Writing for the Sunday Independent, Dan White explains why Ireland should have taken more cues from Iceland in back in 2008 regarding economic and financial choices.
Back in fall 2008, many considered Ireland and Iceland to be in very similar situations. “The joke in financial circles was that the only difference between Ireland and Iceland was a letter and six months,” writes White.
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“Remember when the Icelandics did the unthinkable and, unlike Ireland, told bank creditors to take a hike?,” writes White. “They also imposed capital controls and allowed the value of their currency to fall – the Icelandic krona has lost almost half of its value against the euro over the past five years.”
White explains how many people thought Iceland’s approach was “crazy.” Turns out it was just crazy enough to work.
White then goes on to recall how despite Ireland repaying “over €70bn of bank bonds at par,” markets have yet to regain confidence in the Emerald Isle. He describes the “experts” plans of actions as “catastrophically and utterly wrong.”
Ireland’s approach to fixing the situation has done nothing but hinder the economy, White points out, using the shrinking of the domestic economy as an example. Further, the domestic economy is only predicted to grow by 1.4 per cent in 2012 and 0.9 per cent next year. Other forecasters are taking a far more pessimistic view.
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Iceland, however, is not in the same boat. Economic growth is expected to be 3.1 per cent this year and 2.2 per cent in 2013. Perhaps more importantly, Iceland has managed to retain the trust of international markets, very much unlike Ireland.
“What these investors see is that,” writes White, “by burning the bank bondholders rather than taking these debts on to the national balance sheet, the Icelandic sovereign is in a far stronger position to repay any future debts.”
Read More: A budget of a thousand cuts is the latest austerity measure for the Irish
By being “the good boys,” Ireland wound up being bounced into the EU/IMF bailout in 2010 and are now “still stuck with the banks' legacy debts and, a few carefully choreographed fund raisings by the NTMA notwithstanding, the State remains largely reliant on official lenders to fund its activities.”
Iceland is now preparing to re-enter the foreign markets, essentially getting the last laugh on Ireland.
“...by the end of 2013, there is no way the Irish sovereign can repay existing borrowings let alone any new loans it may seek to raise.”
“Maybe,” concludes White, “instead of being the good boys it's time we [Ireland] followed the Icelandic example and indulged in some Viking-style plunder and pillage.”
22 Comments
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Switch to the desktop site to post a comment.casualMBA | Dec 20, 2012, 12:36 AM EST
Some would have Ireland think cultural integrity, and collateral, are passe.
curtisjohnson | Dec 19, 2012, 09:49 PM EST
" Bottom line here is that the Irish in Ireland don't mind immigrants that are white but others not. Ireland is a country made up of people from other countries from day one " What on earth are you trying to say - genetics show the Irish, Welsh and Basque to be among the most indigenous and homogenous Europeans. Regarding "white" immigrants, I thin there have been a few problems extending over a millenium now.
anglo-norman | Dec 19, 2012, 04:09 PM EST
Bottom line here is that the Irish in Ireland don't mind immigrants that are white but others not. Ireland is a country made up of people from other countries from day one.
bobby | Dec 19, 2012, 08:05 AM EST
the immigrants that live their. All the Africans, Asians, caribbeans. No wonder you are so angry and full of hatred, you bitter little thing.
bobby | Dec 19, 2012, 08:01 AM EST
Who are you kidding Woundedknee have a read of all your comments you leave here. You are so angry with alot of things, especially immigrants. Being an immigrant yourself, what a hypocrite you are. You speak alot of rubbish over and over and sound extremely Thick. How do you survive in America with all
WoundedKnee | Dec 19, 2012, 03:01 AM EST
bobby: Better to be angry (which I'm not) than to be dumb (which you are). I can promise you that in 2013 I'll redouble my efforts to articulate the unheard views of that large majority of Irish people who say NO to foreign colonization and globalization.
sirpeter | Dec 18, 2012, 07:11 PM EST
Georgy boy just stating economic facts..So Georgy were you in Dublin for the swearing in ceremony of our new Irish citizens?Or are you still wearing your pointy head?
merefalow | Dec 18, 2012, 06:23 PM EST
its what i said and have been saying,the only way is tell them,the rip off banks to get stuffed,what they going to do send the bailifs in,then you print your own money,the state is the bank,no private ripping of intrest rate setting banksters. do it.
bobby | Dec 18, 2012, 04:43 PM EST
Anglo a Reality check and some Counselling will do you some good. It cannot be a happy life you live. So much hatred and Bitterness. It's not healthy for your little brain. Same goes for Woundedknee. I wish you both well.
anglo-norman | Dec 18, 2012, 04:00 PM EST
bobby- The Truth shall set you free son.
bobby | Dec 18, 2012, 03:36 PM EST
Woundedknee & Anglo-mormon you would make a lovely couple, full of hatred both bitter and miserable things. Great match....
WoundedKnee | Dec 18, 2012, 02:06 PM EST
Sirpeter is back, I see. Still as spineless as ever, still obsessed with defending the corrupt and dumb Irish politicians.
sirpeter | Dec 18, 2012, 10:50 AM EST
"The Icelandic krona has lost almost half of its value" Great for exports..Not so good for imports..At least your average Icelander can just about afford to buy fish.Fact is a weak currency is great for an economy..But a disaster for individuals.I think Dan White left out that part.He also didn't say that the price of petrol has doubled in the last five years.If that happened in the U.S.A. there would be revolution.Defaulting on debt is always a bad idea, especially if you are part of a club/EU.
angrypaddy | Dec 18, 2012, 12:47 AM EST
What would you expect from our expert's advice a bunch of self appointed A#$ H@#$% LOL Paddy Last !st in the Goodie two shoes Class
darragh S | Dec 17, 2012, 11:48 PM EST
Pigs Arse.
casualMBA | Dec 17, 2012, 11:21 PM EST
Could Kerry Gold serve for sovereign collateral?
curtisjohnson | Dec 17, 2012, 08:57 PM EST
"'What these investors see is that,” writes White, “by burning the bank bondholders rather than taking these debts on to the national balance sheet, the Icelandic sovereign is in a far stronger position to repay any future debts.'" Exactly what I and other sensible posters have been expressing throughout the "crisis." Ireland's self defeating actions demonstrate the toxic influence of the anglo-sphere over the Dublin establishment.
KatieMurphy | Dec 17, 2012, 04:23 PM EST
I've also went to Iceland, primarily to celibrate their passing marriage equality and giving full respect to their LGBT folks. wonderful country, about 90,000 of the 220000 in Reykjavik come out to view the pride celebration...........And according to what I read they are the best educated people in Europe and fortunately the catholic church has almost zero presence there.... I wqish I could move there but there are 3 adult children and 3 grandchildren here and what I spent on their education doest allow two homes - the winters are not fun there, but the summers eg mid august 55 F early AM 70 to 75 in the PM. I guess we cant have everything.
WoundedKnee | Dec 17, 2012, 12:51 PM EST
I've been in Iceland. It's a very homogenous country ethnically. Little or no Mass Immigration. Compare that with the ethnic cacophony of Ireland, where more than 100 nationalities compete for lebensraum. A lesson for the dopey Irish ruling class, but one they won't take.
FastEddy | Dec 17, 2012, 11:52 AM EST
All inflation is caused by government. Government prints the money and government can too easily print too much. Iceland opted out of taking most of the EU/IMF bailouts and has all but eliminated income taxes of its citizens ... One might also note that Iceland owns more Gold than does Ireland ... go figure.
bobby | Dec 17, 2012, 11:52 AM EST
Ireland is a member of the European Union, Iceland is not, Germany would never allow Ireland to default, banks all across Europe would collapse.
Portia777 | Dec 17, 2012, 08:37 AM EST
by the end of 2013, there is no way the Irish sovereign can repay existing borrowings let alone any new loans it may seek to raise.” That was the whole idea- auto genocide once again for the wee Irish and loss of sovereignty. That is what the Queen was doing in Eire at Cashel, while everyone thought it was great. Oh it was great all right. Only those with eyes saw what was actually unfolding behind the veil of illusion. "Fool me once, shame on you, fool me twice shame on me"