I don’t think there is anyone who questions that Iceland should be held responsible for the usual EU mandated depositor minimum (€15,000 or €20,000 or whatever – in Denmark it was €35,000 before the crisis) for all depositors. What many people think is a whole lot less obvious is that the Icelandic population should be held responsibility for professional investors in Britain not doing their paperwork and speculating for hundreds of thousand or millions of Euro in risky banks because they here could get a higher interest. With higher pay off comes higher risk. A universal bank guarantee for all sums wasn’t part of the package.
The Icelandic banks should never have been nationalized, but left to go down. As it is now, rather than sending an impossible debt load on to the next many generations, the Icelandic state should go bankrupt and default on all loans. Investors will have to take their own losses. People need to start to take their losses and not send them on to taxpayers.
This is certainly not the case now. I don’t remember exactly what the maximum amount was, but (in the Netherlands at least) it was certainly capped. It might have been more than 20000, but certainly not more than 100k. There is quite a lot of people that already lost money on this and the issue is now about Iceland repaying the UK and Dutch government the guarnateed money.
Abou it being sad for Icelanders, boo f-ing hoo. The nice thing about democracy is that it’s ultimately the peoples fault for having people in power and parliament that allowed/provided the conditions in which icelandic banks could specualte with tons of foreign money with the caveat that the Icelandic government would need to back it up.
Just like with any other democratic government issue that you might disagree with, it is ultimately the voters (ie population) that is responsible.
Where’s the professional investors line coming from? Many of those who lost their shirts were savers, not investors, who were foolish enough to suppose that Iceland would honour the treaties that they signed and provide protection for depositor accounts.
The same Icelandic tax payers that were benefiting from all that tax money being reaped in by their oversized banks? Boo-fucking hoo. They enjoyed the good times, now it’s time to start paying back what they owe.
For instance the UK councils that invested more than £900 million in Icelandic banks. Pay each depositor €50,000 and let them eat the rest themselves.
As I said, everybody agrees that Iceland should refund every depositor to the EU deposit insurance of €20,000. Personally I think that is rather low set, and could easily be raised to €50,000. But Iceland should not be liable to pay anything beyond the deposit insurance. Just like US taxpayers should not be liable to pay Danish banks the couple of hundred of millions of dollars lost in Lehman.
I feel no pity for Icelanders. They fucked up. But all this business with socialising the losses of professional investors engaging in irresponsible money speculation must stop. These organisations must take their own losses and not pass them on. And that goes too for British local councils making good money over high interests, now whining when the deal turns sour. Boo-fucking hoo.
How did they “invest”? They placed money in a savings account. Iceland’s own deposit insurance covers all savings made in Icelandic accounts, and now they want to discriminate based on nationality (Icelanders get all their money back, Dutch and British have to reimbourse their own) expressly against the Treaty of Rome that Iceland’s a party to.
Iceland should be held to the standard that their own laws set:
Note what’s missing: unlike Dutch and British law, wholesale deposits were covered under the Icelandic deposit insurance scheme. Yet, Iceland now wants to cover 100% of Icelandic deposits and refuse to pay out for any British deposits. Like I said, under the Treaty of Rome, you cannot cover one nationality at 100% and tell the Dutch and British to piss off.
Yes, it must stop after the Icelandic government made a packet on taxes from the obscene amounts that these banks were bringing in, and the Icelandic people were benefiting from same tax income. The Icelandic people should be held responsible for this because a) they were the ones benefiting from all this income and b) they elected the idiots in the first place that allowed it to happen.
Agreed. Icelandic savers should be reimbursed to the same amount, 20,887 Euros, as British and Dutch depositors.
Then you do believe that US taxpayers should pay Danish banks the hundred of millions lost in Lehman. I disagree. Socializing losses and passing it on to taxpayers should never have taken place, except to the €20,000 (or €50,000) per investor to prevent bank runs. And it certainly makes no sense to set up an arbitrary exception for precisely Icelandic banks – Icelandic taxpayers should pay the tab for those, but all else should take their own losses.
The Icelandic people benefitted from the extravagance of Icelandic bankers to the extend that the American people benefitted from the bonuses of American banks and investment firms. That is to say, not a whole lot.
Are the United States party to the Treaty of Rome? No, of course they’re not. The two situations are not remotely comparable. Iceland signed a treaty with strict conditions on what they can and cannot do in such a situation. Unfortunately, the rest of Europe now knows any treaty Iceland signs is essentially worthless, subject to sudden piques of referenda madness (with the caveat, of course, that the Icelandic government is already sure that the people of Iceland will vote the “right way”).
lol, whatever. The standing joke in the UK is the British welfare system is kept afloat by our banking system and the masses of tax income that it brings in. Iceland transformed itself from a nation of fishermen in the blink of an eye, and you hold this had nothing to do with the vast sums of money being brought into the country by the banks?
Yes, a big mistake on Iceland’s part. Icelandic local authorities are covered at 100%. They’re now trying to limit British authorities to getting £28,000 back on the millions deposited within accounts, as Wikipedia makes clear:
Eh… the treaty of Rome founded the EEC in 1957. It was signed by France, Germany, Holland, Belgium, Luxembourg and Italy. Of course there are now 27 countries, and the EEC has become the European Union. Iceland is not a member.
So Iceland are not party to the Treaty of Rome either.
That’s also unsure. In theory, Greece is going to cheerfully adopt a massive fiscale austerity package. In practice, there’s a good chance they’ll do nothing of the sort and more or less demand a huge bailout from Germany to finance their welfare state.
In short, Iceland recently held a referendum on whether to pay back loans of about £2.3 billion to the UK and €1.2 billion to the Netherlands - loans which helped bail them out of their meltdown*, and the result was comprehensive “no”. These loans were due to be paid back from 2017-2023.
If Iceland’s economy needs help again, would any governments seriously consider it in light of this referendum result?
Norway apparently has a loan of over a billion euros on ice*, would it be wise for them to go through with it?
Any Icelandic dopers - what are your thoughts and opinions on all this?
Of course you have to consider - how much of that loan money went to Iceland, and how much went to ensure that foreign banks dumb enough to overextend themselves in Iceland did not go under?
I don’t know much about the Icelandic situation - but if it’s the same as the USA - the governments that fronted that money did it for their own self-interest more than to help Iceland. The USA ended up holding its collective nose and shelling out billions to prevent the collapse of banks that had up until then (and seem to now be) shelling out millions in bonuses to the same idiots for the same behaviour that created this mess.
Unless the loans bought new roads or new schools for Iceland, why would an Icelandic voter feel obliged to pay them back? Think of it as like bankruptcy - which is essentally what it is. If Iceland keep its nose clean for a decade, the same morons will be back lending them money.
I don’t see any reason for the Icelanders in general to reimburse foreign investors. Those accounts were created and mismanaged by a private institution that was ultimately nationalized to prevent a total financial apocalypse. The Icelandic Government didn’t mess up the savings accounts, nor did the people in general; some greedy turds acting privately are at fault. You can’t just pass the buck around until you find someone small enough to bully.
Except that they’d previously agreed to do so. Having then established that governmental debt, they voted against paying it.
Being a sovereign means that if you don’t want to pay your debts someone has to make you - but if you don’t, there’s no obligation for people to treat you like a financial grown-up which is typically more of a problem than the one you’re trying to solve.
Interesting article. I’m inclined to forgive Iceland for completely fucking foreign investors because they at least prosecuted bad bankers. How many prosecutions have we had in the US? Two?
