Randall Forsyth, writing in Alan Abelson’s usual column “Up and Down Wall Street “on October 17th, quotes Barron’s Roundtable member, Fred Hickey in the current issue of The High Tech Strategist that QE 3 is a “matter of when not if”. [Preoccupied by Wall Street]
Forsyth, like a growing number of qualified observers seems to find Quantitative Easing’s record to date quite inadequate.
With the USA’s condition not great, thoughts can wander to other options. But they’re limited, looking at Europe’s financial mess, the dangerous conditions in the Middle East and the repressive option offered by China.
How about a surprising choice: Iceland—with a successful democratic parliamentary government dating back to 890 AD!
Hey, my wife and I have just returned from a refreshing, informing 10 days in Iceland. People we met feel quite positive about its recovery from its horrendous banking crisis.
The day we left Reykjavik for home, some citizens there mounted a Wall Street type protest. An Iceland blogger wrote:
“Two protests meetings where today in Reykjavik. One was in front of the parliament building, and the other in front of the Reykjavik county courthouse. Then the meetings at the courthouse joined the meeting at the parliament building.
The protest was very peaceful, and you cannot see a police officer anywhere.”
“They are protesting mostly for economic issues worldwide”—i.e. no specific Iceland grievances.
On thing for sure: Iceland is not being overrun with new immigrants that have to be absorbed and dealt with—as the U.S. is. You can get a limited visitor’s visa. But to become a citizen takes quite a seven year slog, including showing financial stability and character. (If you marry an Icelandic citizen, it takes only 3 years.)
Needless to say, the number of immigrants is quite low. The largest group is Poles, some 9000. There are under 2,000 Americans and Brits. One famous American who was made an Icelandic citizen was the chess master, Bobby Fischer, who died there in 2008.
Fischer’s brilliant chess career gave Iceland important visibility. We visited his grave in a humble churchyard in the small Christian cemetery of Laugardaelir, outside the town of Selfoss, 60 km southeast of the capital, Reykjavík
Not many people emulate Bobby. As IndexMundi reports:
“Net migration rate: 0.53 migrant(s)/1,000 population (2011 est.)
Definition: This entry includes the figure for the difference between the number of persons entering and leaving a country during the year per 1,000 persons (based on midyear population). An excess of persons entering the country is referred to as net immigration (e.g., 3.56 migrants/1,000 population); an excess of persons leaving the country as net emigration (e.g., -9.26 migrants/1,000 population). The net migration rate indicates the contribution of migration to the overall level of population change. High levels of migration can cause problems such as increasing unemployment and potential ethnic strife (if people are coming in) or a reduction in the labor force, perhaps in certain key sectors (if people are leaving).”
Boy, that quote surely gets it right.
Back to the bank crisis: It got handled very differently than our “too big to fail” strategy, which was invented and fear-mongered through by the very leaders who brought on the crisis in the US and worldwide. By the very rich folks who had the most to personally lose!
Here’s Wikipedia (October 18, 2011:
“The 2008–2011 Icelandic financial crisis is a major ongoing economic and political crisis in Iceland that involves the collapse of all three of the country's major commercial banks following their difficulties in refinancing their short-term debt and a run on deposits in the United Kingdom. Relative to the size of its economy, Iceland’s banking collapse is the largest suffered by any country in economic history.
“In late September 2008, it was announced that the Glitnir bank would be nationalized. The following week, control of Landsbanki and Glitnir was handed over to receivers appointed by the Financial Supervisory Authority (FME). Soon after that, the same organization placed Iceland's largest bank, Kaupthing, into receivership as well.
“Commenting on the need for emergency measures, Prime Minister Geir Haarde said on 6 October, 2011 ‘There [was] a very real danger ... that the Icelandic economy, in the worst case, could be sucked with the banks into the whirlpool and the result could have been national bankruptcy.’ He also stated that the actions taken by the government had ensured that the Icelandic state would not actually go bankrupt. At the end of the second quarter 2008, Iceland's external debt was 9.553 trillion Icelandic krónur (€50 billion), more than 80% of which was held by the banking sector. This value compares with Iceland's 2007 gross domestic product of 1.293 trillion krónur (€8.5 billion). The assets of the three banks taken under the control of the FME totaled 14.437 trillion krónur at the end of the second quarter 2008.
“The financial crisis has had serious consequences for the Icelandic economy. The national currency has fallen sharply in value, foreign currency transactions were virtually suspended for weeks, and the market capitalization of the Icelandic stock exchange has dropped by more than 90%. As a result of the crisis, Iceland is currently undergoing a severe economic recession; the nation's gross domestic product decreased by 5.5% in real terms in the first six months of 2009. The full cost of the crisis cannot yet be determined, but already it exceeds 75% of the country's 2007 GDP.”
But this is old news and badly outdated by what we saw firsthand. Iceland’s GDP has bounced back and the stores we visited all over the country were full of merchandise and customers. The restaurants were fully booked. The streets were spotlessly clean and certainly not occupied by beggars or angry miscreants.
We traveled all over this fantastic island nation and saw for ourselves the prosperity and the uniformly upbeat attitude of countless business people and ordinary citizens. Even as the Summer and Fall tourist season was passing into their long winter, the people remained busy, productive, and seemingly very positive.
We found spotless public spaces— little graffiti and no litter and very clean rest rooms. Good diets based on endless fish means low obesity (12% vs. USA’s rate of over 50%) and constant exercise from swimming daily indoors to spelunking in the 500-plus discovered caves—an amazing 2000-plus are thought to be still undiscovered—have produced a splendid-looking population.
Perhaps most important of all in this astonishing place; 80 percent of the energy comes from hydro or thermo electricity—thermal hot springs and waterfalls.
America better get with electric cars and solar energy much faster than it is doing.
We dined privately one evening with several top foreign diplomatic officials and one former Icelandic ambassador to the US. None of them even once mentioned concern over present banking conditions or that the economy was in bad shape.
One knowledgeable observer, our tour leader, was a Ph.D. with much international exposure, speaking many languages. He kept declaiming that bad as the bank meltdown had been, the worst is now over and the country is not in any way in as bad shape as most of Europe.
As my readers know, I have been most critical of our own QE series of fixes which have not fixed our economy or job situation.
Let’s just take a look at how we might fare if we were lucky enough to get into little Iceland.
Its unemployment rate is about 6% versus our 9.1% which everyone knows does not include underemployed or those who have stopped looking. We spend some 15% of GDP on healthcare, they spend under 10%—and provide fine free health care for all. Yes, they do pay high taxes, but the consensus is that the cost is worth it. Its per capita GDP was $36,510 in 2005, which puts it 6th out of 169 countries measured. Our per capita GDP is about $41,000, putting us 2nd.
Iceland of course has no military, only a small police force. Going through airport security is a breeze! Naturally, they and many other countries are pleased that the USA is beggaring itself so they can feel safer.
Ok, Iceland is 1/1000th the size of the US—320,000 population vs. our 320 million. But still…
Some 95% of Icelanders are of one religion—Lutheran. I find separation of church and state important, so it’s a strong negative for me that in Iceland the state religion gets taxpayer contributions. The unmasking, while we were in Iceland, of the prior, now deceased, Lutheran Bishop’s molestation of his daughter was truly unnerving to Icelanders. But then, after the spate of impropriety by clergy of other religions, one must be not surprised. And I did not sense a rampant evangelistic element was in control here, although every country has some of those.
In short: A bunch of good stuff, which seems to go with cohesive populations and a single national language (although most Icelanders speak also English). While multiculturalism is elite orthodoxy in the USA, the smooth and graciously functioning society we observed suggested to us that if one needed a comfortable place outside the turmoil of larger countries, Iceland would be a dandy choice.
After all, if you can afford it, you can always fly away in winter to another island in the tropics!
The most inspirational part: the scenery, the magnificent waterfalls, the snow-capped mountains, the huge fields of lava interspersed with lush farms all over. You don’t have to live in Iceland to be awed by the purity of its air, water and the spirit of its people.
Yes, they protested Wall Street on 10/15—but in sympathy for us!
And I bet they are glad they aren’t us!
Donald A. Collins [email him], a free lance writer living in Washington, DC. , is a long-time board member of the Federation for American Immigration Reform’s (FAIR). However, his views are his own.