what's not simple, mg? iceland told their creditors to f-off. that's the base of it. as a result, they're starting fresh.
without any additional facts from you your remark is not only disingenuous but it shows hubris on your part.
Well, as I mentioned previously, there are two main things that aren't simple. a) In the process of telling their creditors to f-off, the Icelandic government violated an EEA-wide retail depositor protection treaty that they voluntarily signed up for. That, to me, is cheating. Fine, if you want to screw the bondholders and the wholesale depositors, do that. However, to renege on your most minimal promise to a Joe Blow retail depositor is no good, especially as you signed it into your own national law. b) The reason why comparison with Ireland doesn't work is simple. Ireland is part of the EMU. Its govt can't act as unilaterally as Iceland did. For example, in the EMU, if I am not mistaken, senior bank bondholders are, by law, pari passu with depositors. So you can't default on one group, without defaulting on the other, unless laws change. Furthermore, there's all sorts of political reasons why the core countries wouldn't let peripheral sovereigns allow banks to fail. Point is that, for better or worse, Ireland has effectively surrendered its sovereignty over their banking system to their new German overlords. Facts right above, for your viewing pleasure.
They should have let the banks fail and if that meant the depositors would have lost their money together with senior bondholders, too friggin bad. Now if, according to you, the German and French would have bailed out the banks, let them. Then it would be German and French taxpayers on the hook, not Irish ones.
Well, they should have never let the bubble happen in the first place. And, guess what, in hindsight maybe they should have never joined the EMU. However, these things happened and, because of this, the Irish had great times during the noughties and enjoyed all the fruits of explosive economic growth (some enjoyed more than others). Now, when it's time to pay, the EMU that brought the party to Ireland earlier is forcing the Irish to abide by their rules. Who's right in this? That's why I say that it's far from simple. The real world is never cut 'n dry, black and white, right and wrong; it's always messy and complicated. Saying that everyone should just do what Iceland did is naive.
I don't think everyone should do what Iceland did but an economy the size of Ireland's can't recover in a reasonable amount of time protecting the debt holders. They are now buried for decades. It is one thing for taxpayers to shoulder a reasonable burden that will protect a nation's viability in its international dealings but quite another to shoulder a burden that is beyond its capacity. My guess is Irish government debt will take a haircut within the next 3 to 5 years; and quite possibly a few more restructurings after that. They are cooked.
to a: iceland did so because they believed (correctly, in my opinion) that there was massive fraud on the part of the big banks that got them to where they were. they felt cheated, so they cheated back. quid pro quo. to b: ireland can simply say, adios, EU. no longer interested. bring back the punt. are their legal aspects to it? probably big ones. but they can pull an iceland (albeit more complicated in doing so) and get away with it. whats the EU going to do? invade ireland? only politicians and banksters see otherwise. there is simply no-way-in-hell that ireland could repay the loan they were given. greece, too. as a previous poster said - they're cooked. game over for at least a decade.
It is incredibly difficult for any single country to abandon the Euro. Any of those that would want to revert back to their sovereign currency would be doing so in order to inflate their way out of their obligations. Imagine the runs on their banks. Billions upon billions would be wired out -- in Euros -- as soon as the financial markets believed it could happen. Getting into jail requires little talent or imagination and no brains. Getting out is not so easy.
not true for Germany and a few other countries.. the german mark would appreciate substantially. if pegged against the euro.