Iceland to have referendum on Bank Bail out.

Agent J

http://news.bbc.co.uk/2/hi/business/8441312.stm

Well this is interesting. It doenst have snowballs chance of passing in a popular vote.

The president seems to be kicking this one to touch.

Politically Iceland may loose a lot of international friends over this if it doesn't.

Bottle_of_Smoke

Can't blame them. Read somewhere it works out 12K per citizen if they bail out the 5bil.

Would you pay 12K for international friends?

BlaasForRafa

Agent J wrote: »

http://news.bbc.co.uk/2/hi/business/8441312.stm

Well this is interesting. It doenst have snowballs chance of passing in a popular vote.

The president seems to be kicking this one to touch.

Politically Iceland may loose a lot of international friends over this if it doesn't.

Its pretty disgraceful that he's after passing this to the people.

It may be unpopular and political suicide but this was a payment solution that they signed up to. I assume that they have tried to renogiate the terms of the payments and that failed but not paying will make them something of a pariah for the next few years and make it even harder for them to borrow money.

digme

Agent J wrote: »

http://news.bbc.co.uk/2/hi/business/8441312.stm

Well this is interesting. It doenst have snowballs chance of passing in a popular vote.

The president seems to be kicking this one to touch.

Politically Iceland may loose a lot of international friends over this if it doesn't.

It is 40% of their gdp.

Fratton Fred

So the people of Iceland get to decide on whether or not to screw the people of the UK and the Netherlands?

Nice way for a minister to shirk his responsibilities. I wonder if the Dutch would have welcomed them into the Euro if they knew this was going to happen.

digme

I don't think you get it what he is doing.
It went to a vote and it lost 30-33, so now the president, who obviously doesn't want 40% of his countries gdp payed out to some foreign countries, has put it to the HIS OWN people,as that's the only way he can save his dam country.

sceptre

digme wrote: »

I don't think you get it what he is doing.
It went to a vote and it lost 30-33

You've got it the wrong way around. It went to vote and it passed 33-30.

After all, Olafur Grimsson vetoing it wouldn't make sense it if it lost:)

digme

It depends what side your looking at, I thought it failed myself. His only option is to put it to his own people and i think he is doing the right thing.
If they join Europe they're screwed.

sceptre

digme wrote: »

It depends what side your looking at, I thought it failed myself.

Dude, the first half of that sentence scares the reality of existence. It passed. 33-30. Have a second link and a third to verify that it passed through the Althing that so that all of us (including your good self) can move on and discuss whether it's a good thing or not without needing to consider again whether the parliament passed it.

digme

It passed.

Agent J

I'm not really sure what my view on it is.

It is a nightmare situation for the country to be in and i wouldnt want to touch it with a barge pole myself.

However i'm not the president of Iceland.

Sand

Given the scale of the payment and the injustice of billing the ordinary taxpayer for the failings of the banks it is only right that the ordinary taxpayer is consulted for his permission to do this.

That everyone considers it a given that the plan will be rejected by the people only shows there is no confidence that there is any compelling argument for the plan or that those who drew it up had any mandate or support to do so. As such, its a good day. Its only a shame that our own political system was too craven to exercise a similar clause in our constitution that would have allowed a referendum on NAMA and the bank bail outs.

The British and Dutch depositors involved may lose some or even the majority of their deposits ( I imagine their respective governments will get involved) but no one held a gun to their heads: they liked the return they were getting (6%+ interest rates), now theyve gotten burnt. Its sad, but its better they accept responsibility for their own decisions to invest in the Icelandic banks than the average joe in Iceland be forced to fork over astronomical amounts to bail them out.

And I truly doubt the seas will rise up and swallow Iceland should the banks debts be defaulted.

johnnyskeleton

sceptre wrote: »

Althing

Oldest parliament still in existence. Although it's come a long way from the days when taking a bribe to advocate something was punished by an instant death sentence/banishment.

Hellm0

johnnyskeleton wrote: »

Oldest parliament still in existence. Although it's come a long way from the days when taking a bribe to advocate something was punished by an instant death sentence/banishment.

*sigh* If only....

I heard there were some shady doins' with the banks in question, specifically to do with dodgy loans given out to English/Dutch investors. I also heard that Iceland had suggested a repayment scheme which was based off of % of GDP rather than a fixed payment cycle. I heard these things on wikileaks.com, which seems to be in dire need of donations. I'll be making one shortly, hopefully that will bring forth some answers.

brianthebard

BlaasForRafa wrote: »

Its pretty disgraceful that he's after passing this to the people.

.

Fratton Fred wrote: »

So the people of Iceland get to decide on whether or not to screw the people of the UK and the Netherlands?

Nice way for a minister to shirk his responsibilities.

It can be viewed in that way, but since Iceland is a republic it should not be surprising that its citizens get a say from time to time, and something as massive as this bail out should involve the general population imo.

digme

http://notsylvia.wordpress.com/2010/01/05/icelandic-president-listens-to-the-voice-of-the-people/

Read this Icelandic man's blog, he explains how things are quite well.

Bottle_of_Smoke

Fratton Fred wrote: »

So the people of Iceland get to decide on whether or not to screw the people of the UK and the Netherlands?

Nice way for a minister to shirk his responsibilities. I wonder if the Dutch would have welcomed them into the Euro if they knew this was going to happen.

The icelandic people didn't/aren't screwing the Dutch and the British, the privately owned Icelandic bank did. Why should they have to pay 12k each for something they played no part in?

Look at it from the minister's point of view, if he allowed it to go through the country would descend into anarchy. Their public service would in all likelihood stop working, potentially police included. Don't think they have much of an army neither. What would you have done in this situation?

oppenheimer1

Agent J wrote: »

http://news.bbc.co.uk/2/hi/business/8441312.stm

Well this is interesting. It doenst have snowballs chance of passing in a popular vote.

The president seems to be kicking this one to touch.

Politically Iceland may loose a lot of international friends over this if it doesn't.

They might find themselves in difficulty when they go to the IMF for more loans, that is the major issue, as well as a possible economic boycott. They could find themselves out in the cold for a long time if they don't pass the bill, and no it isn't fair either. However the Icelanic government are responsible for the mess they are in mainly due to their non-existant regulation and by allowing the banks to take on risk 5 times the size of their economy. That said it is likely they would have been able to painfully refinance their way out of the mess but for the collapse of Lehman and the greed of some in the City of London.

I've a feeling Iceland will have to sell the family silver in order to get out of this (their natural resources). If I were Icelandic I would be very angry at the system and its inherent unfairness. I feel sorry for the ordinary guy.

Agent J

oppenheimer1 wrote: »

I've a feeling Iceland will have to sell the family silver in order to get out of this (their natural resources). If I were Icelandic I would be very angry at the system and its inherent unfairness. I feel sorry for the ordinary guy.

Seconded. They are damned if they do, damned if they dont.

Im just looking at it as a mirror to our own situation. Imagine if NAMA had to go to referendum?

Zambia

I re-read the entire wiki article on the crisis just to timeline everything and refresh my memory.

At the time all these assurances where very welcome. By this I mean the UK goverment stepping in to assure UK investors. Everything was in freefall for the first time in my life I remember worrying about my sums in the bank? I looked into the fine print of who was guaranteeing my money. Something a lot of us never did because we never knew this sort of thing could happen.

Basically the Icelandic banks could not survive a run on the bank because they had grown to such an extent that their own central bank could not rescue them. So you could say the Icelandic central bank was dozing at the wheel to let this happen.

The UK and the Netherlands where aware of the risks but said nothing as even discussing the problem could cause the problem if you get me. Had they both stepped in with warnings earlier this could have been avoided but that would be micro managing IMO.

I'm torn on what I would vote if I was an Icelandic citizen because I probably never saw the huge difference in my personnal wealth. During the time of soaring National GDP unless I was in Banking.

So in the end I would say no to it and face the consequences simply on the principle its better to die on your feet than live on your knees.

Mahatma coat

ask yerself, would you bail them out if you'd have been given the choice.

Good on em, tell the 'International Financiers' to get stuffed

Fratton Fred

Mahatma coat wrote: »

ask yerself, would you bail them out if you'd have been given the choice.

Good on em, tell the 'International Financiers' to get stuffed

And what about the people who lose their life savings? Stuff them as well?

The British government got a lot of stick for using anti terror laws to prevent the Icelandic bank from moving their money back to Iceland, it looks like it was a very good move. If the little countries want to enter the markets of the big countries and enjoy the benefits of doing so, they need to play by the rules of the big boys or face the consequences, which Iceland may now have to do.

Sand

None of the little people have lost their savings, they were compensated by their governments already ( British/Dutch). Now the UK and the Dutch governments want their compensation from the Icelanders. Given the Icelanders ( vast majority of whom are little people too) had nothing to do with these Icesave accounts with enticed British/Dutch savers with higher rates I dont think theres much justice in the claims against the Iceland taxpayer.

Bottle_of_Smoke

Fratton Fred wrote: »

And what about the people who lose their life savings? Stuff them as well?

The British government got a lot of stick for using anti terror laws to prevent the Icelandic bank from moving their money back to Iceland, it looks like it was a very good move. If the little countries want to enter the markets of the big countries and enjoy the benefits of doing so, they need to play by the rules of the big boys or face the consequences, which Iceland may now have to do.

You seem to be ignoring the the point that Icelandic people played not part in this. Expecting them to pay for the meltdown of an Icelandic bank is guilt by association.

Comparing the population sizes this would be like asking the UK population to fund a GBP£592 billion debt of a private British company. How do you think Britons would react to that?

Hellm0

What I find funny about all this is the blatant double standard when it comes to big business. Laissez Faire capitalists would have it so that the government is completely uninvolved in the running of businesses yet the Icelandic government is now being held to task for the folly of it's banking industry.

Is it just me or does the international banking industry seem to resemble an organized crime syndicate. Be it the financial crisis of the US or the banking situation in Ireland, when these scumbags lose money we pick up the tab. When they make money we see a fraction of a cent of it in tax income while the higher ups still get their massive bonuses(though they get those regardless it seems).

Sand

Those are not capitalists, they are opportunists. When theyre making profit, they want to keep it, when theyre making losses they want to pass them on to the state. The phrase "patriotism is the last refuge of the scoundrel" has never been more true.

Interesting, Fianna Fail and Brian Lenihan in particular have attempted to portray their recent efforts as a great patriotic war against Lehman Brothers unprovoked attack on our happy land, that all proud and true citizens should rally to. Anyone who advocates the shocking idea of forcing the banks to face their losses is deounced as a dangerous lunatic. So, people who swing to statist solutions are deounced for double standards, otherwise theyre denounced as maniacs who would destroy all civillised society. What to do?

Iceland is not being bullied by international bankers though, it is being bullied by the UK and Dutch governments. The UK/Dutch have taken the line that no bank stakeholders should be allowed to fail, and that they will bear any burden in propping up their banking systems. The Icelanders have taken a different line from the very start. The UK/Dutch are attempting to force the Icelanders to back their banks in the same way they have backed their own.

The UK/Dutch case is dubious (EEA law only requires a deposit insurance scheme which there is, but it is wholly insufficient versus the losses), but they believe they have an edge in that they can veto EU membership ( Iceland is not deeply supportive of this anyway) and the IMF have said they will not assist further without sign off from the Dutch/UK, but in practise this wont be sustainable. Hopefully the Icelanders will be brave enough to do the right thing and avoid entangling themselves with the losses of stakeholders in a private bank.

That said, someone over on Irisheconomy.ie made an interesting point - apparently the British dont take this sort of thing lying down: They attacked Istanbul in 19th century after a Turkish default, and took over Egypt under similar provocation. Id imagine the Icelanders might start investing in their defences?

johnnyskeleton

Fratton Fred wrote: »

And what about the people who lose their life savings? Stuff them as well?

What about the people who lost their savings in bank shares? Or property deals? Or gambling? Should the people of Iceland compensate them too?

Fratton Fred wrote: »

The British government got a lot of stick for using anti terror laws to prevent the Icelandic bank from moving their money back to Iceland, it looks like it was a very good move. If the little countries want to enter the markets of the big countries and enjoy the benefits of doing so, they need to play by the rules of the big boys or face the consequences, which Iceland may now have to do.

Well they did play by the rules of the big boys. In fact, the rules of most free market capitalist countries is that if an unsuccessful business collapses, unsecured creditors get what little is left after the tax man, employees, secured creditors etc takes their share. So the rules of the UK allow the bank to be wound up, as do the rules of Denmark.

The problem here is that Icelandic government appears to have offered the UK?Danish governments a guarantee that it couldn't follow through on.

Overheal

I wish US Healthcare would be a Referendum

AARRRGH

It's a no win situation, so the president has decided it's better to side with his own people than with a bunch of foreigners.

This is what you'd expect a president to do, but bizarrely rarely happens.

If only our own government had the people's interests at heart.

+1 to Iceland.

Zambia

Fratton Fred wrote: »

And what about the people who lose their life savings? Stuff them as well?

I would have to sympathise with them but in essence they took a risk they did not check to see how secure there money was. Granted like I said before at the time no one did but when someone is giving you such a good rate you have to ask questions. There is also the adage of all your eggs in one basket. They could have placed it in shares and if the shares went belly up no one would care.

Fratton Fred

johnnyskeleton wrote: »

What about the people who lost their savings in bank shares? Or property deals? Or gambling? Should the people of Iceland compensate them too?




Well they did play by the rules of the big boys. In fact, the rules of most free market capitalist countries is that if an unsuccessful business collapses, unsecured creditors get what little is left after the tax man, employees, secured creditors etc takes their share. So the rules of the UK allow the bank to be wound up, as do the rules of Denmark.

The problem here is that Icelandic government appears to have offered the UK?Danish governments a guarantee that it couldn't follow through on.

puting your money in a bank is sensible, sticking it on shares is risky, putting it all on 22 black is stupid, so no, I don't think gamblers should be compensated the same way.

yes, you can check the financial stability of your bank, it is worth noting that Lehmann Brothers had a pretty impressive credit rating, as did RBS, right up to the point they went tits up.

The British and Dutch tax payers are now forking out on a bank gaurantee that they should not have to. The governments of both countries bailed it out, with the agreement and gaurantee of the Icelandic government, who are now reneging on that agreement.

The Icelandic PM may have won himself a few votes, but he now has the problem of pissing off two counties who may well play an important part in Iceland's economic future.

i appreciate the problem they are in, but it appears they need to think this one through a bit better and get to a negotiating table PDQ