This article includes a video interview with the President of Iceland, who explains that part of Iceland’s recovery from economic catastrophe was to allow the banks to fail.
In an impromptu interview with the Al Jazeera News Network’s Stephen Cole, Iceland’s President Olafur Ragnar Grimsson explains that his country was able to rebound from the worldwide financial crisis better than all other countries that faced the same problems, by doing just that, allowing the failing banks to go bankrupt.
Iceland had the luxury that a failure of its banks would not threaten to crater the entire planet’s economy. The U.S. didn’t have that luxury. Just sayin’.
The bailout fiasco reminds me of the scene in the movie Blazing Saddles where the new sheriff holds himself hostage to keep the townspeople from lynching him. However, in the case of the too big to fail banks, lynching would be too good for them.
It is my understanding that the procedure followed in the GM bailout should have applied to the banks. The federal government should have taken control of the banks through receiverships, investigated the bank officers, fired those responsible and even pursued criminal charges where applicable.