Yes, I am jealous of Iceland. You see, they are facing their reality, and, while unpleasant, at least they are getting on with the necessary adjustments.
Iceland, a tiny island nation with 315k souls, managed to rack up a stunning $100 billion in banking liabilities (half of which was external) that dwarfed its gross domestic product of approximately $14 billion. Well, not everyone in the country caused it; it turns out that about 50 people were involved in racking up those debts while everybody else was looking the other way.
The defining characteristic of something that is unsustainable is that it will someday stop. Without being an economic genius or delving too deeply into brain-splitting economic minutiae, we can readily appreciate how such a debt load proved to be unsustainable. One cannot forever increase one’s debts relative to one’s income, which seems to be intuitively obvious to everyone except bankers and conventional economists. So the music stopped playing one fine day in late September of 2008, and the dream was over even more suddenly than it began.
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