Let Banks Fail Is Iceland Mantra as 2% Joblessness in Sight [View all]

[BelgianMadCow]

Last edited Thu Feb 6, 2014, 07:27 AM - Edit history (1)

Iceland let its banks fail in 2008 because they proved too big to save.

Now, the island is finding crisis-management decisions made half a decade ago have put it on a trajectory that’s turned 2 percent unemployment into a realistic goal.

While the euro area grapples with record joblessness, led by more than 25 percent in Greece and Spain, only about 4 percent of Iceland’s labor force is without work. Prime MinisterSigmundur D. Gunnlaugsson says even that’s too high.

To support households, Gunnlaugsson in November unveiled a plan to provide as much as 7 percent of gross domestic product in mortgage debt relief. The government intends to finance the plan, which the OECD has criticized as being too blunt, partly by raising taxes on banks.

More at Bloomberg

On edit: why the question is relevant:

Heiner Flassbeck is one of the few economists to get into positions of influence despite being firmly opposed to the prevailing doctrine of neoliberalism. He’s also direct and articulate. Among other things. Fleassbeck has been a professor of economics at the University of Hamburg, a Vice Minister at the German Ministry of Finance, and a director at the United Nations Conference on Trade and Developmentt. In this Real News Network interview, he discusses why the danger of a global recession is acute and what remedies would be viable.

&feature=player_embedded