Friday, September 04, 2009

[icesave] and the principle of taxpayers subsidizing the speculators

Thank you Iceland Review for pics and info

As in the UK, so in Iceland. The tab for ineptitude and corruption is picked up by the taxpayer.

On August 19th, the Icelandic Prime Minister, Jóhanna Sigurdardóttir, announced plans for Icesave:

“Once the Icesave agreement has been approved by Althingi the dispatch of the loan from the International Monetary Fund can be worked on,” the PM told reporters. “When these matters have been completed we can step across a large threshold which has stood in the way of the restoration [of Iceland’s economy].”

In a nutshell, the Icelandic government, in their ignorance and greed, offered investors in the UK and the Netherlands a nice return for their money. Councils across the UK, for example, invested in Iceland's Landsbanki and then the whole thing went pear-shaped.

Most people know the story of the fiasco and all those out of pocket. Where councils invested, they were, by definition, investing our money. The UK and the Netherlands, naturally, want their money back but how to get it? Simple - force the Icelandic government to take a loan from the IMF.

Interesting how the IMF keeps popping up all over the place, isn't it?

Now, for the Icelandic government to do this, they must commit to stringent conditions and who pays for this for several decades? Of course - the Icelandic people. So the people here and the people there all pay. And what of the criminals themselves? They get away with rap over the knuckles.

The parliament, Althing, colluded with this of course and so a series of squabbles over amendments took place, to make Icesave [if ever there was a misnomer, this is it] more acceptable to the people:

The disclaimers that were added to the agreement between Icelandic, British and Dutch authorities on Icesave include that economic growth determines the annual down payments of the loans from British and Dutch authorities and that no payments will be made if economic growth is halted.

... and here:

The Icesave agreement, signed by Icelandic, British and Dutch authorities in June, states that the Icelandic Depositors’ and Investors’ Guarantee Fund will not start repaying the loans until 2016.

The Budget Committee also discussed how it could be implemented that the state guarantee would only be valid if British and Dutch authorities agreed to the disclaimers introduced by the Icelandic parliament.

The committee referred to this item as the “InDefence-disclaimer” after the InDefence campaign group, which has presented ideas in relation to the Icesave case.

Naturally, the Icelandic people take a dim view of this and here is the result:



The Icelandic way of demonstrating is quaint:

Frosti Sigurjónsson, managing director of travel search engine Dohop, has promised to reward the loudest protestors at today’s demonstration against the Icesave agreement with ISK 1-2 million (USD 7,700-15,400, EUR 4,900-9,800).

But it turns nastier:

Sigurjónsson explained that the purpose with all the noise is to protest the fact that the Icelandic nation will have to pay for the debt of gamblers and their private banks.

“We have suffered enough already. It is in breach of all laws and ethics to make us pay. Both native and foreign specialists have pointed that out. The nation should not accept such injustice without making noise,” Sigurjónsson writes.

And so to the call for a referendum on the proposal, which will put every Icelander in hock for the rest of their days:

Representatives of the website kjosa.is, where more than 8,500 people have signed a petition demanding a referendum on the Icesave legislation passed by parliament on Friday, will formally hand the petition over to President Ólafur Ragnar Grímsson today. In the petition, the president is challenged to enforce a referendum by vetoing the legislation, Fréttabladid reports.

Now, contrast this situation with my portrayal of Iceland in my earliest posts. Let me quote from one of those posts:

The heatwave from Europe may not exactly be here, but the weather in Reykjavík has finally turned sunny. It was rainier this June than it has been for many decades. July has been worse, that is until today.The heat is now 17 degrees centigrade, which is excellent for Reykjavík.

Many people have taken the day off.
This explains why not much is happening in the country, as you can see from the lack of news.

... to which I received the reply, from EU Serf:

In the middle of a hectic day of a hectic life, Iceland seems somehow peacefully inviting doesn't it.

Oh how that innocence has been lost.

Small bikkies, peanuts too, you might say, compared to the massive losses in Europe and America but Iceland is such a clear country, in the sense that the dirt in Europe is hidden beneath all the otehr things going on there but in the little island of the north, the dirt shows up in stark relief, for all to see.

A bunch of greedy people saw a chance of a massive killing on both sides of the sea. Result - the people pay for that greed. Same story wherever you go. Question? Will the greedy really get away with it?

UPDATE: September 8th from Iceland Review:

I like your post but there is one thing I think you misunderstood. Icesave was Landsbanki's online savings scheme in the UK and the Netherlands and at the time of its launch, Landsbanki was a private bank. It was only nationalized after the economic meltdown of last fall, which is why the Icelandic tax payers have to suffer the consequences. Therefore it isn't fair to say that the government is to blame for Icesave's blunders, although the Icelandic, British and Dutch governments should probably never have allowed Icesave to operate the way it did.

What's her future now?

No comments:

Post a Comment

Comments need a moniker of your choosing before or after ... no moniker, not posted, sorry.