Many of the Patriotic Citizens of the United States are not familiar with the catastrophic events that froze the economy of the tiny nation of Iceland. We will summarize the events that were responsible for the plummeting the economy in Iceland into one of those crevasses associated with the great glaciers of  Antarctica.
First of all, we will give you a graph summarizing the value of the stocks traded on the Icelandic exchange. Do you notice its glacier type shape? As anyone can see, the stock market slipped into the abyss.
The assets of Icelandic pension funds are, according to one expert, expected to shrink by 15–25%. The Icelandic Pension Funds Association has announced that benefits will in all likelihood have to be cut in 2009. Iceland's GDP is expected by economists to shrink by as much as 10% as a result of the crisis, putting Iceland by some measures in an economic depression. Inflation may climb as high as 75% by the end of the year.

The circumstances leading up to this economic tsunami. First of all, the three major Icelandic banks borrowed short term to enhance their growth, this in itself didn't break their back. It was that the borrowing was in currencies other than their own, like the British Pound.  Icelandic Financial institutions attracted foreign capital by paying very high interest on deposits. This caused money to flow into them like a glacier melting in springtime.   The only problem was the depositors had the right to withdraw the funds in local currencies. This caused the banks to go belly up when the depositors demanded their money back.  The run on the banks started. And there was really no way to stop it. They all went Bankrupt; the three major Icelandic Banks.

A number of writers have linked Iceland's woes to the nation's adoption of neo-liberal economic policies starting in the 1990s Households also took on a large amount of debt, equivalent to 213% of disposable income, which led to inflation. This inflation was exacerbated by the practice of the Central Bank of Iceland issuing liquidity loans to banks on the basis of newly-issued, uncovered bonds— effectively, printing money on demand.In response to the rise in prices — 14% in the twelve months to September 2008,^[ compared with a target of 2.5% — the Central Bank of Iceland has held interest rates high (15.5%). Such high interest rates, compared with 5.5% in the United Kingdom or 4% in the  Eurozone for example, have encouraged overseas investors to hold deposits in Icelandic krónur, leading to monetary inflation:  Icelandic money supply (M3) grew 56.5% in the twelve months to September 2008, compared with 5.0% GDP growth. The situation was effectively an economic bubble, with investors overestimating the true value of the króna, the Icelandic currency.

Since the crisis began, many of Iceland's business leaders, who had previously been considered financial gurus who greatly developed Iceland's economy, are now under intense public scrutiny for their roles in causing the financial crisis. A huh. Parts of the Icelandic public have arranged protests against the Central Bank, the Parliament and the government's alleged lack of responsibility before and after the crisis, attracting between 3000 and 6000 people (1–2% of Iceland's population) on Saturdays. (ICED TEA PARTIES)

And as we speak (write) the fallout is still being felt. Some measure of stability has occurred, but many lives have been changed for the worst. Careers have been devastated and politicians are no longer trusted.

This brings us back to our original question. Is the United States heading down the slippery slope into the crevasse of no return? The economy has been pumped up by a shot of economic heroin, it provided a short term high. The chickens are now coming home to roost. 

For long term stability to occur, the fat must be cut; private industry does it all of the time. It is called the "survival of the fittest:. A 25% cut in government spending and a 25% tax cut across the board will catapult the economy into a new era of growth. There is no "free lunch". When are our government leaders going to realize this?  Probably never. We cannot spend our way to prosperity. Just ask that Hugo Chavez guy down in Venezuela. Socialization and spending more than you have is the exact opposite way to go.

November 3, 2009 will be a hint on what is coming in November 2010. The Tea Party Movement is not going away. It may have been in hibernation for 236 years, but it has awoken with roar.  They said it best in New Hampshire when they adopted it for their State Motto in 1945.