Iceland Imprisoned Its Bankers And Let Banks Go Bust: What Happened Next In 3 Charts

Tyler Durden's picture

This year, Iceland will become the first European country that hit crisis in 2008 to beat its pre-crisis peak of economic output. In spite of its total 180-degree treatment of nefarious bankers, the banking system, and the people of its nation when compared to America (or The UK), Iceland has proved that there is a different (better) option that western dogma would suggest. As abhorrent as this prospect is to the mainstream's talking heads and Keynesian Klowns who bloviate wildly on macro-economics and endless counterfactuals, Iceland came to that fork in the road, and took it...


As The Independent reports,

While the UK government nationalised Lloyds and RBS with tax-payers’ money and the US government bought stakes in its key banks, Iceland adopted a different approach. It said it would shore up domestic bank accounts. Everyone else was left to fight over the remaining cash.


It also imposed capital controls restricting what ordinary people could do with their money– a measure some saw as a violation of free market economics.


The plan worked. Iceland took a huge financial hit, just like every other country caught in the crisis.



This year the International Monetary Fund declared that Iceland had achieved economic recovery 'without compromising its welfare model' of universal healthcare and education.


Other measures of progress like the country’s unemployment rate, compare just as well with countries like the US.



Rather than maintaining the value of the krona artificially, Iceland chose to accept inflation.


This pushed prices higher at home but helped exports abroad – in contrast to many countries in the EU, which are now fighting deflation, or prices that keep decreasing year on year.



With the reduction of capital controls – tempered by the 39 per cent tax – it continues to make progress.


"Today is a milestone, a very happy milestone," Iceland’s finance minister Bjarni Benediktsson told the Guardian when he announced the tax.

*  *  *

But apart from the economics... Iceland also allowed bankers to be prosecuted as criminals – in contrast to the US and Europe, where banks were fined, but chief executives escaped punishment. The chief executive, chairman, Luxembourg ceo and second largest shareholder of Kaupthing, an Icelandic bank that collapsed, were sentenced in February to between four and five years in prison for market manipulation.

"Why should we have a part of our society that is not being policed or without responsibility?" said special prosecutor Olafur Hauksson at the time. "It is dangerous that someone is too big to investigate - it gives a sense there is a safe haven."

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knukles's picture

But we're still exceptional!

localsavage's picture

It's a good start.  Throw in a few lawyers and politicians and we may be able to climb our way out of this hole.

Cognitive Dissonance's picture

I'm surprised the US (central bank) didn't suddenly 'find' terrorists in Iceland and promply invade.

wee-weed up's picture

If it wasn't so damn cold, I'd consider moving there.

Normalcy Bias's picture

...but the WOMEN, man! They're exceptional.

Coke and Hookers's picture

Reliable sources tell me that in the years after the crash the Icelandic banksters couldn't go to bars or clubs because they feared they would be physically assaulted by members of the public. There were apparently cases of just that. So they holed up in a private bar lounge in a downtown Reykjavik hotel owned by one of them where they drank booze and snorted coke while they weathered the storm. It's hard being a banksta sometimes.

I am more equal than others's picture


then...“Ich bin ein Berliner”

now... “Ich bin ein Icelander”

Save_America1st's picture

well I'm convinced....obviously Iceland must be bombed back to the stone age.


that'll learn 'em


Tom Servo's picture

Iceland doesn't have many "vibrants" there do they?


J S Bach's picture

To the Viking peoples of the Edda, we salute you.

A Nanny Moose's picture

Debt to stimulate economic is to banker, is what playing dead to evade beads is to...bears

Stuck on Zero's picture

Either we imprison the bankers and let the banks go bust or the bankers will imprison us and let us go bust.

macholatte's picture


This year the International Monetary Fund declared that Iceland had achieved economic recovery


Isn't that like the coyote telling the rabbits how pretty they are?

Fish Gone Bad's picture

Kyle Bass called Iceland a roach motel.  This article was almost rainbows and unicorns.  I am thinking Kyle is right.

Pinto Currency's picture



Any time you have fiat money, you will have bubbles and inflating-away of citizens wealth.

Sound money reform is needed now to stop this ridiculous cycle.

usednabused's picture

For everything else there's mastercard. They got to give those bankers a fucking like those bankers wanted to give the people. How much sweeter could it be?

Oh regional Indian's picture

It's a 15 billion economy total.

Abundant Electricity.

330,000 people....

It's not evven a pimple on the dimple on the left nut of a bumble bee in the grand scheme of things.

Plus, lot's of hyp(O) in the Icelend stories also.

Not bying IT. 

Not selling IT either, yet.....

cookie nookie's picture

Eventually, American bankers will be thrown in jail.  Vote for Warren, and it will happen sooner than later. 

dark pools of soros's picture

They'll let someone like Warren win once all of the states look like Camden, NJ and the tribe and MIC sink their claws deep into China

One World Mafia's picture

Yes, it is a propaganda piece for inflation, capital controls, higher taxes, and socialized medicine.  US inflation will hurt a lot more.

A better analysis:

Inflation Has Not Cured Iceland’s Economic Woes

jaxville's picture

  Iceland has taken some impressive measures against the bankers.  The underlying issue of overvalued real estate and its related debt has not been resolved.  The credit expansion did far more harm than a handful of jail sentences could fix. 

froze25's picture

more like the Coyote telling the Sheep dog, ok ill stay the fuck away, for now.

James_Cole's picture

It also imposed capital controls restricting what ordinary people could do with their money– a measure some saw as a violation of free market economics. 

The plan worked. Iceland took a huge financial hit, just like every other country caught in the crisis.

Capital controls bitchez. And iceland is uber liberal, y'all are not gonna fit in there. 

UselessEater's picture

So I'm guessing the capital controls are still in place??

mmm.... Just writing this Q feels dumb, I'd be amazed if the capital controls were lifted.

patb's picture

They have a plan to remove them soon

TeamDepends's picture

Amen! And, at the risk of getting pelted with virtual rotten vegetables, white peoples everywhere are going to have to rediscover that Viking spirit else we be going the way of the Dodo bird.

Ward cleaver's picture

Team, we may all end up there. Very few "Canadians", and not many "knock out" games. Sounds awesome

Fish Gone Bad's picture

Dodos laid a single egg and rats ate the eggs.  That is how we are going to go, people will save and rats will eat their savings...

fascismlover's picture

They have a website set up to teach you Icelandic for free.  It must be something in the water there.  They want people to be free but no one cares because it is cold there.  Sign me up for the cold and the people there.  With cold, you get no mass refugees.  With being angry with bankers, you get no elite.  I am thinking this place is the last standing panacea that is not being brown bombed right now.  Don't worry though...eventually something is going to blow up somewhere and all of the passports will be Iceland restricted.  That train is never late.   Until then...bravo last nation.  Please continue.  

Creepy Lurker's picture

I LMAO every time you write "vibrants."

That had to have originated in San Francisco.

Normalcy Bias's picture

"Vibrants" IS a fucking hilariously PC way of referring to blacks/hispanics...

giovanni_f's picture

They have weapons of whale mass destruction that are a threat to America.

philipat's picture

In fairness, in view of the size of the problem in relation to its GDP, Iceland didn't really have any other option. However, that does not detract in any way from the outcomes which serve to illustrate another, better, way of treating the Banksters.

fascismlover's picture

They said fu...they do not have a trillion dollar economy so they could say that and they did.  I have followed all of my uncle's traces back to Europe but none said Iceland.  I am being the prick in the family chain who says it is now. 

azusgm's picture

They could have lost their sovereignty to the UK or EU by going along with the bailouts.

Our country is giving up sovereignty with trade deals and immigration.

espirit's picture

When it's so cold outside your balls freeze in minutes, you tend to think before you act.

~Sun Tzu?~

Monetas's picture
Monetas (not verified) A Nanny Moose Jun 11, 2015 9:43 PM

Gesundheit = soundness = health !

Divine Wind's picture




The second chart comparing unemployment rates is complete BS.

The U.S. line would be on a steep upward angle, thereby reflecting much higher unemployment numbers.

There is no possible way Iceland and the U.S. are trending the same, albeit at different levels.

Crawdaddy's picture

Seasonal adjustments are a bitch when you only have one season.

Commodore Decker's picture

If you can get past the bad teeth.

Lumberjack's picture

The WX isn't that bad. a little cool but beats 90 degrees with 90% humidity.

acetinker's picture

Iceland may be cold, but it's physically south of Greenland.  Who thought that shit up?

Lemme think...:)