Anonymous justinian 1w

i feel like we were on the right course in the 90s until the glass steagall act was repealed. we had the best example of pure free markets in iceland.

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Anonymous #2 1w

Maybe I’ll dive down that Wikipedia rabbit hole again tn

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Anonymous #2 1w

we are talking about 2008. in the early 2000s, iceland severely deregulated their economy. within months, foreign investors swarmed the country which pushed up the value of the currency. icelandic banks invested into risky assets that no bank would touch, so they offered the highest yields, only further enticing investors. there were no real financial laws, so it only proliferated. iceland’s trade deficit soared to 20% for 3 years. on the surface, everything looked ok.

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Anonymous OP 1w

So whats the answer? Neoliberalism with guardrails?

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Anonymous OP 1w

I mean at least they sent people to jail over it 😭 the US only jailed 1 person over it 😭

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Anonymous #2 1w

under the surface, there were SIGNIFICANT flaws in the system. the icelandic economy was running red hot with an inflation rate of 7% and 6% for 06 and 07. the central bank hiked interest rates which only further increased banking yields and the value of the krona. when the american system broke on sept 15, 2008, foreign investors rushed to pull their money out of iceland. icelandic banks failed after their investments defaulted. banks hemorrhaged money, so the government had to bail them out.

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Anonymous OP 1w

Interesting though, I didn’t realize foreign investors played a role in that

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Anonymous OP 1w

Is this separate from Icesave?

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Anonymous #2 1w

within hours, people started panic buying and ran on the bank with fears that the value of the krona would continue to fall. the icelandic government had no clear leadership during the crisis. no one ever thought that the system would break, so when it catastrophically blew up, the government was in crisis. they had traditional remedies like freeze withdrawals under foreign currency and buying the banks, but the icelandic government collapsed within months due to public anger over the situation.

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Anonymous #2 1w

this was icesave

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Anonymous OP 1w

Ahaaa ok. This explains it better than Wikipedia though, so thank you

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Anonymous #2 1w

GDP sank 8%, only helped by the decline in the trade deficit. the government deficit stood at -12% in 2008, and debt to GDP soared to 136% in 2011. also, inflation rose to 12% for 08 and 09, only exacerbating the crisis.

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Anonymous #2 1w

i also got the asian financial crisis and the chinese debt crisis

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Anonymous OP 1w

Wait so did the tourism boom (one of my favorite countries imo) essentially save their ass? Between this and the Eyjafallajökull eruption?

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Anonymous #2 1w

the tourism boom did save their ass. once the traditional jobs were gone during the tiger years, tourism stepped in to fill the gap and provide much needed foreign currency.

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Anonymous #2 1w

nice!

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Anonymous justinian 1w

i meant that iceland was the worst example. look at singapore for the best example of free market neoliberalism. they have incredibly free markets but with guard rails.

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Anonymous OP 1w

How did the economic crisis affect Iceland’s energy production?

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