Matt Yglesias

16 Responses to “A Rescue for Iceland”

1. nobi yuno Says:
   October 21st, 2008 at 9:34 am

   Pretty soon, Icelandic real estate is going to start looking like a real bargain.

2. David Says:
   October 21st, 2008 at 9:38 am

   To be clear though, the IMF was intended for use by developed countries. Also, both Mexico and South Korea were OECD countries in the 90s when they received IMF help.

3. David Says:
   October 21st, 2008 at 9:50 am

   The more I think about it, I really think you should conider South Korea a developed country don’t you?

4. El Cid Says:
   October 21st, 2008 at 10:13 am

   Ha-Joon Chang, in the Guardian:

   …In a version of “don’t try this at home”, Americans tell other people that they should all adopt the free-market, free-trade model. However big their financial crises are, other countries are told that they should let the markets correct themselves.

   Of course, other rich countries do not have to listen to US advice, although Japan did so in the 1990s and made its infamous financial crisis even worse by trying to get out of it without public bail-outs.

   However, the story is different for developing countries. They cannot ignore US advice, or else they will not get the endorsement from the US-dominated International Monetary Fund, which is important in getting access to the international capital market.

   So in its 1997 financial crisis, Indonesia was forced by the IMF to close 16 banks at the same time, prompting a bank run. It was made to raise interest rates to 80%, and the president of Indonesia was humiliated by being photographed signing terms of agreement with the IMF, while the Fund’s managing director stood over him with arms folded.

   Similarly, Korea had to shut down close to a quarter of its financial institutions and raise interest rates to 30%. The country was forced to run a budget surplus, despite the fact it had the then second lowest public debt (as a proportion of GDP) in the OECD. Only when its economy took a nosedive for six months, it was allowed to run a small budget deficit equivalent to 0.8% of GDP, when the $700bn bail-out package alone will increase US budget deficit by 5% of its GDP.

5. Frank Wilhoit Says:
   October 21st, 2008 at 11:01 am

   Quick: what’s the capital of Iceland?

   …

   …about fifty bucks.

6. jerry Says:
   October 21st, 2008 at 3:23 pm

   The next bjork album will only cost a quarter.

   Humanitarian aid drops are plotted to start in 7 years, I believe.

   Privatization is starting.

   Iceland, it was fun while it lasted. Now that the IMF has it’s meat hooks in you…well…anyway.

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