Visiting Iceland to chill-out after a hectic 5-week whirlwind business trip across America, the Middle East and the UK, I couldn’t help think back to the Reagan-Gorbachev October 11-12, 1986 Summit in Reykjavik, the country’s capital and global banking crisis that triggered the recession of 2008-2011.
The summit between President Ronald Reagan and Secretary Mikhail Gorbachev was one of the most productive summits of all time. Gorbachev agreed that human rights issues were a legitimate topic of discussion, something no previous Soviet leader had ever agreed to.
Reagan and Gorbachev also agreed to eliminate all new strategic missiles and for the first time the real possibility of eliminating nuclear weapons. A year later the U.S. and Soviet Union signed the Intermediate Range Nuclear Forces Treaty (INF), for the first time eliminating an entire class of nuclear weapons — and ultimately ending the Cold War.
Presidents Trump, Xi, Putin, and Supreme Leaders Kim and Khomeini should seriously consider summits in Iceland to address the same topics tackled by Reagan and Gorbachev! What better place to chill and end the looming hot and cold wars brewing between America, China, Russia, North Korea and Iran? Sure beats meeting in the tropical heat of Singapore and Vietnam, or tip-toeing into North Korea. Iceland’s saunas, unlike hot Singapore, Vietnam or North Korea, cool political hot-heads and allows them to start sweating out the hard issues.
During the 2008 recession, all governments around the world — except Iceland — bailed out their failed subprime bank lender-bundlers, and their criminal bankers got off scot free.
Iceland was the only country that did not think banks were too big to fail. When Iceland’s three privately owned banks defaulted in 2008, it was — like America — the largest systematic banking collapse by any country in modern economic history. But unlike America and other countries that spent trillions of dollars bailing out banks, Iceland liquidated the banks, resulting in losses for shareholders and foreign creditors and new banks were formed to take over domestic operations. New capital controls were imposed and 36 senior bankers were jailed and the prime minister was put on trial.
Now that American, Chinese and other global financial institutions are leading the world into the next recession because of their risky lending practices, hoping they will again be bailed out because they are too big to fail, it is time government regulators worldwide follow the Iceland example. Liquidate the banks and jail the bankers! What better way to cool an overheated economy and start narrowing the gap between the 1% and 99%-ers?
Iceland is a very cool place for political hot-heads and banking regulators to chill-out and better serve the people they represent.