From Trust Your Instincts:
Booming Iceland continues to show the benefits of requiring the banks to
recognize the losses on the excesses in the financial system under the
Swedish model for handling a bank solvency led financial crisis.
As reported by the Telegraph,
Iceland, whose economy has recovered rapidly following the 2008 collapse
of its banking sector, on Friday repaid $483.7 million in loans to the
International Monetary Fund.
The early repayment, which follows another one of more than $900 million in March, is a symbolic step for the country ....
Iceland's main commercial banks collapsed in the space of a week as the
global financial crisis struck in late 2008, imploding under the weight
of huge debts built up during an aggressive overseas expansion.
The 'collapse' was the result of a policy choice not to adopt the
Japanese model and protect bank book capital levels through bailouts and
regulator forbearance (under which the banks keep zombie borrowers
alive through 'extend and pretend' practices).
But the country's rebound has been equally surprising. Iceland's economy
expanded in the first quarter at its fastest pace since its
near-meltdown, powered by a surge in exports, tourism and domestic
consumption.
Actually, there is no surprise that the real economy in Iceland has
continued to grow. Unlike the real economy in the EU, UK or US,
Iceland's real economy does not have to carry the burden of supporting
excess debt....MORE
See also 2009's
Obama: Swedish Model Would Be Impossible Here:
The Swedish Model
