tag:blogger.com,1999:blog-3448927642739850334.post8706083423028430126..comments2023-10-29T08:06:00.610+00:00Comments on The Political Economist: What’s behind Iceland’s rapid recovery?Vuk Vukovichttp://www.blogger.com/profile/01878567452492217960noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-3448927642739850334.post-59359261071910460922016-03-19T06:59:43.222+00:002016-03-19T06:59:43.222+00:00This article is actually remarkable one it helps m...This article is actually remarkable one it helps many new users that desire to read always the best stuff. <a href="http://www.lifeinsurancerates.com/determining-the-cash-value-of-your-whole-life-policy.html" rel="nofollow">face value of whole life insurance</a>Anonymoushttps://www.blogger.com/profile/05045364083248389653noreply@blogger.comtag:blogger.com,1999:blog-3448927642739850334.post-55429878574816441652015-12-16T18:56:52.822+00:002015-12-16T18:56:52.822+00:00Hello Everybody,
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Then again who knows. Perhaps the shock to the system would be too big to recover that quickly.<br />And "cheep" is a misprint, thanks for pointing it out. Vuk Vukovichttps://www.blogger.com/profile/01878567452492217960noreply@blogger.comtag:blogger.com,1999:blog-3448927642739850334.post-34430479620330203022013-02-09T18:14:20.394+00:002013-02-09T18:14:20.394+00:00Very interesting. I wonder what would have happen...Very interesting. I wonder what would have happened had the United States chosen to let one of its big banks fail? I am not proud of the fact that greedy individuals in our country helped foment such a widespread collapse.<br />Curious - does the UK spell cheap as cheep?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3448927642739850334.post-53194428160373614842012-07-05T00:01:28.186+01:002012-07-05T00:01:28.186+01:00You are talking about savers who pulled out their ...You are talking about savers who pulled out their cash, which is a true fact, but the real problem would affect debtors, i.e. all those people who have a foreign denominated loan. <br /><br />And yes, Icelanders had a lot of foreign denominated loans, but in Greece, in the case of a return to Drachma, everyone would have had foreign denominated loan repayments to cope with. <br /><br />The analogy I’m making here would be more similar to the case of <a href="http://im-an-economist.blogspot.co.uk/2012/05/argentine-example-isnt-helpful-to.html" rel="nofollow">Argentina</a>, rather than Iceland, where domestic wealth was literary expropriated in an attempt to devalue the currency (moving the dollar-peso peg from 1:1 to 1:4), after which the people started with the actual riots and the turmoil began. <br /><br />Repeating this scenario in Greece will destroy any chance of political stability and could produce a potential dictator or continuing political instability (from which Greece has suffered before and could easily repeat again). This is dangerous as it prevents further consolidation and leads to a self-fulfilling downturn of the country's political and economic system (see more on that <a href="http://im-an-economist.blogspot.co.uk/2012/05/achieving-political-stability-is-it.html" rel="nofollow">here</a>).<br /><br />Finally, as I pointed out in the article, Greece and Iceland are institutionally very different countries and what presumably worked in one need not be applicable to the other. My point here is on the situation in each country's labour market (I'm referring to the point when Iceland was in deep trouble), efficiency of their public sector, tax revenue collection and the rule of law. With or without depreciation, signals to foreign investors will depend a lot on the efficiency of these factors.Vuk Vukovichttps://www.blogger.com/profile/01878567452492217960noreply@blogger.comtag:blogger.com,1999:blog-3448927642739850334.post-8803288046106095882012-07-04T22:48:04.155+01:002012-07-04T22:48:04.155+01:00But isn't it also true that a lot of Icelander...But isn't it also true that a lot of Icelanders had loans in foreign currencies which would mean that the depreciation made the people poorer? However, with all the help depreciation did for its fishing industry and tourism, the people didn’t feel the declines in incomes or the loan repayment problems that much. Nor did they have to bear the losses of the banks which meant that no harsh austerity was needed – just a short boost from currency depreciation in order to support their structural reforms. <br /><br />Knowing your stance on currency depreciation, wouldn’t you agree that this was actually beneficial in the end, and that Greece would have benefited from it? They also have a strong tourism sector, and particularly now in the summer. If they did it before the summer it could have benefited them already.<br /> <br />But they didn’t so we’ll never know just how benefitial depreciation would have been, no matter how big the initial impact on Greek personal wealth would be. They’re having a silent bank run anyway and have pulled out most of their cash holdings out of the country.John Turpinhttps://www.blogger.com/profile/03146853575797586917noreply@blogger.comtag:blogger.com,1999:blog-3448927642739850334.post-79442532831092178272012-06-19T00:39:23.820+01:002012-06-19T00:39:23.820+01:00You make a valid point. However, there is always a...You make a valid point. However, there is always a question of what would the optimal level of reserve requirements be, or what is the optimal level of the equity to debt ratio?<br />For example, will setting the reserve requirement too high, in addition to stronger regulatory requirements, reduce lending in a time where we expect banks to support the real economy? On the other hand, in the case of zombie banks there is no point of keeping them going, so is it justifiable to have the capital standards to punish them?<br /><br />But I agree, in the future design of the banking and financial regulatory reform, the 4 things you mention should definitely be taken into account. However, the new regulatory standards must be designed without the regulators creating an incentive what to invest in (as it happened in the US and in Europe as a prelude to the crisis - I called it the <a href="http://im-an-economist.blogspot.co.uk/2011/10/regulatory-omissions-paradox-of.html" rel="nofollow">regulatory paradox</a>)Vuk Vukovichttps://www.blogger.com/profile/01878567452492217960noreply@blogger.comtag:blogger.com,1999:blog-3448927642739850334.post-20671240725447865992012-06-18T19:30:11.425+01:002012-06-18T19:30:11.425+01:00Your description of the problems leads me to the s...Your description of the problems leads me to the same conclusion I have had for some time now. There is no substitute for sound lending policies. Time after time, banks, companies, individuals, and nations get into trouble from too much debt, and a basic devaluation in the common lending practices which we all learn in our first Finance course.<br /><br />We could replace all of the myriad and byzantine finance laws with four basic things. First, complete disclosure, and higher and hard limits set on reserve requirement, equity to debt ratios, and down payments for real estate.KyleNhttps://www.blogger.com/profile/15766641765942339253noreply@blogger.com