austerity fail: EU unemployment continues to rise: UPDATED
Saturday, May 5, 2012
http://middleclasspoliticaleconomist.blogspot.com/2012/05/austerity-fail-eu-unemployment.html


Overall, Eurozone and EU unemployment continue to worsen, although there were reductions in the UK and Ireland. However, both Britain and Ireland returned to recession, along with Belgium, Greece, Italy, the Netherlands, and Portugal.

The good news, for both Europe and the U.S., is that Europeans are beginning to wake up to the failure of austerity. The Dutch government has collapsed over its austerity measures, and it appears that Nicholas Sarkozy will go down to defeat for the same reason. As Krugman counterposes to these results, the Right in this country is keeping up a steady drumbeat for austerity It's important that we beat back such calls, or even millions more people will suffer needlessly when their policies increase unemployment.

---

[hack89]

30. Yet austerity worked in Iceland. Looks like Iceland is not a valid model for Greece. nt

[clang1]

33. Iceland shows eurozone how to fight crisis

Iceland shows eurozone how to fight crisis
Iceland's Prime Minister Johanna Sigurdardottir. (Reuters / Bob Strong)
http://rt.com/business/news/iceland-crisis-policy-rating-757/

Iceland shows eurozone how to fight crisis
'...country’s “unorthodox crisis policy response has succeeded."'


In 2008 Iceland faced the worst financial crisis in its history as three leading banks defaulted under the weight of huge foreign debt. As it became clear the default were inevitable Iceland’s government nationalized the banks, while foreign creditors were left holding the bag.

“A Major part of Iceland’s debt has been written off. That means the country has more chances to pay its debts. So Iceland’s bonds are more attractive to investors than those of Greece or Portugal”, commented Tamerlan Khassimikov, the head of BST Capital Management.


The country also received a $2.2 billion bailout from the IMF and carried out structural reforms which enabled Iceland to reduce its fiscal deficit. The devaluation of the Icelandic krona contributed to the country’s exports.


"...The Icelandic krona unlike the euro is supported by the country’s production."

But it wasn’t only effective crisis management that helped Iceland stay afloat, according to the expert. “Iceland is a disciplined country, it used not to spend much more than it has”, Mr Khassimikov said. “The fiscal deficit was formed during the crisis, because Iceland’s banks are a part of global banking. As for Greece, it became a victim of its own careless approach to finance”.


Analysts agree Iceland’s crisis approach is hardly applicable to the euro-zone countries as they can’t devalue the currency by themselves. But Iceland definitely shows a textbook example of a thrifty financial policy.
---------

[hack89]

35. "Structural reforms which enabled Iceland to reduce its fiscal deficit."

that is the fancy phrase for austerity.


Here is the problem in a nutshell:

“Iceland is a disciplined country, it used not to spend much more than it has”

vs

As for Greece, it became a victim of its own careless approach to finance”.

So Greece has to implement structural reforms to ensure they don't spend more than they have. Do you think they are willing to do that?

[clang1]

37. Heh heh thanks for letting me know that

I've said what I have to say in this thread. Thanks
PS I don't know yet.

[newthinking]

72. This we can agree on

They will have to make adjustments. But they should do it their own way and they will only have hope for a bright future if they detatch from Neo-Liberal economics and plan on at least eventually paying off the IMF and leaving behind their influence.

[newthinking]

65. No, Progressive Democracy and Nationalizing the banks worked

http://reason.com/archives/2011/10/27/iceland-loses-its-banks-finds

[hack89]

73. Along with pay and pension cuts, higher taxes

a huge drop in individual wealth and a large increase in personal debt.

Plus borrowing billions of dollars from the IMF.

[stockholmer]

45. +100 , this is ponzi austerity, as the banksters are made whole, the debt for their theft is then

dumped on the citizens, and the economies and social safety nets are further shredded. Then, less revenue is taken in by the governments, and the whole debt/borrowing cycle starts all over again.

Welcome to neofeudalism.



Foreign aid is a phenomenon whereby poor people in rich countries are taxed to support the life-styles of rich people in poor countries. - Lord Peter T. Bauer

---------------------------------------------------

Slouching Towards Neofeudalism

http://www.huffingtonpost.com/garrett-johnson/slouching-towards-neofeud_b_568972.html


The financial crisis that grips our nation's states and cities has a malicious source, and Governor Tim Pawlenty recently named that source: public school teachers.

"It used to be that public employees were underpaid and over-benefited. Now they are over-benefited and overpaid compared to their private-sector counterparts."

The school teacher, the policeman, the firefighter - these are now the faces of what is wrong with America today. It doesn't matter that studies by the Bureau of Labor Statistics say otherwise, America can no longer afford their overpaid, middle-class salaries. At least that is what the right-wing media is telling us. Tea party members also want to see a drastic pay cut for the same people who teach their children.

A familiar comment on the internet is, "I took a pay cut last year. Why shouldn't they?" This attitude goes beyond schadenfreude and goes straight to the crabs in a bucket mentality. Strangely enough this attitude of "if I can't have it, neither should you" only extends to working class people who live next door. For some reason none of the jealousy and malice is reserved for the people who actually broke the budgets of the states and cities, i.e. the people who deserve it.

If you really want to know why the cities and states are so broke, then you must first ask yourself where all the money went. Was the firefighter down the street from you buying vacation yachts for his tropical island? Probably not.However, the guys on Wall Street who sold your school district, county, and state governments] http://www.businessweek.com/magazine/content/09_48/b4157034230199.htm?chan=magazine+channel_top+stories complicated financial derivative products are buying yachts for their tropical islands. Maybe we should start there instead.

snip

[clang1]

51. Yep. n/t

[newthinking]

71. +100 - Thanks for trying to cut through the false propaganda so many seem to believe!

[may3rd]

36. How many more payments does the country with the 320k population have to make ?

Seem to be comparing apple to olives

what with it comes to numbers of unemployed and social programs required by such a small country the size of Greece

[clang1]

38. Well maybe not. -- Thank you. Re: apples to olives n/t

[hack89]

39. Many here point to Iceland as a model for what Greece should do.

they point to Iceland "letting the banks fail" while ignoring many of the other pertinent details.

I personally think that Iceland cannot be used as a model to fix the Greek crisis - at their roots they have fundamentally different causes.

[clang1]

40. Yep I feel the same. n/t

[bhikkhu]

50. Exactly - and Spain is different, Ireland is different, the US is a whole different story as well

I wouldn't pretend to have any idea of how to fix all the problems of the world's finances, but I am glad Iceland seems to have found a positive way forward. It is "within the system", and with the help of the IMF, which gives some confidence that solutions can be found.

What bothers me is the cookie-cutter approach, where the problems of every state are imagined to be the same as ours. That is very far from being the case. While I haven't the background to see a variety of solutions myself, I do know that the people who engineered some of the most egalitarian and beneficial governments around are working with all good intentions to solve them, as best as they can be solved...and I wish them all success.

[clang1]

52. Governments 1000 times better than our own at taking care of it's citizens n/t

[DFW]

55. Not bad for a country whose population is about as large as Des Moines n/t

[hack89]

56. Political and social unity made it easier for Iceland. nt

[DFW]

58. The people ARE pretty homogeneous, it's true

I only stayed there for a couple of days when I was there, but it is pretty obvious.

[roamer65]

84. The biggest thing that helped them are the capital controls.

It stops the speculative flow of "hot money". China does similar.

[progressivebydesign]

92. Amazing what happens when you dump your Trickle Down nonsense... n/t