Iceland Recovering Fastest in Europe After Jailing Bankers Instead of Bailing them Out

June 11, 2015   |   Claire Bernish

Claire Bernish
June 11, 2015

(ANTIMEDIA) After Iceland suffered a heavy hit in the 2008-2009 financial crisis, which famously resulted in convictions and jail terms for a number of top banking executives, the IMF now says the country has managed to achieve economic recovery—“without compromising its welfare model,” which includes universal healthcare and education. In fact, Iceland is on track to become the first European country that suffered in the financial meltdown to “surpass its pre-crisis peak of economic output”—essentially proving to the U.S. that bailing out “too big to fail” banks wasn’t the way to go.

Iceland is beautifully, yet unfortunately, unique in how it chose to handle the disaster. It simply let the banks fail, which resulted in defaults totaling $85 billion—lending ample justification for the prosecution and conviction of bank executives for various fraud-related charges. The decision seemed shocking at the time, but the gamble has obviously paid off. Choosing a different route, the U.S. bailed out the banks and let executives off the hook by levying fines that ultimately ended up being paid by the corporations—meaning the executives ostensibly responsible for the mess got off scot-free.

“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 police officer from a small fishing village, ended up taking the role of special prosecutor after being urged to do so when the first announcement to fill the position drew no applicants. The Icelandic Parliament even aided the prosecution’s effort by loosening secrecy laws to allow investigation without the hindrance of requiring court orders.

Six of the seven convictions that ended up in Iceland’s Supreme Court have been upheld, and five cases were scheduled for the top court as of February. An additional fourteen cases appear likely to be prosecuted. By contrast, the animosity Americans felt toward their largest financial institutions after the bailout has grown bitter. After the banks pled guilty in May for manipulating global currency and interest rates, the court imposed a paltry fine of $5.7 billion—which won’t even go to the people most affected by the fraud. Iceland’s successful prosecutions and economic recovery remain the subject of envy for Americans.

Shortly, however, Iceland’s economic health will be put to the test.

Strict capital controls that were applied when banks were circling the drain six years ago will now be loosened, allowing foreign investors—whose assets have essentially been frozen since then—to take their business elsewhere. To prevent a possible repeat crisis, the finance minister announced a 39% tax for anyone choosing to do so. “The danger is capital flight and a consequent fall in the value of the krona,” explained University of Iceland economics professor, 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 many are nervous, there is still cautionary optimism since Iceland has certainly weathered the storm before.


This article (Iceland’s Economy Recovering Fastest in Europe After Jailing Bankers Instead of Bailouts) is free and open source. You have permission to republish this article under a Creative Commons license with attribution to the author and TheAntiMedia.org. Tune in! The Anti-Media radio show airs Monday through Friday @ 11pm Eastern/8pm Pacific. Image credit: Javier Soriano. Help us fix our typos: edits@theantimedia.org.

Author: Claire Bernish

Claire Bernish joined Anti-Media as an independent journalist in May of 2015. Her topics of interest include thwarting war propaganda through education, the refugee crisis & related issues, 1st Amendment concerns, ending police brutality, and general government & corporate accountability. Born in North Carolina, she now lives in Cincinnati, Ohio.

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26 Comments

  1. So do I, Nanette. Greece sorely needs to have a serious talk with Iceland and learn from that island nation's actions against the banksters. If Greece follows Iceland's lead in arresting the banksters, it will find its economy recovering at a very fast clip.

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  2. Interesting article; however, I think that this can possibly be a myth. Note: I don't blame the writer of this article. I myself believed at first that the story about Iceland wich reportedly had arrest the bankers, was true. So, I believe, Miss. Claire Bernish is a sincere truthful writer! What seemingly appeared the truth at first, can later on to be a myth! Look at studiotendra.com/2012/12/29/what-is-actually-going-on-in-iceland/ However, if I am wrong, please, correct me!

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  3. Has there ever been a fiat currence that was not designed to fail or did not eventually fail?
    If it is a race to the bottom by all fiat currency nations ther must be some strategy for 'winning' personally and nationally.
    Iceland has won it seems. But not everyone in Iceland.
    It appears that when reconned by lot that most of the world'd in-goverment scoundrels are worse than ours – The USA may be the last fiat currencey standing. There may be great profit for the USA in that if handled right.

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  4. Well, some of it is true but this article is obviously written by a leftist, and he/she absolutely hates the right-wind parties and our dear president. It´s true that we didn´t tell the IMF to go jump, and it´s true that we couldn´t have bailed out the banks even if we wanted to, but I would take the rest with a grain of salt. About Icesave: "•The voters disagree and only get a say because the president is keen on making everybody forget that he is a bankster collaborator who was in the pocket of the banks right up to the crash." This is utter bullshit. The leftists truly deeply hate the president. He doesn´t do what they want him to do, and they can never mentioned his great decision regarding the Icesave, without adding some slander.
    We did arrest the bankers, and they are in or going to jail. Doesn´t mean everything is perfect, but don´t depend on info from people like this to find out more.

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  5. Well, some of it is true but this article is obviously written by a leftist, and he/she absolutely hates the right-wind parties and our dear president. It´s true that we didn´t tell the IMF to go jump, and it´s true that we couldn´t have bailed out the banks even if we wanted to, but I would take the rest with a grain of salt. About Icesave: "•The voters disagree and only get a say because the president is keen on making everybody forget that he is a bankster collaborator who was in the pocket of the banks right up to the crash." This is utter bullshit. The leftists truly deeply hate the president. He doesn´t do what they want him to do, and they can never mentioned his great decision regarding the Icesave, without adding some slander.
    We did arrest the bankers, and they are in or going to jail. Doesn´t mean everything is perfect, but don´t depend on info from people like this to find out more.

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  6. Russell Patton Davis You can't just go and say the issue is 'fiat currencies'… it really makes no difference. Is it a specially printed paper that is the 'commodity', or is it processed gold? Who currently controls all the printed commodity (money), the banks… who controls the vast majority of the gold / silver / platinum / titanium / diamond / ruby commodities.. also the banks (and those in positions of wealth and power). The only real thing that will change the 'way of the world' would be global anarchy, and new french revolution on a global scale, deposing those in power and shuffling everything up. But frankly, I'm pretty happy where I am, so I'm not interest in this… and I'm glad those people that are interested in such a shake up are already generally too unorganised to actually make it happen.

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  7. Russell Patton Davis You can't just go and say the issue is 'fiat currencies'… it really makes no difference. Is it a specially printed paper that is the 'commodity', or is it processed gold? Who currently controls all the printed commodity (money), the banks… who controls the vast majority of the gold / silver / platinum / titanium / diamond / ruby commodities.. also the banks (and those in positions of wealth and power). The only real thing that will change the 'way of the world' would be global anarchy, and new french revolution on a global scale, deposing those in power and shuffling everything up. But frankly, I'm pretty happy where I am, so I'm not interest in this… and I'm glad those people that are interested in such a shake up are already generally too unorganised to actually make it happen.

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  8. That's great news to hear that Iceland took these steps to jail the bankers, we need to see this more, we the people need to also need to step in and say: "enough is enough"! Things will continue to get worse only if we allow it, think of it: "what can we do to stop it?

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  9. The world is ruined by the banks in the name of development n economic growth. They promote n exercise greed without limits.

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  10. The world is ruined by the banks in the name of development n economic growth. They promote n exercise greed without limits.

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  11. I read somewhere else that the debt for the default of the banks just shifted to thew government and they aren't allowing foreign investors to take any money fromt he economy. In fact the country still owes 221% of its GDP as debt. They just pay token amounts but aren't addressing the long term problem of national debt.

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  12. "Universal healthcare"? I don't think this is accurate. People have to pay to see the doctor here, and I know young people who have skipped seeing the doctor because of the cost.

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  13. The only thing that would work better than jailing bankers is executing them.

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  14. Sindri Thorsteinsson Dear Sindri: Thank you very much for your correction! I have discovered that besides the truth, there is a lot of dis/misinformation on the internet. Again, thank you for your response!

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  15. Money is based on faith, just like religion. If people do not have faith, it is no more than magnetic domains on a series of hard drives and backup tapes.

    What happens when the heretics throw defrocked financial clergy on their asses?

    I guess we will see. It is, however, time for the .1% to remember the days of the French Revolution. People will put up with a lot – to a point, and nobody knows where that point is.

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  16. To simple! Make them suffer first!
    I recommend a blood eagle! But drawn an quartered will work too

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