Help the needy. It works!

It was one of the countries hardest hit by the economic downturn. The stock markets fell 90%, unemployment rose ninefold, the major banks collapsed. However, unlike the USA and other European nations, Iceland decided to do what was morally right. Help the needy. Tax the rich. Punish the wrongdoers. It worked!

Iceland let the banks fail and punished the bankers. It is only fair that we hold people accountable for their actions and that is exactly what Iceland did.

When Iceland’s President Olafur Ragnar Grimmson was asked whether or not other countries – Europe in particular – would succeed with Iceland’s “let the banks fail” policy, he stated the following:

“Why are the banks considered to be the holy churches of the modern economy? Why are private banks not like airlines and telecommunication companies and allowed to go bankrupt if they have been run in an irresponsible way? The theory that you have to bail out banks is a theory that you allow bankers enjoy for their own profit, their success, and then let ordinary people bear their failure through taxes and austerity. 
People in enlightened democracies are not going to accept that in the long run.”

Grimmson’s “famous” reply to the controversial question, “What is the reason for Iceland’s recovery?” is most remarkable.

“We were wise enough not to follow the traditional prevailing orthodoxies of the Western financial world in the last 30 years. We introduced currency controls, we let the banks fail, we provided support for the poor, and we didn’t introduce austerity measures like you’re seeing in Europe.”

In the United States, the government helped the banks hoping that they would help the people. However, investing in the corrupt never brings desirable results. The banking industry created loan servicing companies who found ways to profit from foreclosures! They used public money to further their selfish objectives, looking for profit much like how Pakistan uses US aid meant for development projects to buy weapons of mass destruction.

The gulf between the rich and poor has never been wider. Americans are under so much stress today. They are losing their homes and income too.

Providing tax breaks to the rich, letting off the wrongdoers and hoping that loan servicers would actually help distressed homeowners hasn't worked. The rich have become richer. Loan servicers have become major players in the real estate industry. They are becoming landlords and real estate agents and auction houses and title and escrow and more! Under the pretext of helping homeowners, they are acquiring properties and earning commissions and fees and rental income! People like William Erbey have created a fortune for themselves fleecing hapless homeowners and a weak economy. They are modern-day Shylocks who will stop at nothing.

It may be a good idea to learn a few things from Iceland.

(The author, Saurabh Singh, is a student of the Buddhist monk Thich Nhat Hanh. He is a Foreclosure Prevention Activist and a vegan. He is also a member of People for Ethical Treatment of Animals(India), Consumer Advocates in American Real Estate, UNITES Professionals and supports various charitable causes and crowdfunding.)