Delighted to find that at least one nation has figured it out – from the Wall Street Journal:
Voters in Iceland have rejected a government-approved deal to repay Britain and the Netherlands $5 billion for their citizens’ deposits in the failed online bank Icesave, referendum results showed Sunday.
With about 90% of the votes counted, the “no” side had 59.1% of the votes and the “yes” side 40.9%. The result reflects Icelanders’ anger at having to pay for the excesses of their bankers, and complicates the country’s recovery from its 2008 economic collapse…
The story goes on to note what happened – during an easy money boom in Iceland, a lot of Brits and Dutch invested money in a high-yield Icelandic bank. These yields were only possible in a massively over-heated economic atmosphere and could only continue as long as a “greater fool” was around to keep buying over priced financial investments. Eventually, the last fool appeared and there was no one in line after him, and Iceland’s economy completely collapsed. So, everyone is out their money – except, of course, for the fact that the United Kingdom and Netherlands used public funds to cover the losses of British and Dutch investors…and now the Brits and the Dutch want the people of Iceland to agree to tax themselves to cover the losses to the investors. The people of Iceland gave an answer to this idea – the first word in their answer begins with “F”, the second word is a possessive pronoun.
It is the same answer we should have given when we were told we needed to bail out the “too big to fail” banks. Or to bail out GM and Chrysler. Or, indeed, to fix up anyone who loses money in an investment. An investment is by its very nature a risk – you are looking to increase your money supply without having to do actual work and so you invest it in this, that or the other enterprise and hope that it gives you a nice return…but there is always the chance that you’ve invested your money with idiots and you’re going to take it in the shorts. If you do, then there’s no use whining about it. You deal with it, and move on. As is so often said – and so often ignored – if its too good to be true, it probably is.
If someone says “hey, invest with me and I’ll get you a 15% return”, he’s either a con artist, or an idiot, or a combination of the two. He’s playing upon your greed…your wisdom tells you that 6 or 7% is a more than reasonable return and, hey, history shows that you should get that kind of return in a wise investment…shooting for more than that is the equivalent of shooting dice. Which, by the way, is a fine thing to do – as long as you realize that its a gamble (and, additionally, as long as you do it here in Vegas…and, man, we’re hurting out there, so if you’ve got a few bucks…or a couple billion, actually…to blow, come on down!). Essentially, what the banksters did towards the end of the boom is offer us absurd returns on our money and we (or, at least, a lot of us) fell for it. And when it all went belly up, we should have just told the banksters to take their lumps like the rest of us.
Iceland has done this, and I admire them for it. Sure, things will be tight for them…and no one is going to want to lend them a lot of money any time soon. But, who cares? All this means is that Iceland will have to some how struggle through life debt free and have to earn its living by hard work. Hardly a sentence to the salt mines, you know? If only we had that level of courage and wisdom.
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