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Comment by driverdan | Hacker News Reader

> No Executive anywhere on the planet has yet to do prison time for any action, decision or behavior relating to the largest manufactured Financial Crisis since 1929.

Wrong! Iceland imprisoned multiple executives, among others.

http://www.icenews.is/2011/04/07/first-iceland-bank-crash-pr...

http://www.bloomberg.com/news/2012-06-07/iceland-court-sente...

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Iceland seems like the only country the banks don't rule.

yeah, many people took out loans and couldn't pay them back. Iceland's answer? The banks are evil and those people shouldn't have to pay them back anyway.

It doesn't really teach responsibility.

Not quite. These people, perhaps foolishly, took out loans denominated in Euro. When these banks imploded, they took a huge chunk of the Icelandic economy with them, and the Krona was heavily devalued.

Yes, people should have been more wary of taking out foreign currency-denominated loans. These banks were the reason they could never pay the loans off, though.

Not quite. "Iceland's households also racked up debts amounting to 213% of disposable income. Britons and Americans owed just 169% and 140% of disposable income respectively—figures that make them seem almost sober by comparison. "

http://www.economist.com/node/12382011?story_id=12382011

So while there were many factors involved in why these banks failed, the citizens of Iceland played a key role.

Usury that is enforced by the state is (or ought to be) a privilege, not an inalienable right. Both sides share responsibility.

Well, of course the citizens played a key role. But it doesn't mean they weren't fleeced or foolishly lent to by sleazy, greedy bankers just like everyone else in the Western world.

Even if you hold these citizens fully accountable, at least in Iceland the people who so irresponsibly led themselves to financial ruin were bailed out, rather than the banks who so irresponsibly led themselves to financial ruin.

"The analysis suggests that the share of indebted households in distress grew from 12½ per cent in early 2007 to 23½ per cent on the eve of the banking collapse in the autumn of 2008, when the lion’s share of the balance sheet shocks had already taken place. The extent of acute distress nearly quadrupled over the same period. Forbearance efforts provided temporary breathing space, but the share in distress is estimated to have peaked at 27½ per cent in autumn 2009, before declining to 20 per cent at yearend 2010 due to policy and legal interventions. Financial distress is found to be inversely related to income and age, as well as being higher among families with children and those with foreigndenominated debt than among childless couples and those with ISK-denominated loans only. Parents of every fifth child in Iceland were in distress at year-end 2010. The incidence of negative housing equity increased dramatically, from roughly 6 to 37 per cent of indebted homeowners, over the four-year period. Negative housing equity is more widespread among high-income than low-income households. The share of homeowners simultaneously in distress and negative equity rose from roughly 1 to 14 per cent but declined to 10 per cent by the end of the period. Middleincome families with children, most of which had foreign-denominated loans, and low-income singles seem especially vulnerable. Some of the seeds of households’ financial difficulties were sown by imprudent lending in 2007 and 2008, when 16 per cent of the total amount of new loans was granted to households already in distress. Up to 34 per cent of households in distress at yearend 2010 were granted loans in 2007-2008, when they were already financially distressed." http://www.cb.is/library/Skr%C3%A1arsafn---EN/Working-Papers...

Yes, but also, it's the banks who employ the financial experts who convince people that they can afford these loans that they can't really afford.

Yeah, many banks gave out loans and then couldn't pay their other debts. America's answer? The home owners are evil and banks should be propped up and shielded from the risks they took.

It doesn't really teach responsibility.

Letting the banks fail was an option. Lehman failed. I wonder what the EU would look like now if we let the banks fail. Too big to fail is a problem though.

Too big to fail = too big to be bailed out.

Responsibility? The onus is on the banks to lend responsibly. They made outrageously risky loans and were liable for when the borrowers could not pay them back.

Bailing out the banks by putting whole populations into long term debt "doesn't really teach responsibility".

Be careful about thinking Iceland is some utopia. Many articles in the Anglosphere seem to not have done any fact checking. Some even think Iceland is in the EU and uses the Euro.

"Iceland told the banks to f* off, why can't USA do the same" is a nice story. The truth is usually more complicated.

The truth is Iceland forced their banks to reduce the dollar amount of mortgages to within 110% of a house's retail value. If that's not telling a bank to "F OFF" then I don't know what is.

When everyone went underwater, they lowered the water level instead of putting people on stilts.

If Iceland hadn't told the banks to eff off, they would have been hugely indebted to foreign banks for a hundred years.

The really criminal thing is that not that we haven't found someone to prosecute but that we haven't found anyone with the cojones to break up the banks into small enough entities that can fail on an individual basis without taking out the financial system.

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