Tuesday, November 18, 2008

A Little Country with a Popuation less than Sedgwick County Is at the Center of the Financial Crisis

Robert Jackson writes a "Letter From Iceland" in the Financial Times, "Think of Ireland. Rotate it 90 degrees clockwise, make it a third bigger and hang it like a pendant from the Arctic Circle. Crack open the earth’s crust below to release limitless supplies of geothermal steam, then fill its territorial waters, all 200 miles of them, with an abundance of cod. [read on]"

The Wall Street Journal shows us protests in Iceland:

6 comments:

Rafe A. Schaefer said...

I thought this article about Iceland was fascinating. The term "financial crisis" certainly wouldn't be considered hyperbole when applied to the events in Iceland. Many individuals may point to these events in Iceland as a sign that "unregulated" banks don't have the prowess needed to make wise decisions and protect their customers. As a proponent of a truly free market, however, I have a response to any that may espouse that notion.

The Icelandic crisis is not a problem that resulted from the lack of bank regulation, per se. Rather, the lack of regulation of governmnet interaction with the banking sector could be chalked up as the cause. As Robert Jackson wrote, "the whole system is run by a small group of men who go back a long way and, in the words of one businessman, 'sit in the same hot tub three times a week.'" The Icelandic problem wasn't a problem of the free market, but rather a problem of an effectively government subsidized banking system. Fannie and Freddy, anyone?

Alex Moseley said...

Interesting. I agree with Rafe...the government did not interact as needed to prevent the banks from expanding more rapidly than the economy could handle. The prime minister seems too nonchalant on the issue and expects the troubles to just dissipate over time.

Regardless of the lack of government regulation, the banks still have to be held accountable for the poor decisions made, forcing the country into a definite crisis.

Alex Moseley said...

Interesting. I agree with Rafe...the government did not interact as needed to prevent the banks from expanding more rapidly than the economy could handle. The prime minister seems too nonchalant on the issue and expects the troubles to just dissipate over time.

Regardless of the lack of government regulation, the banks still have to be held accountable for the poor decisions made, forcing the country into a definite crisis.

Gentz said...

This just amazes me that Iceland; such a small country in terms of population could have so many people rioting in their streets. If we acted the same way here in the US, I would be scared to take a political seat. The equivalent would be Millions of people rioting in Washington D.C. I am sure that politicians would look to work with both sides in order to save their own skins. I am sure most people would act more urgent if they had a lynch mob outside their workplace demanding that they fix a problem every time that they messed something up. I am sure with more accountability in this country we would see things done different in our government… Just something to think about.

Brett Warkentine said...

I agree with Gentz. That a small populated place like Iceland could be in such a big credit crisis. I guess this just show in reality of no country big or small can overcome the credit crunch. It doesn’t matter if you have millions of people or just a couple hundred thousand people; the market of today’s society is in major help. I am more shocked in the fact that there was not that much intervene during the riots. Here in America if we were to riot in Washing D.C. it wouldn’t be much longer than a couple of hours before we a tear gassed or even worse killed.

Kevin T said...

It is crazy to think of a country actually rioting over certain economic events since we never see any of this in our own country. We are used to protesting or public dislike for something but never the creation of rioting to gain power of a situation. I know people are upset and want changes but the government can only do so much. The economy of the world is in a downfall and the Icelandic people should realize that.