Why Iceland should be in the news but is not..

[Fumesucker]

http://sacsis.org.za/site/article/728.1

An Italian radio program's story about Iceland’s on-going revolution is a stunning example of how little our media tells us about the rest of the world. Americans may remember that at the start of the 2008 financial crisis, Iceland literally went bankrupt. The reasons were mentioned only in passing, and since then, this little-known member of the European Union fell back into oblivion.

As one European country after another fails or risks failing, imperiling the Euro, with repercussions for the entire world, the last thing the powers that be want is for Iceland to become an example. Here's why:

Five years of a pure neo-liberal regime had made Iceland, (population 320 thousand, no army), one of the richest countries in the world. In 2003 all the country’s banks were privatized, and in an effort to attract foreign investors, they offered on-line banking whose minimal costs allowed them to offer relatively high rates of return. The accounts, called IceSave, attracted many English and Dutch small investors. But as investments grew, so did the banks’ foreign debt. In 2003 Iceland’s debt was equal to 200 times its GNP, but in 2007, it was 900 percent. The 2008 world financial crisis was the coup de grace. The three main Icelandic banks, Landbanki, Kapthing and Glitnir, went belly up and were nationalized, while the Kroner lost 85% of its value with respect to the Euro. At the end of the year Iceland declared bankruptcy.

Contrary to what could be expected, the crisis resulted in Icelanders recovering their sovereign rights, through a process of direct participatory democracy that eventually led to a new Constitution. But only after much pain.

<snip>

Read the rest of the story at the link.

[Diclotican]

1. Fumesucker

Fumesucker

My guess is that if the truth about how to get out of debt are released to a larger publicum, it could end in others do the same as Iceland. And that would be a danger to the Powerst to be, who dosen't want information about different solutions to the debt poision known... Information is dangrous - and the fact that Iceland managed to at least partly get the hand out of neo-liberal kapitalism is something many either dosen't know mutch about - or are totaly ignorant about...

Diclotican

[Fumesucker]

2. You are a good guesser I think..

TPTB don't want us to know a lot of things, knowledge is power and ignorance is weakness.

[Mudoria]

3. So basically they took a bunch of small investor's money

and said we're stealing your money? Nice..

[arikara]

4. The banksters did exactly that

They did it. Not the Icelandic people.

...more...

Elections were brought forward to April 2009, resulting in a left-wing coalition which condemned the neoliberal economic system, but immediately gave in to its demands that Iceland pay off a total of three and a half million Euros. This required each Icelandic citizen to pay 100 Euros a month (or about $130) for fifteen years, at 5.5% interest, to pay off a debt incurred by private parties vis a vis other private parties. It was the straw that broke the reindeer’s back.

What happened next was extraordinary. The belief that citizens had to pay for the mistakes of a financial monopoly, that an entire nation must be taxed to pay off private debts was shattered, transforming the relationship between citizens and their political institutions and eventually driving Iceland’s leaders to the side of their constituents.


...
edit to add: correct me if I'm wrong, but this would mean that a family of 4 would be on the hook for 400 euros or $530 a month for 15 years to pay for the banks thievery... if the Icelanders had stood for it.

[Fumesucker]

5. I guess you missed this part..

Protests and riots continued, eventually forcing the government to resign. Elections were brought forward to April 2009, resulting in a left-wing coalition which condemned the neoliberal economic system, but immediately gave in to its demands that Iceland pay off a total of three and a half million Euros. This required each Icelandic citizen to pay 100 Euros a month (or about $130) for fifteen years, at 5.5% interest, to pay off a debt incurred by private parties vis a vis other private parties. It was the straw that broke the reindeer’s back.

What happened next was extraordinary. The belief that citizens had to pay for the mistakes of a financial monopoly, that an entire nation must be taxed to pay off private debts was shattered, transforming the relationship between citizens and their political institutions and eventually driving Iceland’s leaders to the side of their constituents. The Head of State, Olafur Ragnar Grimsson, refused to ratify the law that would have made Iceland’s citizens responsible for its bankers’ debts, and accepted calls for a referendum.

Of course the international community only increased the pressure on Iceland. Great Britain and Holland threatened dire reprisals that would isolate the country. As Icelanders went to vote, foreign bankers threatened to block any aid from the IMF. The British government threatened to freeze Icelander savings and checking accounts. As Grimsson said: “We were told that if we refused the international community’s conditions, we would become the Cuba of the North. But if we had accepted, we would have become the Haiti of the North.” (How many times have I written that when Cubans see the dire state of their neighbor, Haiti, they count themselves lucky.)
In the March 2010 referendum, 93% voted against repayment of the debt. The IMF immediately froze its loan. But the revolution (though not televised in the United States), would not be intimidated. With the support of a furious citizenry, the government launched civil and penal investigations into those responsible for the financial crisis. Interpol put out an international arrest warrant for the ex-president of Kaupthing, Sigurdur Einarsson, as the other bankers implicated in the crash fled the country.

[sabrina 1]

13. This is why the EU chiefs, Sarkozy, Merkel (who all but threatened

war) panicked when Panandreou suggest putting Greece's loan from the IMF and its draconian conditions to a vote. THEY remembered Iceland. So they forced him out and put in an unelected Banker to run the country who will force Greece into an undemocratic system that will turn them into debt slaves, as would have happened in Iceland, for decades. Iow, these thugs have turned Europe into a series of third world nations, beholden to the IMF and the World Bank.

I was so hoping Greece would do what Iceland did, and I am still hoping.

[Merlot]

6. Someone send this to Greece! Really good article worth the read.

[Nye Bevan]

9. Greece is benefiting from a 50% write down of its sovereign debt.

Iceland never defaulted on its sovereign debt.

[Merlot]

21. The people voted against the "write down"

But the EU is not taking "no" for an answer.

[PETRUS]

7. We aren't big on "news" in the US. We're more about publicity. nt

[murielm99]

8. Maybe Argentina should be in the news, too.

They defaulted on their debt and came back. Their economy is growing, and it seems that poverty is decreasing there, too.

The IMF kept lending them money, even though they had no hope of repaying it.

On another note: If you have not read Confessions of an Economic Hit Man, please do.

[Ginas]

17. Unlike Iceland, Argentina did NOT cause Euro-crisis

Or the investors IN Iceland.

[slay]

10. K&R for the late night crowd

:kick:

[muriel_volestrangler]

11. An addendum, since that was written for Daily Kos in August:

The dispute with the UK and Netherlands was about whether the British and Dutch depositors should be paid back the first €20,000 of their deposits, as Icelandic law had said would happen. The Icelandic government said it would pay the Icelandic depositors, but not foreign ones; the British and Dutch said that, since the Icelandic government had told the banks to set up the emergency fund for it, it was up to the Icelandic government to back it up for foreign accounts too, and that it was discrimination (which, so far, all courts have agreed with).

Meanwhile, the bankrupt banks did have some assets, but they weren't very liquid, and bondholders in the banks were claiming they should be paid back as well, using those assets, at the same time as the depositors. This dispute has finally cleared the Icelandic legal system:

Iceland will start paying out as much as $11.4 billion in foreign depositor claims after the country’s top court upheld an emergency law that leaves bank bondholders in the lurch and protects ordinary account holders.

The decision by Iceland’s Supreme Court to rule in favor of a crisis bill enacted three years ago “marks the endpoint” to a dispute with the U.K. and the Netherlands triggered by the island’s 2008 financial collapse, Economy Minister Arni Pall Arnason said. The ruling will help repair relations with the two countries, whose depositors risked losing their savings when Iceland’s second-biggest bank collapsed, he said.

“It’s clear from these rulings that all depositors, regardless of nationality, residency, nature or amount of their deposit, will get their money back in full,” Arnason said in an interview in Reykjavik. Repayment may start within weeks, he said.

Iceland’s banks defaulted on $85 billion at the end of 2008, as the government ring-fenced lenders’ domestic operations in an effort to protect the $12 billion economy from total collapse. The local assets of Landsbanki Islands hf, Kaupthing Bank hf and Glitnir Bank hf were taken over by the state, which has since created new banks from the lenders. Bondholders, including Royal Bank of Scotland Plc, BNP Paribas SA and Deutsche Bank AG, are still trying to recoup their funds.

http://www.businessweek.com/news/2011-11-10/iceland-passes-last-hurdle-in-11-4-billion-depositor-payout.html

So I think it should be noted that what was at the heart of the dispute was whether small depositors should be repaid according to an Icelandic law. Iceland was effectively saying "forget the old law, we can't afford to honour that guarantee, but we'll cover it for Icelanders, and other countries must pay their own nationals". Disputing this was not such a heinous thing as many DUers seem to think. And now, the British and Dutch governments will get reimbursed (since they paid the individuals up to €20,000), and other depositors (eg British local councils) will get the rest of their deposits back.

[Scuba]

12. K&R

[MH1]

14. "this little-known member of the European Union "?

Is Iceland a member of the European Union? I don't think so. Am I mistaken?

If I'm right, it kind of cuts the article's credibility off at the knees. Even if the rest of it is true.

[muriel_volestrangler]

18. You're right; this was only a diary from Daily Kos

No, there are various mistakes in the diary. For instance, Iceland did not 'literally' go bankrupt. The privately owned banks went bankrupt. The government refused to take on their debt, and got into a dispute with the UK and Netherlands about repaying depositors in the banks. But the government's own debt obligations (as far as it saw them) were always met.

[Ginas]

15. I agree, Iceland BANKING scandal

Should be IN the news!

[malaise]

16. Go Iceland

Lead the way

[xchrom]

19. recommend

[WillyT]

20. K & R !!!

:kick: