An editorial in the New York Times, one of the USA’s biggest and most respected newspapers, describes Iceland’s chosen way back to growth after the economic crash as looking “Increasingly smart”.
Under the headline “Iceland’s Way”, the New York Times editorial says that the Icelandic authorities have not been any cleverer in their handling of the crisis than other governments; but that they simply did not have the money to bail out the Icelandic banks and therefore had to let them fail and be innovative. By not taking responsibility for the banks, the government forced bank creditors to share the weight of the losses and the pain with everybody else, Visir.is reports the article as saying (although the does not appear to use those precise words.
The European Union and the IMF could learn from Iceland’s experience. Now that negotiations are underway for a Portugal bailout, they should realise that taxpayers alone cannot bear all the weight of the banks’ mistakes.
The article concludes that despite the massive shocks to the economy, Iceland now appears to be much better positioned than Ireland, Greece and Portugal.