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Iceland's Crash and Recovery
Transcript of Iceland's Crash and Recovery
Crash and Recovery January 2000 - November 2012 From Deregulation to Crash 2001 2008 3 Big Banks accumulated $50+ Billion
in debt Deregulation by Privatizing the Banking Sector Domestic banks expanded aggressively in foreign markets; consumers and businesses
borrowed heavily in foreign currencies. The foreign exposure of Icelandic banks, whose loans and other assets totaled more than 10 times the country's GDP, became unsustainable. Iceland's three largest banks collapsed in late 2008 Iceland chooses to let the Banks fail Bail out the Banks Let Banks Fail A B $10 Billion in loans Works Cited https://www.cia.gov/library/publications/the-world-factbook/geos/ic.html http://www.photius.com/rankings/economy/gdp_per_capita_2012_0.html http://topics.nytimes.com/top/news/international/countriesandterritories/iceland/index.html http://www.reuters.com/article/2012/06/12/us-iceland-idUSBRE85B12O20120612 http://www.guardian.co.uk/business/2010/dec/07/iceland-exits-recession-third-quarter http://www.bloomberg.com/news/2012-09-26/is-remedy-for-next-crisis-buried-in-iceland-view-correct-.html http://www.newstatesman.com/blogs/gdp/2012/04/we-can-learn-icelands-crash-%E2%80%93-and-their-recovery http://news.bbc.co.uk/2/hi/business/7658908.stm Results Stabilize Icelandic currency and financial sector, and back government guarantees for foreign deposits in Icelandic banks. 3 new banks were established to take over the domestic assets of the collapsed banks. Two of them have foreign majority ownership, while the State holds a majority of the shares of the third. IMF + other countries give Iceland Iceland's currency has fallen by around a quarter, helping its exports. In 2009, Iceland's president Olafur R Grímsson said: "The difference is that in Iceland we allowed the banks to fail. These were private banks and we didn't pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks." Capital Controls initiated Citizen Loan Forgiveness GDP per capita ~$38k, higher than Germany, UK, and France Raised Taxes and cut deductions for rich