The Iceman Cometh

I probably should have divided loyalties about Iceland's decision to get tough with its creditors. After all, the council I am a member of still has £2m tied up in the interminable legal process that always follows a bankruptcy, public or private. But I can't help rejoicing about the escape by the Icelandic people from the debts that their Viking traders pushed them into.

According to a recent Bloomberg article, Iceland's decision to allow its banks to default has done it very little harm - and a great deal of good:

'The island’s steps to resurrect itself since 2008, when its banks defaulted on $85 billion, are proving effective. Iceland’s economy will this year outgrow the euro area and the developed world on average, the Organization for Economic Cooperation and Development estimates. It costs about the same to insure against an Icelandic default as it does to guard against a credit event in Belgium. Most polls now show Icelanders don’t want to join the European Union, where the debt crisis is in its third year.'

Iceland has suffered economically, with a contraction of 6.7% in 2009, but was back to growth last year and is now growing more rapidly than the Eurozone.

The different with Greece is, of course, that it was part of the vast euro currency area, and so could not make decisions in its own national interest. That, and the fact that Iceland is a tiny economy (GDP of £13bn.) and so its people could never have been good for the debt. Greece, by contrast, has a large and skilled workforce who work harder than the Germans. That makes it good for the extraction of value, as do the tasty public assets which are currently being put into a firesale.
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When it Comes to Work, Less is More

How embarrassing that yesterday's data from the European Statistics Office show that France and Germany are surviving the recession better than the UK and the US. The two-pronged approach of disciplining labour and liberating capital that was pursued with such conviction for the past 20 years in the Anglo-Saxon world suddenly doesn't look so clever.

I am depressed beyond measure by the thought that this is a result of France and Germany having got in first with their car scrappage schemes. First, I hate to believe that the automotive sector can provide such a significant contribution to any national economy. But more importantly, the thought that continuing to engage in the perverse alchemy of turning fossil fuels into money can possibly be a solution to the mess we are in is simply untenable.

One real difference between the Anglo-Saxons and the continental Europeans is in the extent to which their 'captains of industry' have abandoned the noble task of production for the fool's gold of money itself. If your most significant exports are all invisible they have a tendency, like the emperor's clothes, to disappear. The almost wilful destruction of our manufacturing industries during the 1980s and the refusal, until recently, to take seriously the need for food security, have left the UK in a precarious state.

Interestingly, the French have achieved a stronger economic position with considerably less effort. Far from continuing to haunt their offices throughout the summer for fear of the email tsunami that will be lurking there if they dare to stray, French workers disappear en masse for a whole month in the summer to toast themselves in the sun or eat cheese or whatever else they enjoy doing.

Please join me in my campaign for a real summer holiday. No work for the whole month of August sounds good to me. Anybody else up for that? Together we can defeat the relentless capitalist treadmill and save those Californian internet servers some work. Tweet