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Five years of a pure neo-liberal regime had made Iceland, (population 320 thousand, no army), one of the richest countries in the world. In 2003 all the country’s banks were privatized, and in an effort to attract foreign investors, they offered on-line banking whose minimal costs allowed them to offer relatively high rates of return. The accounts, called IceSave, attracted many English and Dutch small investors. But as investments grew, so did the banks’ foreign debt. In 2003 Iceland’s debt was equal to 200 times its GNP, but in 2007, it was 900 percent. The 2008 world financial crisis was the coup de grace. The three main Icelandic banks, Landbanki, Kapthing and Glitnir, went belly up and were nationalized, while the Kroner lost 85% of its value with respect to the Euro. At the end of the year Iceland declared bankruptcy.

Contrary to what could be expected, the crisis resulted in Icelanders recovering their sovereign rights, through a process of direct participatory democracy that eventually led to a new Constitution. But only after much pain.

This is a quoted from an article everyone should read, if only to be aware this actually happened. Titled in dramatic fashion: “Why Iceland Should Be in the News But is Not”. (It has been translated from an Italian radio show).  This articles reports on what has happened since the start of the 2008 financial collapse in Iceland and how the country has developed its own solution to the situation.

Big Media haven’t picked up the story about what has happened since, by the end of the article you could understand why.

There are a number of errors in the featured article, here is another explaining the issues that have been reported as incorrect.

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Written by jonathanjk

November 22, 2011 at 15:00

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