Poland and Iceland, Zloty and Krona…

Pre-1975 50 złoty banknote

Image via Wikipedia

…Bigos and Hakar. Boring? Possibly, but themes that keep catching my eye make an appearance…

On Poland:

But during the global economic crisis, Mr. Grad acknowledged, “Certainly the fact that the zloty could be adjusted helped us.

The floating zloty, which has fallen about 18 percent against the euro since early 2009, acted as a pressure release valve, helping to keep Polish products competitive on world markets and insulating Poland from the effects of the sovereign debt crisis.


But Poland was also lucky that, in contrast to Ireland, its banking industry was still small compared with the total size of the economy, with less potential to do damage. Household debt is relatively modest.

On Iceland

Like Ireland and Greece, Iceland has taken a large dose of austerity to reconstruct its economy. Unlike Ireland and Greece, however, Iceland allowed private banks to fail, and its currency, the krona, has declined by about 46 percent against the dollar since the start of 2008.


If you go through a bubble economy and you need to correct it, the answer is not to convert private debt into public debt.

To recap: Floating currencies; a small financial sector and/or a financial sector that was not bailed out by the public purse. If I hear one more comment on how “European socialism” caused the Great Recession….