I am often wondering about how we here in the US, and the world over, can recover and thrive in the wake of the recent financial crash. I have been following the story of Iceland from the beginning and it seems to consistently be one of resilient recovery. Would this work on a global scale?
When Iceland’s banks went under, and the economy with it, many homeowners were put under water over night. Instead of foreclosure deserts like Americans saw, the government stepped in to prevent Icelanders from losing their homes.
The banks’ first task was restructuring the loans of companies and households that could no longer pay them. The government passed a law mandating that loans had to be reduced to no more than 110 percent of the underlying property — helping homeowners who had ended up underwater. source
This kept people afloat while they restructured their mortgage and found new jobs in the recovering economy. Without the government intervention, many Icelanders would have been reduced to poverty and potential homelessness.