When it comes to the economy in general, and the economic crisis of last year in particular—and the jury’s still out on whether or not the crisis over—there are two schools of thought, one favoring (and/or blaming) the lack of government regulation of the marketplace economy, and the other favoring (and yes, blaming) more government regulation. To be sure, ebbs and flows within the marketplace are a part of the cycle which gives it life, although it’s a little hard to appreciate this fact abstractly when one considers that real people, real families are often affected adversely by these cycles. But to the credit of each argument, common sense rather than economic ideology tells us that there are times when government regulation can increase the intensity of these ebbs and flows, to the greater detriment or benefit of the economy. Still, the loyalists to the government-need-to-interfere and the laissez-faire beliefs remain unwavering to their respective ideological beliefs.
So it should come as no surprise that there will still be some who disagree with one way the government of Iceland is dealing with the economic crisis within its banking community…a crisis whose effect has been infinitely worse in terms of profound damage to its overall economy. This week, it was reported in the news ("Top Economists: Iceland Did It Right … And Everyone Else Is Doing It Wrong" as an example) that the government of Iceland has begun to initiate both civil and criminal proceedings against banking executives related to the collapses of the country’s 3 largest banks, Kaupthing, Landsbanki and Glitnir. After the findings of a government inquiry concluded that the banks collapsed due mostly to former banking heads taking "inappropriate loans from the banks," the government of government agencies initiated a $2 billion lawsuit in a New York court against former shareholders and executives for alleged fraud. In addition to the lawsuit(s), Iceland has taken the further step of freezing the assets of other banking executives both in the US and in Europe (such as in the United Kingdom and Luxemburg) where many have fled and live lavish lifestyles. Finally, the police have begun rounding up still some other former bankers while issuing arrest warrants for others.
With respect to the outcomes of the Enron, WorldCom, and Tyco International criminal trials of earlier this decade, the Icelanders seem to have mastered not only certain Olympic sports, but how to properly deal with those most responsible for the economic crisis in its country. In America, the financial community makes no bones about justifying big bonuses to “retain the best and most talented” within the lending community, extravagant lifestyles that are were/are “earned,” and asking for and receiving government loans with no sense of shame…all despite the “best and brightest” causing the near-economic collapse of the American economy due to questionable lending practices. While many banking executives and leaders have made off like (pardon the pun) bandits, many Americans have seen the values of their retirement packages plummet to levels that will force many to work well past the age where age has reduce their physical limitations to do so. But as I have often said before, there is a great many things that Americans can learn from other countries about how to deal with socioeconomic problems. Instead of rewarding willful ineptitude, risk taking, and out-and-out greed with bonuses and an implied Its ok to engage in questionable lending practices…we’ll subsidize you both socially and economically, we should be taking a page out of the government of Iceland’s book and start a criminal (and civil) roundup and prosecution of those most responsible for nearly doing what terrorists couldn’t do…bring the country to its economic knees. The government of the United States should the seizure of assets, the initiation of lawsuits, and bringing of charges against those who put potential of personal advancement ahead of the welfare of their institutions, investors, and of the average American who has been invested in many aspects of the lending industry due to changing trends in funding potential retirements.
Stealing a line from the now-classic 1983 Eddie Murphy-Dan Aykroyd movie Trading Places, “The best way to hurt rich people is to turn them into poor people.”