REYKJAVIK, Iceland (PNN) - January 29, 2013 - Iceland has become a laboratory for banking and political reform. The population has stepped up to help sort things out in such a way as to thwart gross self-interest exploitation of the system.

Icelanders now have a growing economy in the face of a mountain of ruinous debt instruments.

Fears related to those debts are misplaced. Bankers like to forget that in sovereign debt, the king does make the rules. The country is now recovering and can buy the paper for ten cents on the dollar until it has recovered 90% of it, however long it takes. Then a generation or two from now, it will settle generously on the balance while putting out a congratulatory press release.

Of course during the recovery, Iceland has built up sound banking internally and has no appetite whatsoever for foreign loans.

This is a lesson to all of what is still possible.