December 18, 2012
MARKETS HAVE NO MEMORY:
The economic return of Iceland has proved that the joke was on us (Dan White, December 16 2012, Irish Independent)
Posted by Orrin Judd at December 18, 2012 6:55 PMWAY back in the autumn of 2008, the joke in financial circles was that the only difference between Ireland and Iceland was a letter and six months. Now, with the Icelandic banks preparing to issue foreign currency bonds once again, it turns out that the joke was on us.Remember when the Icelandics did the unthinkable and, unlike Ireland, told bank creditors to take a hike? They also imposed capital controls and allowed the value of their currency to fall - the Icelandic krona has lost almost half of its value against the euro over the past five years.The "experts" queued up to assure us that these latter-day Vikings would be severely punished for their impertinence. While no one forecast that a hole would open up in the North Atlantic and swallow Iceland whole, some of the predictions came pretty darned close.Meanwhile, we in Ireland did what we were told and repaid over €70bn of bank bonds at par. By doing so, even at the cost of bankrupting the State, the "experts" assured us that we would retain the confidence of the markets. Now, four years later, it is clear that, not for the first time, the "experts" have got it wrong. Catastrophically and utterly wrong.