First Iceland, Then the World

by Michael Collins / March 8th, 2010

The public is angry. Why should the public pay for the bankers mistakes.

— Iceland blogger Halldor Sigurdsson

Who cleans up the mess when ignorant, greedy bankers rack up massive debt then go broke? The people of Iceland made a strong statement Saturday. The sins of big bankers and government regulators shouldn’t fall on the citizens. By a 93% to 2% margin, they voted down a proposal requiring them to cover bad debt incurred by one of the nation’s oldest and largest banks. Covering the debt would have cost Iceland’s 317,000 citizens around $17,000 each.

Iceland’s national referendum was the first opportunity for the people of any nation to vote directly on who pays when the financial elite fail.

As citizens voted, Iceland’s Prime Minister was dismissing the importance of the vote and promising to negotiate a payment scheme obligating citizen subsidies for bad debt created by Iceland’s beyond-bad bankers.

Icelanders are struggling with a collapsed economy. Businesses are failing at a startling rate, unemployment is soaring, and the prospects for the future are simply not there. Yet the British and Dutch governments demand that their swindled citizens receive compensation from beleaguered Icelanders. Where were the British and Dutch central banks and politicians while their citizens were being fleeced? Aren’t the rulers of these countries aware that the failed Icelandic bank was owned by wealth investors, not the citizens?

Iceland’s size and the very dire circumstances offer a focused preview for citizens around the world. The banks make bad deal after bad deal. When they’re about to fail, the government steps in with a taxpayer bailout. It doesn’t matter which faction of the narrow political spectrum is in charge. The message is starkly clear — when the banks fail, you pay. The solution is presented to citizens as a fait accompli, a mandatory submission to indefinite financial slavery for the benefit of the failed financial elite. The will of the people doesn’t matter even when there’s a direct vote.

The failed financial enterprises that control global commerce are opening their new show on the road in Iceland. Greek citizens are next in line for indentured servitude, thanks to their lying leaders and Wall Street’s Goldman Sachs.

Citizens in the United States remain overwhelmingly opposed to bailouts for Wall Street and big banks. Like Iceland’s Prime Minister, members of Congress and the president don’t care. Big banks have now received at least $12 trillion in credit and cash from the US Treasury and Federal Reserve Bank. The 17 million citizens out of work, their families, and the eight million forced to work reduced hours are barely mentioned and get just a pittance compared to the ultra wealthy bankers.

How did the financial elite and their political minions do it in Iceland? The lesson is instructive.

Tiny Iceland‘s Bankers Fool British and Dutch Regulators

Iceland’s second largest bank wanted some new customers. In 2006, the bank created the Icesave banking service. For the British market, Icesave pushed high fixed interest rates and easy access to online banking. The Netherlands sales pitch was based on banking transparency, seeing how the bank functioned online, with a 5% interest rate on deposits.

British regulators voiced no major problem with Icesave’s policies until the bank collapsed in October 2008. The Netherlands central bank (just now in a liquidity crisis) gave its stamp of approval to Icesave even though there were substantial warning signs that the bank was in trouble.

By the time Icesave was insolvent, its 300,000 British depositors and over 100,000 in the Netherlands saw their money vanish. The finger pointing began. The Dutch central bank claimed Iceland’s regulators lied to them. British regulators were shocked at the disarray of Iceland’s banking system.

Dutch and British regulators failed to mention that they’d outsourced regulation for their citizens to tiny Iceland’s central bank. These financially savvy nations couldn’t be bothered with their own people until the Icesave scheme did its damage.

Dutch and British political leaders somehow forgot to mention that Sweden and Norway insured the deposits of their citizens when another Icelandic bank failed in those countries.

Icelanders Stuck with the Bill

Icesave’s failed business tactics, negligent regulation by Iceland’s government, and indifferent British and Dutch authorities created the problem. But citizens are taking the fall. The usual suspect, the International Monetary Fund (IMF), offered up billions in cash in return for covering the lost deposits for British and Dutch citizens. IMF backed off of this position as it became clear that Icelanders would reject the March 6 referendum.

Ultimately, the financial machinations by international bankers and G-20 leaders don’t matter. The people of Iceland are in no position to pay the bill. Pretending otherwise only prolongs the charade of some order for the comatose global financial system. Who benefits? The financial elite who continue to accumulate more and more money as though it’s actually worth something.

Furious Citizens – Bloggers Won’t Give Up

Icelanders take their voting seriously. Turnout is usually above 80%. But the turnout for this referendum was 57%, the lowest figure in years.

The very good news is that Icelanders are providing real analysis and hitting the streets on a regular basis to protest the big con pulled by their leaders and financial elite. This is a sample of the vibrant dialog of the people who choose to fight back.

Independent Icelandic News – The Icesave Fraud Case

"The public was deliberately lied to and the deception was complete. The banks fell, the Brits and Dutch, and Germans too are pissed off and we Icelanders have to loose our savings, our homes, our jobs, our dignity. We also have to pay for the Germans, the Dutch and the Brits.

"We are only starting to ‘feel the cold dead hand of the neoconservatist financial free market monster’ that tore through the world and is still squeezing the Icelandic nation, even after its death. We don’t get a recession, we get a complete collapse." June 23, 2009

*****

Economic Disaster Area – Arrogant, Humiliating, Short Sighted, and Stupid

"Right now the nation is numb. Everyone is waiting for something while trying to stay afloat. Businesses and individuals who have been watching their cash fly out the window atop exorbitant interest rates for years are experiencing a drowning feeling. It seems like many are just shutting their eyes and resigning their fate to fate itself while still waiting for rescue to appear somewhere on the horizon.

"Most people agree that something must be done. They just cannot agree on what exactly." @ Dadi, May 24

*****

The Iceland Weather Report – Johanna (Iceland’s Prime Minister) sends a clear message

"As if the government wasn’t in enough trouble with public opinion here at home, Prime Minister Johanna Sigurðardóttir has publicly announced that she plans to shun the referendum tomorrow.

‘To me it is pointless and I find it is very sad that the first referendum since the founding of the republic revolves around legislation that is already obsolete. Consequently I see no point in taking part in this referendum,’ (said Iceland’s Prime Minister). alda March 5, 2010

*****

Iceland Banking Crisis News and More

"According to numbers, 1.5 % percent have said yes to the agreement to pay Icesave, but 93.6 say not to that. But this does not change anything. The Prime minister and finance minister say that there is a new deal on the table. Iceland’s President says that a Referendum makes the democracy stronger. The outcome of the referendum does not have any affect on the government in Iceland." Halldor Sigurdsson, Mar 7

*****

Economic Disaster Area – National Referendum – A Sad Day for Democracy in Iceland

"Tomorrow is the first national referendum Icelandic citizens have been allowed to participate in by the political elite since the conception of the republic in 1944. By all measures, this should be a happy day for democracy in Iceland.

"But instead it is not a cause for celebration but a large milestone in the farcical power play which has taken place between the four largest political movements in Iceland since 1944.

"Yes, a farce.’Isn‘t that what this whole thing really is’, asked a Dutch journalist yesterday after surveying the scene? It is a sad day.’ March 5 @ Dadi

Michael Collins writes for Scoop Independent News and a variety of other web publications on election fraud and other corruptions of the new millennium. He is one of few to report on the ongoing struggles of Susan Lindauer, an activist accused of being a foreign agent, who was the subject of a government request for forced psychiatric medication. This article may be reproduced in whole or in part with attribution of authorship, a link to this article, and acknowledgment of images. Read other articles by Michael, or visit Michael's website.

This article was posted on Monday, March 8th, 2010 at 8:59am and is filed under Classism, Democracy, Iceland.

8 comments on this article so far ...

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  1. MichaelKenny said on March 8th, 2010 at 9:46am #

    The somewhat ranting tone of this article misses the main point (ranting normally causes that problem!). Iceland is under no legal obligation whatsoever to “indemnify”, to use lawyer’s language, the British and Netherlands Governments and those governments do not claim they do. The two governments, voluntarily and without obligation, compensated the depositors resident in their countries and are now asking the Icelandic Government to re-imburse them for that voluntary expenditure. The referendum result is a surprise to nobody and a problem fornobody. Now, the British and Netherlands Governments can say that they have tried everything to get the money back but cannot do so.
    Greece is a totally different problem. That seems to have been a deliberate attack by the Wall Street banksters, via the hedge funds and the rating agencies, designed to undermine the hated EU and its euro, probably intended to intimidate EU leaders away from plans to limit bankers’ bonuses by law, and follows an earlier, largely unsuccessful, attack on Latvia. No matter what is said publicly, the EU cannot afford to let a Member State go down and, as with Latvia, it will do whatever is necessary to prevent Greece collapsing. Making the details public would just play into the hands of the speculators who set up the stunt in the first place.

  2. Michael Collins said on March 9th, 2010 at 12:57am #

    There are no excuses for the fraud pulled on the people of Iceland. First, their government had no right to guarantee the deposites for overseas banking. British and Dutch regulators had no business accepting, then demanding that guarantee since they knew or should have known that that guarantee would be worthless. The state of banking in Iceland was no secret. The face validity of any claim that Icesave coule come through if things got rough is absurd.

    The banks and regulators failed now the people pay. That is cause for outrage. My tone is not commensurate to the tragedy. The Icelanders will get it right, the people, not the”elite” bankers who fail again and again all over the world.

    Here’s a good summary based on a report on the affair by Dutch academics: http://tinyurl.com/yjge4ol

    “It is certain that that the Icelandic authorities bear responsibility for the Icesave collapse, but also so do the Dutch and UK authorities for allowing Icesave to operate in their markets without adequate regulation and supervision of its operations or an appreciation of the consequences of a collapse (notwithstanding the European passport rules that allowed Icesave to operate in those markets).

    “The actual CDS spreads, the Basel II working rules on risk management that prescribes the DNB to do an integrated risk assessment, including Landsbanki and the FX exchange risk, the problems with the loans of Icelandic banks with the Luxemburg Central Bank, the different ‘warning’ reports on Icelandic banking by market participants and the lack of reserves in the Icelandic Central Bank were all reasons enough to at least take more than a formal procedural approach during granting the banking license to Icesave.”

  3. John Andrews said on March 9th, 2010 at 1:19am #

    The source of all wealth is labour, not gold, paper money, oil or anything else. Human labour is the only means of producing wealth. The world’s money supply has for many decades been based entirely on hot air – credit – itself based on absolutely nothing more substantial than some banker pressing a few buttons on his computer. But what that banker’s action actually means in real terms is that some some working stiff somewhere has guaranteed to supply her labour for however many years it will take her to slave for the banker.

    The IMF wanted to take on Iceland’s ‘debt’ (to Britain and Holland) because they have more muscle to enforce payment – just the same as any common debt collector might – only the people rightly pointed out that they never agreed to the debt in the first place and therefore don’t need to supply their labour for the next half century in order to repay it.

    Good for them.

  4. Michael Collins said on March 9th, 2010 at 1:24am #

    I couldn’t agree more and didn’t say it as well.

  5. nedlud said on March 9th, 2010 at 5:35am #

    Damn straight, Michael Collins!

  6. Michael Collins said on March 9th, 2010 at 11:07am #

    Hey nedlud. Great to see you. The Icelanders are an inspiration.

  7. Mulga Mumblebrain said on March 10th, 2010 at 1:14am #

    The Icelanders can vote 100%, and until they go red in the face. They will be screwed, they will be made an example of, just as country after country in the poor world has been devastated by the IMF and World Bank.To encourage the others in total obedience and absolute quiescence. The market capitalist neo-feudal project is, at its very base, founded on a psychopathology which consists primarily of hatred of other people and a determination to harm them in the process of enriching themselves. Thanks to capitalism we have devastated an entire planet, felling vast forests, exterminating huge populations of passenger pigeons, North American bison,tuna, cod, sharks and whales, polluted every biosphere, mined the soil to exhaustion, drained the aquifers, dammed every major river, all to enrich a tiny, infinitely greedy, parasitic elite. Global poverty, relative and absolute has never been greater, and mass immiseration is being spread to the previously protected lower ranks of the rich, Western, world. No longer needing the mindless loyalty of their masses, now that the Communist menace has been seen off, the parasites are driving their detested proles into poverty, safe in the thought that revolt can be as easily crushed in Reykjavik or Detroit as in Fallujah or Gaza. Who knows, if the Icelanders rebel, perhaps the NATO bases will prove useful in launching drone attacks on the ‘terrorists’.

  8. John Andrews said on March 10th, 2010 at 3:51am #

    Michael, I don’t think the Icelanders are especially inspirational – they simply had the opportunity to express their opinion – something denied to all the rest of us. I’m sure that if Americans or the Brits (or anyone else caught out by the banksters) had had any say in the great bank bailout most of us would have done exactly the same as the Icelanders, and kicked the banks into the very long grass.