Iceland may not have had many people – just 320,000 on an island a little smaller than Great Britain – but by the 21st century it had built itself into a banking powerhouse. In 2008, the house of cards came tumbling down when the financial crisis made its way from the United States, to Europe, and finally to the island that banking built.
Driven by the same speculation and risky lending that drove the United States economy, Iceland crashed hard. Relative to the size of its economy, Iceland’s financial crisis was the largest banking collapse in history. All three of its major, privately-owned banks failed. What’s remarkable about Iceland’s banking crash isn’t just how massive it was, but how quickly they rebounded since.
Unlike other countries who haven’t seemed to learn the lessons that the financial crisis forced upon them, Iceland’s position was “never again.” Frankly, Icelanders knew they couldn’t afford to let banks play dice with their entire country’s economy. Repeated over and over in the streets and in Iceland’s parliamentary house came the words “Let banks fail.” In 2008, while America was hastily putting together a bailout package for its largest banks, Iceland let theirs crash.
Far from being suicide, the gamble seems to have paid off.
Read More here:
http://iacknowledge.net/iceland-lets-banks-fail-now-2-unemployment-in-sight/
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