andrewducker

"Iceland refused to bail out the banks or cut back on welfare..."

...and just as crucially never joined the Euro.

Oh yes - deflation was very-much their friend.

(I used to be neutral to slightly-favourable on shared currencies, but decided that more currencies would be better than less some time ago - if Scotland was independent then I'd be in favour of it having its own currency, as it would no-doubt help exports enormously. Heck, the North of England is could frequently do with different economic policies to London.)

Yeah, I was just about to say, the article says the Krona lost 80% of its value compared to the Euro. Which I would think single-handedly saved them.

I wonder how much the pound has lost in real terms to the Euro after all of the quantitative easing thats been going on.

http://finance.yahoo.com/q/bc?s=EURGBP%3DX+Basic+Chart&t=5y

We're doing rather well. Because of Greece, Portugal, Spain, etc.

Aye – I think I’d put the economic recovery down to the 80% depreciation against the Euro which is in turn is only something that can happen when you are an economy of a few hundred thousands trading with two economies of many hundreds of millions. I’m not so sure it’s something that the UK could pull off, let alone Europe, without having a strange distorting effect on the world economy.

I’d be interested to see what had happened to sales of things like French wine or German cars or captial goods imported from the EU. I reckon, if you are Iceland you can wear an 80% currency depreciation with your largest trading partners for a while without suffering too much pain. Services are produced and sold internally. You can defer large spend on imported goods and services for a while. I think all of Iceland’s energy is produced domestically (a bit of lesson for us when we look at our own investments in renewables perhaps). Increases in food prices are probably compensated for by better wages at the aluminium plant. A fall of 80% in the value of the currency is going to hoover up every last scrap of spare capacity for export industries. Lots of fish to be caught and canned for export.

I think the longer term implications of their situation are perhaps less rosy. High inflation and the huge increase in big expensive imports might end up being quite harmful. Difficult to say.

I think there is a limit to the lessons we can can learn from an economy the size of Swindon’s.

Well, core to the actual issue is they didn't socialise bond holder loses like Ireland did. Basically Ireland represents one of the largest transfers of money from tax payers to bond holders - where as Iceland refused to bail out the foreign bankers and focused on internal stimulus.

Paul Krugman has called pretty much every element of this spot on since it started and writes weekly on ways we could get out of this mess. But they all involve more deficit spending.

Internal Euro devaluation is a perfectly sensible option. The Germans gained hugely by the internal exchange differentials when the Euro started.

A lot of the problem just needs the German economy to introduce inflation, mostly by printing money which they can use to buy Greek, Spanish and other bonds.

But good luck getting the Germans to do that.

Yeah, there seems a certain intransigence on the part of the Germans to do anything that might harm them at home.

Which I suppose you can't blame them, every nations politicians are after all only thinking about the next election they have to win.

Well, I'll also give the Germans that they still have a deep ingrained memory of what inflation can be like in a way that 1970s double digit inflation was not.

But I think they need to get their heads around 5% inflation not being the 1920s, especially if the end result is a global depression caused by the Euro vanishing.

Apparently a sitcom-character can be likable even though they're a rapist - if they're a woman.

I enjoyed the 2009 show Eastwick quite a bit, until they had one of the characters use her mind control powers to essentially rape a guy - a situation that was made even worse by the fact that the guy was gay and the next episode had the other two characters joke with the rapist at how embarassing it was that the man she forced to have sex with her was gay.

Yup. It's very troubling when people just don't see it.

At least in Louie the writer of the show seems to get it. The reviewer, not so much.