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Icelandic Revolution - the people say NO to the Banksters
January 7, 2010 - 9:28am
Iceland appears to be setting a new standard of taxpayer response that politicians everywhere might want to note.
Under pressure from voters and taxpayers, Iceland's President, Olafur Ragnar Grimsson, this week refused to sign a bill to reimburse almost $6-billion to Britain and Holland for money paid to depositors who put money into two high-flying Icelandic banks that failed in 2008. The president was responding to taxpayers who are essentially rebelling against being forced to pick up the tab for a financial bailout of depositors, regulators, foreign governments and even their own government and politicians. It is only a bit of an exaggeration to say that the people of Iceland are refusing to pay for all the schemes of private bankers and public officials who, over the course of the last decade, drove the whole of Iceland into bankruptcyRead more: http://www.nationalpost.com/opinion/columnists/story.html?id=02d1dd96-0c30-43d3-a5b7-eb7bf7037fba#ixzz0bvt6dTTZ
I was listening to this on the news this morning and cheering. Good for them! The bankers got themselves into the mess - we shouldn't be bailing them out!
Icelandic government is warning Britain to watch their mouths over the dispute, or it could piss off the people who will be voting in a referendum on February 20th about the terms of the repayment.
It's not a bailout that's being demanded. It's compensation for depositors that thought their money was safe.
Is it the responsibility of the government to step up and cover the deposit insurance if banks fail, perhaps not. Then again a lot of ordinary citizens are going to end up with their savings destroyed because they went to the bank that was offering them the best interest rate. However, this is made more complicated by the international nature of what happened. Considering the scale of foreign deposits it could create an unmanageable burden for Iceland.
Credible deposit insurance is key to credible banking, depending on how Iceland handles this they risk becoming an international pariah in financial services.
I guess that time wasn't, say, 15 months ago when everyone was enjoying the prosperity. I wonder how many Icelandic unions put their pension funds under the mattress, rather than playing fast and loose with this irresponsible financial tomfoolery we call "investment" in exchange for the free money? At any rate, I guess they're safe.
I think the point is that the average Icelandic citizen is as much a victim as the investors in Britain were, and they've all been screwed over by the bankers.
Perhaps the unions did invest, thinking their pension money was safe. If so, they've lost everything. They weren't the ones gaming the system, however, so why should they lose everything AND be forced to pay for everyone else in other countries who got defrauded by the same people who defrauded them?
I mean, do you have RRSPs? I did, for a while. I actually cashed them out due to a family crisis just before the markets started falling, but if that family thing hadn't happened, I'd have lost big time too.
That doesn't make me responsible for the financial crisis, though, just because I was investing for my retirement. I mean, what the heck else are we supposed to do about our retirements besides invest in the vehicles that are there for us, and which we trust the governments to regulate?
For the moment I'm pretty undecided as to who should take the hit for this mess. However, framing what's happening as some sort of victory over the banks it rather misleading. The bankers that engineered this mess have areadly been paid and made good money even though some may have now lost their jobs. The banks are either in government ownership or being liquidated to pay their liabilities. The corporations that did this are effectively gone and the people responsible aren't going to be held accountable.
This is now a debate between governments as to who foots the bill for the clean up, it's going to be one tax payer or another so I'm not really sure what there is to cheer about.
The people who run the bank should have to pay back every cent. And since they don't have likely have $10 billion on hand (which seems like a lot for only 300 000 clients, btw) they should go into debt for the money. That debt will be passed on to their children, their children's children, etc. and they will finally learn how the other half lives.
It's an average of $33 333 per person. High but not obscenely so.
No, though my pension contributions, and my employer's matching contributions, are surely invested in something. And that's kind of why I find it funny when (especially after the financial meltdown a year or so ago) investment is characterized as some kind of Three Card Monte scam that dishonestly manufactures wealth out of other wealth and rips off the little guy. The little guy never seems to complain about it when it's his pension that's growing, or when it's him that gets a mortgage that will allow him to buy the house that he wants to buy. Nobody seems to think that the world of finance and investment is a huge Ponzi scheme when it contributes significantly to the GDP. Iceland was quite famous for transitioning from a fishing and sealing economy to a financial powerhouse, and I don't recall hearing all the Icelanders demanding to go back to the herring boats. Similarly, I haven't heard many Americans complaining that that house they bought was forced on them when all they really wanted was to rent forever.
I think what is appalling is the total lack of regret by those on the right in Iceland who implemented Milton Friedman's whacky neoliberal agenda since the 1990's. Some of them are even suggesting that they didn't go far enough with the voodoo.
That just struck me as pretty high for bank account deposits. But then, I'm pretty broke.
MAKE THE FUCKING RICH PAY! They lobbied for low regulation, they turned banks into casinos and pyramid schemes, and they have been the net beneficiaries if the bailouts and so-called stimulus schemes. Make them pay. And it's really, really easy. The method is a one syllable word: tax.
Iceland promises to pay no matter what
http://news.bbc.co.uk/2/hi/business/8444829.stm
Why Iceland Should Be in the News, But Is Not
by Jérôme E. Roos on June 11, 2011
In just three years, Iceland went from collapse to revolution and back to growth. What can Spain and Greece learn from the Icelandic experience and its embrace of direct democracy?
http://roarmag.org/2011/06/iceland-crowdsources-constitution-investors-spain-greece/
More people need to hear about Iceland. I find it inspirational. Hell, if things get worse around here, I'll try to find a way to live there. It's not like I'm not used to cold weather.
Yes, thanks to Catchfire. Now there is a real information service!
You and me both, Deena. ;-)
laine lowe, it's actually not that cold there. The temperatures are quite moderate due to natural geothermal heating. When rr and I went there for our honeymoon in June, the weather was quite nice - it was around 13-20 C. (And I think it gets a little warmer than that in July, if I'm not mistaken.) And we were told that in the winter, it doesn't generally get colder than -10 C.
A really interesting English language publication to read regularly is the Reykjavik Grapevine. It's a newspaper that gets published once or twice a week (I think, at least during the summer anyhow), and it's politically progressive. It's a good way to keep up with not only political news there, but also cultural stuff as well.
http://grapevine.is/Home/
Thanks, Michelle. I know very little about Iceland.
Countries have a right to defend themselves against marauding international capital.
It is ILLEGAL for any nation to treat foreign nationals differently than its own citizens.
Clean slates, and not oppressive debt claims imposed illegally by international banksters, leads to prosperity. POst-WW II Germany is a good example of this. And alternatively, Post WW I Germany is a very bad example of banksters imposing oppressive debt levels with criminal interest rates on a nation of workers who did not share in profit windfalls had by industrialists who took advantage of immoral warfiteering.
No kidding! And to paraphrase Hudson: International banksters' trillion dollar gambling debts that can not be repaid, won't be. And they know their impossible gambling debts will never be repaid. It's a ruse to get countries to handover valuable state assets and moneymakers to an international oligarchy at firesale prices.
By the way, that article posted by Catchfire above, written by Deena Stryker, may be inspiring, but apparently it's completely riddled with factual errors - just about every claim in it is either exaggerated or incorrect. So you might want to read this correction from the Grapevine. They correct it somewhat reluctantly, since they'd like Iceland to be the folk heroes that those of us outsiders on the left want them to be!
http://grapevine.is/Features/ReadArticle/A-Deconstruction-of-Icelands-On...
Credit to radiorahim, who noticed this article and passed it along to me.
Thanks Michelle and Radiorahim.
One thing, I wonder who "we" are out there in the tweetosphere? I'll read some more...
The Grapevine editors, I would assume, with the actual article written by Anna Andersen. And they were addressing Naomi Klein, who also tweeted the article Catchfire posted above, I think. Notice all the Icelanders in the comments after the article who were congratulating the editors for setting the record straight.
I'm slightly but not entirely confused by this:
And AA is right. Iceland is not an EU member country.
Iceland is a candidate nation for membership in the EU. They were already heavily integrated into the European common market before their application for membership was submitted sometime in June.
I'm guessing that she is saying Icelandic government did not default on debts that it does not legally owe to British or Dutch banks? Is that what AA is saying?
And then there is this from the NYTimes:
I think Valfells may be confusing the issue. How can Iceland declare bankruptcy for what are Icelandic banks gambling debts owed to British and Dutch banks? It makes no sense.
Apparently Icelanders had a referendum on whether or not they would take Iceland's private bank debts on to the public's balance sheets as public debt owed to foreign creditors. But as Keynes said, foreign debts should be paid out of exports, goods and services, but not GDP. Paying from GDP has an effect of lowering the exchange rate/purchasing power of the national currency and thereby raising the foreign debt to GDP ratio, which at some point becomes unsustainable and unrealistic for a nation to take on.
They need to wipe debt slates clean in all those countries. Clean slates and not oppressive debt levels lead to economic prosperity. Post WW II Germany is a good example. 2000s Argentina is another. As Hudson and others say, debts that can not be repaid won't be.
Fidel, the Reykjavik Grapevine is probably the best regular English language source of news about Iceland. It's an "alternative" paper that tends to be on the left and also carries a lot of arts, culture and tourism articles.
They publish monthly most of the year, and it seems every couple of weeks in the summer months. They also archive their back issues in .pdf format. If I recall correctly there are two or three years of back issues on the site.
Furthermore, while Iceland may seem like a symbol of sticking it to the financial institutions that brought about the financial collapse, the people really haven’t escaped the burden. To quote respected political commentator Egill Helgason in an article that will print in The Grapevine on Friday: “According to an OECD report Iceland has put more money into its failed financial institutions than any other country except Ireland. So in this way Iceland is not a model—the people in Spain need not wave Icelandic flags.”
Apparently the author was confused about whether or not we had a new Constitution when she started writing and then did some more research toward the end to realise that yes, it is still a draft with a number of hoops to go through.
The idea that the Constitution was ‘crowdsourced’, as the international media has been keen on reporting, is at best half true. But accepting suggestions via Facebook and an Internet submission form is hardly the same as the Constitution being “written on the internet”. It sounds cool though.
Excellant article, very tongue in cheek criticism of the klein article
Looks like the IMF got one right.
"RÚV reports that the IMF conducted its sixth review of the Icelandic economy in Washington this afternoon, and came to the conclusion that they were no longer needed. The IMF will therefore be concluding operations in Iceland, and leaving."
Icelanders voted overwhelmingly in a referendum not to accept the original terms of the payout to European banks. The case is before an EU court representing a trading block of nations which Iceland does not belong to, at least not yet anyway. Does the EU court have jurisdiction over New Zealand? Because like Iceland, NZ is not part of the EU either. I think the result of Iceland's referendum has more weight than any debt repayment obligations to the EU might claim against a non-member nation. The referendum results make those original debt claims of all Icelanders appear to be illegal, and EU bankers and their shareholders know it.
It remains to be determined how Iceland will pay a debt to the EU banks and what terms. I think the original demands made by British and Dutch banks are out the window for now though. And if Iceland's economy does sink deeply into recession, Icelanders surely won't be paying debts which in coming years could be determined to be neither realistic nor legal debt claims against them. Every country has the right to defend itself from marauding capital. It's also illegal for any country to treat foreigners differently than its own citizens. EU bankers would have preferred there was no referendum. Neoliberalism is inherently undemocratic, and they want to avoid national referenda on these kinds of fictitious debt obligations altogether.
Iceland's social democrats screwed-up by agreeing to a referendum in the first place. Not very neoliberal of them at all. EU banksters are angry with them and ratings agencies threatening to downgrade Iceland's credit rating. Icelanders still could mutiny off the neoliberal Titanic ship of doom, and the banksters know it. It's what they fear most with one country possibly starting a mutiny. Iceland would be better off without abiding by neoliberal monetary diktats emanating from the EU and so would a lot of countries. Look at Latvia.
From "Iceland's Zombie Politics" by Egill Helgason in the Grapevine:
Read the rest here