Festschrift Article: Ban Bank Bailouts

Today is my father's 70th birthday and his festschrift is coming out, with many great articles. My father, Jón Steinar Gunnlaugsson, was a supreme court justice in Iceland and was previously an attorney, a job that he has gone back to in his retirement from being a judge. He is outspoken in his quest for truth and defense of human rights, especially in the justice system. So he has become ever more controversial over the years, which does not decrease the admiration that good people have for him.

Among such authors as Alan Dershowitz there is a little article by me in the festschrift, in which I propose that government bailouts be banned with a new article of the constitution. I believe it is the only way to ensure that the financial markets do not believe in such bailouts, because the temptation to support failing banks is overwhelming when the need comes, regardless of any possible statements of the past that no such support will be granted. New laws will be passed overnight unless the constitution can stop it.

I go further in the article and propose a ban on any kind of government issue of debt and guarantees. I think that government debt is a great problem with modern democracies, as the politicians that will behave irresponsibly and indebt the government will often be popular, as the responsible politicians that decrease debt tend to be less popular.

There is also going to be a seminar shortly at Reykjavik University in honor of my father, at which the president of Iceland will speak, Guðni Th. Jóhannesson, with Arnar Þór Jónsson, lecturer and Katrín Oddsdóttir, attorney. The subject matter is the constitution of Iceland.