Heating up in Iceland

For a country that four years ago plunged into a financial abyss so deep it all but shut down overnight, Iceland seems to be doing surprisingly well.

It has repaid, early, many of the international loans that kept it afloat. Unemployment is hovering around 6 percent, and falling. And while much of Europe is struggling to pull itself out of the recessionary swamp, Iceland’s economy is expected to grow by 2.8 percent this year…

Analysts attribute the surprising turn of events to a combination of fortuitous decisions and good luck…During the crisis, the country did many things different from its European counterparts. It let its three largest banks fail, instead of bailing them out. It ensured that domestic depositors got their money back and gave debt relief to struggling homeowners and to businesses facing bankruptcy.

Iceland…had some advantages when it entered the crisis: relatively few government debts, a strong social safety net and a fluctuating currency whose rapid devaluation in 2008 caused pain for consumers but helped buoy the all-important export market…

Strict currency controls, imposed during the crisis, mean that Icelandic companies are forbidden to invest abroad. At the same time, foreigners are forbidden to take their money out of the country — a situation that has tied up foreign investments worth, according to various estimates, between $3.4 billion and $8 billion…

Some Icelanders say they have been soothed, too, by the country’s bold decision to initiate an extensive criminal investigation into the financial debacle. Many members of the old banking elite have been identified as possible suspects, and some of their cases are beginning to come to trial; several people were convicted of financial crimes last month…

“Everyone was scared, and we didn’t know what was going to happen,” said Kristjan Kristjansson, 49, manager of the store Bad Taste Records downtown. But Icelanders are adaptable people, he said, and many never really believed the economic boom was real, anyway.

Gee – how many leaders in financial and real estate speculation that was the basis for the Great Recession have been indicted and tried in your neck of the prairie? Oh.