After Iceland suffered a heavy hit in the 2008-2009 financial crisis, which notoriously led to convictions and prison terms for a number of leading banking executives, the IMF now states the nation has managed to accomplish economic healing--" without compromising its well-being model," which includes universal health care and education. In truth, Iceland is on track to end up being the very first European country that suffered in the financial disaster to surpass its pre-crisis peak of economic output”, basically showing to the U.S. that bailing out "too big to fail" banks wasn't the way to go.
Iceland is beautifully, yet sadly, unique in how it chose to deal with the catastrophe. It merely let the banks fail, which led to defaults completing $85 billion, lending adequate reason for the prosecution and conviction of bank executives for numerous fraud-related charges. The decision appeared shocking at the time, however the gamble has obviously paid off. Selecting a different route, the U.S. bailed out the banks and let executives off the hook by levying fines that ultimately wound up being paid by the corporations-- indicating the executives ostensibly responsible for the mess got off without penalty.
“Why should we have a part of our society that is not being policed or without responsibility?” special prosecutor Olafur Hauksson said after Iceland’s Supreme Court upheld the convictions for three bankers—and sentenced them to between four and five and a half years each. “It is dangerous that someone is too big to investigate—it gives a sense there is a safe haven.”
Hauksson, a policeman from a little fishing town, wound up taking the role of unique prosecutor after being prompted to do so when the first statement to fill the position drew no candidates. The Icelandic Parliament even assisted the prosecution's effort by loosening secrecy laws to permit examination without the limitation of needing court orders.
6 of the 7 convictions that ended up in Iceland's Supreme Court have been maintained, and 5 cases were set up for the top court since February. An added fourteen cases appear likely to be prosecuted. By contrast, the animosity Americans felt towards their biggest banks after the bailout has actually grown bitter. After the banks pled guilty in Might for manipulating international currency and interest rates, the court enforced a modest fine of $5.7 billion-- which will not even go to the people most impacted by the scams. Iceland's effective prosecutions and financial recovery remain the subject of envy for Americans.
Shortly, nevertheless, Iceland's economic health will be put to the test.
Rigorous capital controls that were applied when banks were circling the drain six years earlier will now be loosened up, allowing foreign financiers, whose possessions have essentially been frozen since then to take their business somewhere else. To prevent a possible repeat crisis, the financing minister announced a 39% tax for anyone deciding to do so. The danger is capital flight and a consequent fall in the value of the krona,” described University of Iceland economics teacher, Thorolfur Matthiasson. "That would be tantamount to October 2008, bringing back bad memories for ordinary people and possibly making most businesses unsustainable due to balance-sheet problems.”
Though numerous are nervous, there is still cautionary optimism considering that Iceland has certainly weathered the storm prior to.
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