Iceland let their banks default. Every other country on both sides of the Atlantic bailed their banks out. The people are on the hook for trillions of dollars on both sides of the Atlantic and their economies are still in the dumps. Iceland on the other hand is on the way to recovery and the tax payers do not owe anything. This makes perfect sense from the Austrian perspective. Markets need to clear out and reach a bottom before a recovery can happen. Massive bailouts prevent this. Bailouts “keep the boom going”. Not only have the bailouts in the U.S. and Europe not helped the man in the street, they have guaranteed a much larger crash in the future. The U.S. and Europe are still kicking the can down the road while Iceland is on its way to recovery.
During the next financial crisis, Americans need to look toward Iceland and take note of what they did. In the interview posted below, the Prime-minister of Iceland explains why he did not bailout the banks and instead left it up to the people in a popular vote. This is the exact opposite of what American politicians did in 2008. When American politicians were receiving phone calls that were 10 to 1 against bailing out the banks, the American congressman sided with the big Wall Street banks instead. It turns out that Icelandic politicians have backbones and will stand up against the financial interests in their country in order to protect the people. American politicians instead stand up for the corrupt government/Wall Street alliance at the great expense of the American people.
Here is the interview. The relevant info starts at about 9 minutes.