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Wednesday, August 24, 2011

I love Iceland. Lessons to face the crisis

I suggest you to read this great article by Deena Stryker, that I was lucky to find at the interesting website Daily Kos. It explains briefly how a country, Iceland, can collapse, economically speaking, and go back stronger while opposing to follow the unique's receipt the rest of the European countries (Greece, Spain, Italy, Portugal on top) seems to be forced to take in the "sacred name" of the market. Is a bit long, but worth every second of your time, so please read it. This are the opening paragraphs:
Iceland's On-going Revolution

As one European country after another fails or risks failing, imperiling the Euro, with repercussions for the entire world, the last thing the powers that be want is for Iceland to become an example. Here's why:

Five years of a pure neo-liberal regime had made Iceland, (population 320 thousand, no army), one of the richest countries in the world. In 2003 all the country’s banks were privatized, and in an effort to attract foreign investors, they offered on-line banking whose minimal costs allowed them to offer relatively high rates of return. The accounts, called IceSave, attracted many English and Dutch small investors. But as investments grew, so did the banks’ foreign debt. In 2003 Iceland’s debt was equal to 200 times its GNP, but in 2007, it was 900 percent. The 2008 world financial crisis was the coup de grace. The three main Icelandic banks, Landbanki, Kapthing and Glitnir, went belly up and were nationalized, while the Kroner lost 85% of its value with respect to the Euro. At the end of the year Iceland declared bankruptcy.

Contrary to what could be expected, the crisis resulted in Icelanders recovering their sovereign rights, through a process of direct participatory democracy that eventually led to a new Constitution. But only after much pain.

Full article here

What an enormous lesson. To overcome the crisis, why don't become more democratic, inclusive and active, instead of letting the ones that created the problem start again? It's a bit embarrassing to read the article when PP and PSOE, the two biggest parties in Spain, have decided to reform the constitution together, in order to satisfy the markets, and without having a referendum. Let's learn something from Iceland, please!

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