Saturday, August 25, 2012

Follow Up Open Letter


Saturday, 25 August 2012

Follow Up Open Letter

After a highly edited version of my open letter was printed in the local newspaper. I decided to send another to all major news outlets in the UK.

Iceland did it. Why can't we?


The IMF-International Monetary Fund released a statement on the 13th of August stating "Iceland holds some key lessons for nations trying to survive bailouts after the island’s approach to its rescue led to a “surprisingly” strong recovery"
Shortly after the Bretton Woods institution published a paper urging our current Conservative Government to delay further austerity until growth returns. This paper enforced similar findings by the National Institute of Economic and Social Research. Austerity causes much more damage to an economy in recession than it would in times of growth.

Iceland are not in recession and has an incredibly positive outlook on growth for the next 2 years. So what did Iceland do that everyone else did not? Well in order to answer that we must look back to 2008. At the time of the financial crash, Iceland through bank deregulation had allowed it's financial institutions to become bloated with debt. These debts were in fact 10 times larger than their economy. The public uproar that followed these revelations, rivaled our notorious Pole Tax riots of the early 1990's.


With an enormous amount of public support the Icelandic Government took a hardline approach to the situation. First they bluntly refused to make full interest payments to the bond market and declined to blindly bail out financial institutions through public enslavement. They then restricted currency movements in order to stop capital outflow. This also served to cauterize their hemorrhaging economy and defend against speculative attack. This common sense approach  pushed most of the financial burden onto those who caused the crash, not the Tax paying public. Allowing Iceland to completely safeguard it's welfare system and shield the unemployed from indigence. They basically did everything we have been told couldn't or shouldn't be done. They Bailed out the people and arrested the corrupt bankers along with complicit politicians. They even indicted a former Prime-Minister! I do understand that there were victims of this closed off approach outside of Iceland. Some of our councils were affected by this. However the Icelandic government had to make tough decisions in order to protect it's people. As all governments should do.


You only have to look to Europe in order to see these bailouts are not working. The IMF has program arrangements with 11 struggling EU nations. Euro economies are shrinking faster than they are able to make cuts. Draconian austerity measures are beginning to affect billions not just in the Euro-Zone but here in the UK too. Drastic cuts are being made to our front-line services. Enormous bailouts and rounds of quantitative easing are having no positive affect on our economy. They only seem to insure profits for a select few.


Iceland's economy will grow this year by at least 2.4 percent  but ours will shrink further or at best, stagnate. An overwhelming amount of evidence is surfacing that seems to cast serious doubt on the UK and EU financial recovery mindset. Bailouts and austerity punish victims and compensate the guilty. Our economy has a very depressing outlook with no real positive signs visible. It will likely get much worse before it gets any better. So my question is.....

Is it time for plan B?
Plan B, Iceland style!


Kind Regards

Wiggy.

http://blogbywiggy.blogspot.co.uk/2012/08/after-highly-edited-version-of-open.html

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