Comments on: Iceland recovers from its financial delusions

By: David Flint

David Flint — Tue, 10 Jul 2012 08:34:57 +0000

I’m baffled that you describe “keep control of your own currency, devalue, impose capital controls, abandon your own banks and bolster your welfare state” as a a heterodox response to the crisis. As a non-economist it sounds like commonsense. And it’s clearly what Greece needs so it can go back to being a cheap holiday destination. Greece could have that if it left the eurozone.

But perhaps you have to be an economist to know why the commonsense approach is heterodox?

By: Eric_A_Blair

Eric_A_Blair — Sat, 07 Jul 2012 14:25:10 +0000

Surely having let their banks collapse Iceland has lost a big chunk of its economy that is not going to come back any time soon. Perhaps the real difference between Iceland and elsewhere is that while Icelanders might be content to return to fishing the rest of us are quite keen to get our lost income back.

By: martin english

martin english — Sat, 07 Jul 2012 07:06:00 +0000

“Is Iceland really relevant? … As a model, surely not. Iceland is unique”

The situation that Iceland, the nation-state, found itself in may have been unique, but the environment (and the laws of that environment) were not, are not, unique. The mechanics, for want of a better word, of economics are pretty well fixed; the only difference is that different ecomomies try to use them differently (or saying they are using them differently) to each other.

The major reason why Iceland recovered so well (i believe) is that sick economies need different economic policies from healthy policies; Countries like the PIGS have limited ability to follow the appropriate policies because many of the automatic levers and incentives (like exchange rates) are out of their reach.

thanks