Iceland's Economic Meltdown Is a Big Flashing Warning Sign
By Toby Sanger, AlterNet. Posted October 21, 2008.

Iceland followed the prescriptions of a right-wing ideologue, and its economy paid a severe price.

http://www.alternet.org/workplace/103525/

Iceland is now essentially bankrupt after the government took over its three major banks to prevent them from failing. It owes more than $60 billion overseas, about six times the value of its annual economic output. As a professor at London School of Economics said, "No Western country in peacetime has crashed so quickly and so badly."

What on earth happened to get Iceland and its banking sector into such a state?

It turns out that Iceland, despite its coalition governments and Nordic social values, became a poster child for neoconservative economic policies inspired by Milton Friedman during the past decade. Friedman himself visited Iceland in 1984 and participated in what was described as a "lively television debate" with leading Socialists. This inspired a generation of young conservatives who came to power through the Independence Party in 1991 and have run its government through different coalitions since then.

Iceland also has one of the world's highest standards of living (or did) and carried a debt load where the payments on the debt were approaching the GNP, which is not good.

Quotecarried a debt load where the payments on the debt were approaching the GNP, which is not good.

Just as the payments on personal debt exceed one's income.