Iceland to Cyprus: Make the rescue more equitable and watch out for inflation

[pampango]

Iceland to Cyprus: 'People should not pay for speculators'

One big difference between Cyprus and Iceland is that the Mediterranean island - as part of the eurozone - cannot devalue its currency as the Nordic island did. "Our recovery (Iceland's) is a typical case based on currency devaluation. Then the exports get more competitive on fish or aluminium sold abroad, also services and tourism got a boost as prices dropped in Iceland," the former spokesman said.

"But we can't forget who's paying for all that - it is the citizens in Iceland, because inflation doubled while salaries stayed the same. We don't pay with high unemployment, but with lower salaries," Omarsson added.

"I would not recommend Cyprus to leave the euro now, even you can wonder in hindsight if it was reasonable to join. Rather, get the capital controls lifted so domestic payments can work again properly, sit down and figure out what to do to shift the burden from locals who lost a lot in a very unfair manner to a more equitable solution," Magnusson said.

"It will be fascinating to see what comes out of the Offshore leaks," Magnusson said, in reference to a trove of leaked names of individuals and banks with offshore accounts obtained by the International Consortium for Investigative Journalism. "We can only hope this leads to a reduction in these activities, which are no benefit to society. It would be better for these tax havens to find other business models that are less damaging to the countries where all these tax revenues are fleeing from," he said.

http://euobserver.com/economic/119718

[dipsydoodle]

1. They did actually suffer higher unemployment too.

A lot of all ages went back to college rather than just sit at home.