I'll answer any questions that you would be curious about local sentiment and coverage.
EDIT: Having finally gotten to a copy of the article I want to point out several factual statements in the article that I find a little bit challenging to agree with.
1. Iceland let the banks fail.
Not really. It was a restructuring. In the restructure a holding company handed all the assets over to a new corporate entity. All debts and obligations were honored.
2. Iceland avoided austerity
Many social programs were cut. Great cutdowns in the healthcare system, so much so it is on the verge of collapse now.
3. Geothermal is clean energy
Ask anyone from Reykjavík. Silver can no longer be kept without wrapping it in cloths, otherwise it goes dark in a day due to the hydrogen sulfide pollution. It's also not renewable. You can farm the area for about fifty years before it's too cold to extract and then it takes a millennia to recover.
4. Value of ISK/EUR
That may be the artificial value while capital controls are in effect. True value is way below that. I might cover the "snowhenge" problem later, it's a doozy.
5. Quoting the President on the banks.
You would have to know how much of a fluffer for the banks the president was for the banks and the oligarchs before the crash to know how stinky that sounds to an Icelander.
> Not really. It was a restructuring. In the restructure a holding company handed all the assets over to a new corporate entity. All debts and obligations were honored.
Iceland refused to bail out the banks. Doing so would have mathematically impossible. The banks failed to honour their financial obligations, and Iceland did not repay the depositors of said banks when the savings accounts were closed.
From the Executive Summary of the Report of the Special Investigation Commission (at http://www.rna.is/eldri-nefndir/addragandi-og-orsakir-falls-...):
> After the collapse of Lehman Brothers, the government’s takeover of Glitnir and the lowering of Glitnir’s credit rating, it was very unlikely that these collateralised loans would be refinanced. It was absolutely impossible for the Icelandic state to meet payments on the aforementioned claims. The government was not able to secure loans in the international finance markets. In the evening of 7 October 2008, the FME decided, on the basis of Emergency Act (Act No. 125/2008), that a special resolution committee take control of Glitnir.
> Shortly after the collapse of the banks in November 2008, an appraisal was carried out of the value of their assets. The results of the asset valuation showed 40% of the booked value at the time when the banks collapsed. The difference amounts to over ISK 7,000 billion
For the depositors, one can read about the lengthy considerations and ongoing Icesave dispute at https://en.wikipedia.org/wiki/Icesave_dispute
For what it is worth, I am a lawyer and recognized expert in sovereign insolvency, being the founder and an officer of a legal experts committee whose members include the counsel for Iceland's bondholders, the external counsel for Iceland for the crisis, the general counsel of the IMF and ECB and other central banks, among other experts. I am also friends with Gudrun Johnson, author of "Bringing down the Banking System", which I strongly encourage reading.
"Iceland refused to bail out the banks."
You also have to realize what sort of lending put the banks under. Using their influence in the banks they directed the loan officers to make out unsecured loans to their own companies. That was a big part of the banks all failing simultaneously.
To clarify, executives at Bank created a Holding Company. Bank lent Holding Company $100. Bank then sold Holding Company Bank stock for $100, thereby manufacturing $100 in "equity". This "equity" makes Bank's debt/equity, and other equity-based leverage ratios, look rosier than they are.
I recall a similar shit show going down around Karzai's cronies in Afghanistan.
Fraud wasn't the initial spark, but it was what turned the American 2008 housing market slump from a self contained bust into a global financial crisis.
The idea that fraud lead a US housing bubble to cause a real estate bubble in the UK and Spain, and a banking crisis in Iceland and Ireland is just not correct.
I'd dispute that. Often it was a smart and cynical decision by lenders to make bad loans, take the bonuses and commissions and leave the government and others to clean up the mess. If you were to pin the blame on one group I'd say it was mostly the governments fault for under regulating this stuff.
So yes, if Tesla sold a car full of explosives that was about to explode as soon as the passenger got in -- then indeed they should be prosecuted. Thankfully the technology industry typically does not act in such manner. Their "crime" is more over-enthusiasm and pushing the envelope of privacy violations.
See "Fabulous Fab": http://www.usatoday.com/story/money/business/2013/08/01/gold...
See Goldman Synthetic CDOs: http://www.businessinsider.com/a-timeline-of-goldmans-abacus...
It is if that bad business decision is the decision to commit fraud.
Because putting money in the bank is exactly like investing in speculative high-risk tech stocks.
Not 1999, but during the 2006-08 iffy loans period, Alayne Fleischmann went whistle blower on some of the fraudsters at JP Morgan. None went to prison (or I think lost their bonuses). JP Morgan gave $9bn of it's shareholders money to the US Govt as settlement instead.
On a different note, nobody bailed out the dot coms.
British depositors with banks such as Icesave were bailed out by the UK government. Apparently 85% has since been repaid from Iceland, but you maintain "All"?
Look at this site to get stories of what the banks are still getting away with: http://4closurefraud.org/
I am somewhat puzzled by this sentiment that it is good to imprison bankers. That is by no means an Iceland-only thing, you can see it elsewhere as well. But I find that scary. People should go to jail simply because someone hates their jobs, legal ones?
I can fully understand that bankers, like everyone else, should go to jail when they commit fraud, insider trading or similar crimes. I understand that is what was done in Iceland.
But the discourse is usually about just being a banker is enough to warrant someone being hanged or sent to jail, with the being banker itself being a serious crime. It's a silly rhetoric trick that makes me suspicious of these prosecutions.
Are there well publicized examples of US bankers who did crimes related to banking - not great harm but crimes - and were let off due to being high earners?
The example you mention above is nothing specific about bankers; it's a claim that a rich person gets off lightly because he can pay for the damages. In fact, related to this particular case, there is a claim that the banker was targeted by police because of his wealth, because other hit-and-run drivers have gotten off completely.
Said diligence manager got off. JP Morgan paid $9bn to settle and hush it up.