Iceland to have referendum on Bank Bail out.

Sand

The British and Dutch tax payers are now forking out on a bank gaurantee that they should not have to.

I think the Icelanders agree they should not have to fork out on a bank guarantee either. Their political leadership is representing them, however imperfectly.

The Icelandic government is only able to speak on behalf of the people on the basis of of it retaining the confidence and consent of its people. That everyone is absolutely certain the Icelandic voters will reject the deal in a referendum (I dont think this is certain for the record) is perhaps the most telling judgement on how truly the Icelandic government can claim to speak on behalf of their nation in this matter.

Mr.Micro

If the referendum does not go the way the Government wants it, then they can always run it again and again, just like here in Ireland Lisbon the re run. Iceland has lost all credibility at the moment but at least the voters are being allowed a say before the Government sells the family silver, not like here where our family silver has been sold without any referendum.

Overheal

Their political leadership is representing them, however imperfectly.

Lets bring that point back down to basics. I work in retail. We sell flooring products. We have Sales Representatives for each company/brand we work with. Its a lot more personal that going straight to corporate anytime you need something. It gets things done.

But listen, the Representative is a fantastic intermediary for 95% of what we do. Even still, there are times you as the Representative need to Step Back and consult directly with the Person(s) you are representing.

For Iceland this is one of those times. In the US, we need Healthcare to be a referendum for the same reason. We voted them to represent us but somehow, for example, I don't feel they have the Authority to make a life altering decision about my body. Similarly the Icelanders feel the power of representation does not extend to this bailout.

BlaasForRafa

Sand wrote: »

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?

I still think that passing the buck is wrong on the part of the president but equally I wasn't aware yesterday just how much of the Icelandic gdp is necessary to pay this back. Either way whether its paid or not its going to be a miserable decade or so for the Icelandic people.

And I agree, the fact that the banks and bankers seem to have more or less gotten away with it, still no prosecutions in Ireland, bonuses in the UK and there hasn't been any huge improvements in regulation. Something similar will happen in another 10 years because the banks won't bother to learn any lessons from this and governments won't force them to learn because "it might hurt the greater economic good of the country"

Regarding your last point....sure didn't the UK and Iceland get into some skirmishes in the 70's over fishing...the so-called "cod wars"?

Overheal

And I agree, the fact that the banks and bankers seem to have more or less gotten away with it, still no prosecutions in Ireland, bonuses in the UK and there hasn't been any huge improvements in regulation. Something similar will happen in another 10 years because the banks won't bother to learn any lessons from this and governments won't force them to learn because "it might hurt the greater economic good of the country"

In order to have a Free Market [or Freedom] you need the Freedom to Fail. Nobody will learn anything while business and retarded homeowners are getting bailed out.

SkepticOne

Contrast Iceland's approach with Ireland where we're borrowing tens of billions in order that international risk-taking bond holders don't get burnt. Ireland as a country has no obligation to these people.

Iceland will have trouble borrowing in the short term but ultimately it is going to have to trade its way out of its problems not borrow its way out.

Ireland on the other hand seems only concerned with maintaining the ability to get further and further into debt.

BlaasForRafa

SkepticOne wrote: »

Contrast Iceland's approach with Ireland where we're borrowing tens of billions in order that international risk-taking bond holders don't get burnt. Ireland as a country has no obligation to these people.

Iceland will have trouble borrowing in the short term but ultimately it is going to have to trade its way out of its problems not borrow its way out.

Ireland on the other hand seems only concerned with maintaining the ability to get further and further into debt.

I think you underestimate Icelands problems. Ireland wasn't anywhere as close as Iceland was to going broke as a nation, plus the IMF haven't had to get involved and loan Ireland money, thats the real sign that a country has completely lost control of its own economy. Ireland (and yes Nama is a con and isn't fair to ordinary joe public) is seeing at least some light at the end of the tunnel whereas Iceland is still in the murk.

SkepticOne

BlaasForRafa wrote: »

I think you underestimate Icelands problems. Ireland wasn't anywhere as close as Iceland was to going broke as a nation, plus the IMF haven't had to get involved and loan Ireland money, thats the real sign that a country has completely lost control of its own economy. Ireland (and yes Nama is a con and isn't fair to ordinary joe public) is seeing at least some light at the end of the tunnel whereas Iceland is still in the murk.

Yes, I realise that Iceland's banking problem is several times the size of its economy. They are probably also in a better position to trade their way out due to their natural resources and exporting industries. However, studies by economists such as Morgan Kelly suggest that, although smaller, Ireland's banks may also be too big to save. Regardless, we're going to pump money into the banks and yet more when NAMA fails to work.

Zambia

Fred I think this could all be a way of the Icelandic goverment getting a better deal.

"Sorry boys we cant sell that to the people, could you revise your figures?"

Fratton Fred

Zambia232 wrote: »

Fred I think this could all be a way of the Icelandic goverment getting a better deal.

"Sorry boys we cant sell that to the people, could you revise your figures?"

I think you are right. The PM has stated that it is his intention to pay up, I guess it is just a case of where, when and how much.

Red Alert

I would vote against bailing out the international investors if McAleese had done similar. I think, however, she doesn't have the power to refer a bill to referendum, only to the supreme court to test constitutionality - i'll be corrected on that though.

Sand

There is a mechanism in Article 27 though its a bit restrictive, as youd expect from Dev who wanted few or no checks on his power.

1. A majority of the members of Seanad Éireann and not less than one-third of the members of Dáil Éireann may by a joint petition addressed to the President by them under this Article request the President to decline to sign and promulgate as a law any Bill to which this article applies on the ground that the Bill contains a proposal of such national importance that the will of the people thereon ought to be ascertained.

Given everyone, even Lenihan, agreed the NAMA bill and bank bailouts were of immense national importance it is difficult to see why the opposition did not seriously pursue this possibility, other than their opposition was merely showboating and they do not seriously understand why NAMA is a bad idea, only that its a good idea to be seen to oppose it.

They could have got the TDs, and in the Senate they could embarrass any footdraggers by asking them to explain if they believed:

1. NAMA wasnt of national importance, contradicting virtually every other serious commentator.
2. NAMA was of national importance, but they didnt want the people to be given their constitutional right of a voice regarding it.

Too late now, the only option left is for Green Fail to wake up and realise NAMA is a disaster in the making and reverse course sharpy ( no chance) or perhaps by the time FG get in power the disaster is already dawning upon them and they are brave enough to default on the NAMA bonds owed to the banks and/or force a reversal of the NAMA terms (next to no chance). So were screwed.

Hopefully the Icelanders will be able to avoid the generational debt shackles the British, the Dutch and their own government are forging for them.

johnnyskeleton

Fratton Fred wrote: »

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.

This is a subjective view of what use of money is sensible (and therefore worthy of a bailout) and what is not. That person still lent their money to the bank. I lent 50 quid to an Islandic mate of mine and he never repaid me. Should the government of Iceland pay this 50 quid back to me because he became bankrupt?

brianthebard

Fratton Fred wrote: »

I think you are right. The PM has stated that it is his intention to pay up, I guess it is just a case of where, when and how much.

I know I'm being pedantic but you've referred to the person in question as the PM multiple times when they are in fact the President. You may not think it makes that much of a difference, but it does. Apart from anything else they have different roles and purposes in Icelandic political life. If you don't know who made the decision then I would wonder if you have read the article.

Buffy the bitch

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?

Don't know to much on the issue but from what I know is Billions was lost becuase of the banks going under. It's that the risk they took in the first place? Why would they pay them backl the money?

Rebelheart

BlaasForRafa wrote: »

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.

That's the "fear" alright, a fear encouraged by the powers-that-be who have done the same scaremongering to the Irish public; pay for the sins of "your" banks or you, the Irish people, will become international outcasts. The Irish, under their elected government, just accepted this. The Icelanders, in contrast, are challenging it. So much for the illusion that the Irish people are "rebels".

There's a very good, albeit short, article by 'Cantillon' in yesterday's Irish Times entitled 'More proof if it is needed that Ireland is not Iceland' and praising this courage from the Icelanders and lamenting the cowardice of the Irish who have been browbeaten into socialising the losses of the Irish banks:

http://www.irishtimes.com/newspaper/finance/2010/0107/1224261823219.html

Rebelheart

SkepticOne wrote: »

Contrast Iceland's approach with Ireland where we're borrowing tens of billions in order that international risk-taking bond holders don't get burnt. Ireland as a country has no obligation to these people.

Iceland will have trouble borrowing in the short term but ultimately it is going to have to trade its way out of its problems not borrow its way out.

Ireland on the other hand seems only concerned with maintaining the ability to get further and further into debt.

Well said.

Rebelheart

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 said also, It has not been mentioned but the reason British and Dutch people put their money in that Icelandic bank was the higher interest rates. In their greed these people abandoned more mainstream and established banks because they were offering less interest and took the risk.

Tough. This is simply a matter of larger countries bullying a smaller one. There's no way in the world that the Icelandic people should be bailing out these banks. But that basic matter of justice is difficult for the poor Irish people, whipped as they are out of fear into conformity, to get to grips with.


Thick Paddies, after all. We have no sense of outrage.

Fratton Fred

brianthebard wrote: »

I know I'm being pedantic but you've referred to the person in question as the PM multiple times when they are in fact the President. You may not think it makes that much of a difference, but it does. Apart from anything else they have different roles and purposes in Icelandic political life. If you don't know who made the decision then I would wonder if you have read the article.

Yes, I agree, you are being pedantic;-)

Just me being too lazy to write out his title. It makes no difference to my points.

Out of curiosity, all those on here who think bank bail outs are bad, what would you do if the bank you had your mortgage with went bust and the liquidators wanted their asset back, ie your house?

Given the very real possibility you were in negative equity you would be faced with two options.

Lose your home and still be in debt to the bank for the outstanding balance.
Take out another mortgage to pay off your existing one (unlikely given that mortgages over 90% aren't available anymore)

I'm not saying NAMA is perfect, but without the Irish government bailing out AIB and BOI this country would be in a far bigger mess than it is now.

Rebelheart

Fratton Fred wrote: »

I'm not saying NAMA is perfect, but without the Irish government bailing out AIB and BOI this country would be in a far bigger mess than it is now.

Prove it.

Fratton Fred

Rebelheart wrote: »

Prove it.

why not answer my post rather than trying to be clever.

What would you do if the bank you had your mortgage with went bust, taking your life's savings with it?

I am pretty sure you would soon be begging the government to step in.

Rebelheart

Fratton Fred wrote: »

why not answer my post rather than trying to be clever.

What would you do if the bank you had your mortgage with went bust, taking your life's savings with it?

I am pretty sure you would soon be begging the government to step in.

I never try to be clever. You made a (big) statement. I'm merely requesting that you support it. I think that's reasonable.

sceptre

No-one's looking especially clever over the past half page of posts.

In order:
PM/Prime Minister is not the same thing as President. The current Prime Minister (PM) of Iceland is Johanna Sigurdardottir The current President of Iceland is Olafur Grimsson. Given that one of them is for this plan and one of them is against, it's a good thing to maintain the distinction between them.

Saying that something that currently exists is better than an alternative that never came to pass is opinion. Opinion is fine. And one can't "prove" that something that exists is better than an alternative that never came to pass, especially when it's the eventual outcome that is the deciding factor and the outcome of both is uncertain. One can back up one's opinion though with something more useful than that bare sentence. In other words, one can't prove that NAMA is better than an alternative. Conversely one can't prove that an alternative is better than NAMA. But some discursive development would be better than none at all - just "X is better than Y" isn't much to offer, nor is "prove it". However, please bear in mind that this thread is about the Iceland bank baillout/Icesave Act, not NAMA so only invoke NAMA where actually relevant rather than launching an off-topic tangent for no particular reason.

Less silliness please. It's silly. This thread will not degenerate finally into "nana, you said <waggles ears>" please. Back up to post 50 and start again. You guys are better than this, and should certainly strive to be.

/mod

Rebelheart

Good article by John McManus in this morning's Irish Times contrasting Iceland's fate with Ireland's fate, noting that while Ireland has lost billions in bailing out the banks it has ECB support, while Iceland has IMF support and billions more as a result of not bailing out its banks. Anybody feel conned yet?


He uses the same word as I did above; the Irish have no sense of "outrage" about this. In particular he notes that there has been no cultural or structural change in the Irish banking system as a quid pro quo of taxpayers' support. How deeply depressing in its truth.

'We are just like Iceland - apart from where it matters':

http://www.irishtimes.com/newspaper/finance/2010/0111/1224262051379.html

Fratton Fred

OK Sceptre, point taken.

IMO, a large number of banks had to be bailed out. It is diengenuous to say that people putting their savings in it were being greedy. It had a good rating and plenty of assets. Many of those who saved with it would have lost everything and would thereafter have been dependant on the state.

I can understand the anger at the bankers who helped get us into this mess, but people (be they Irish, British or Icelandic) need to stop for a minute and consider the consequences of the Governments not stepping in.

Unfortunately, there are a lot of negligent people who caused this mess who are also being bailed out when they don't deserve it (Anglo Irish springs to mind) but the collapse of banks like Landsbanki would have had much more far reaching consequences than people think. In the UK for example, a lot of local authorities had money saved with Icesave, because it was considered prudent. Imagine if these already struggling authorities lost a few million, they would have had to cut back on the transport, education and welfare budgets, hitting thr needy hardest.

Landsbanki is owned by the the Icelandic government, the bank was given Billions by the UK and Dutch governments, they should pay it back.

Sand

Out of curiosity, all those on here who think bank bail outs are bad, what would you do if the bank you had your mortgage with went bust and the liquidators wanted their asset back, ie your house?

If your mortgage was performing it would be sold to another bank at some discount as the value of the mortgage repayments would more than likely be higher than the price of your house in this market.

In the UK for example, a lot of local authorities had money saved with Icesave, because it was considered prudent. Imagine if these already struggling authorities lost a few million, they would have had to cut back on the transport, education and welfare budgets, hitting thr needy hardest.

That would be a matter for UK voters to take up with their local representitives - why did they take their taxes and throw them into a shakey Icelandic bank, thus throwing their budgets into chaos?

Given that local authorities were amongst the primary depositors its a little misleading to claim the depositors were all mom and pop style operations. Icesave was an internet based service, Id very much doubt the bulk of their depositor base were grey haired old dears. Even if they were the UK govt have already bailed them out. The depositors and their plight are pretty much irrelevant. This referendum will have no impact on them at all.

Its just down to the UK and the Dutch trying to do a shakedown on Iceland, trying to force their taxpayers to pay for the UK/Dutch policy on bank failures.

BlaasForRafa

Rebelheart wrote: »

Well said also, It has not been mentioned but the reason British and Dutch people put their money in that Icelandic bank was the higher interest rates. In their greed these people abandoned more mainstream and established banks because they were offering less interest and took the risk.

Tough. This is simply a matter of larger countries bullying a smaller one. There's no way in the world that the Icelandic people should be bailing out these banks. But that basic matter of justice is difficult for the poor Irish people, whipped as they are out of fear into conformity, to get to grips with.


Thick Paddies, after all. We have no sense of outrage.

hmmm I wonder did it mention in the terms and conditions of the icesave accounts that the value of the investment may go up as well as down. I remember having that chat with a banker recently after I put some money in an investment account.

The icesave guarantee did smack of gordon brown trying to save his ass with less than 2 years to go to an election (at that time).

seclachi

Rebelheart wrote: »

Well said also, It has not been mentioned but the reason British and Dutch people put their money in that Icelandic bank was the higher interest rates. In their greed these people abandoned more mainstream and established banks because they were offering less interest and took the risk.

I find it hard to classify putting your money in a bank that gives a few percent more interest as greed. I might agree with you if we were talking about re mortgaging your house to buy invesment property, but when people go to a savings account at a bank they think its safe, usually because it is. Its clear that in the future it needs to be indicated by a bank if investers are covered by an guarantees.

More on topic, I think the Icelanders are right to question having to pay such a massive bill for something that was caused by a private company. It is a little reminiscent of the WW1 reperations in my books. The sad fact is though that in order to get loans from the IMF or EU they will have to honor the deal in some form, its really a rock or hard place situation.

Fratton Fred

Sand wrote: »

If your mortgage was performing it would be sold to another bank at some discount as the value of the mortgage repayments would more than likely be higher than the price of your house in this market.

sold to who? considering that a huge number of mortgages are now risky, who is going to buy them, seeing as that is how this whole thing started.

Sand wrote: »

That would be a matter for UK voters to take up with their local representitives - why did they take their taxes and throw them into a shakey Icelandic bank, thus throwing their budgets into chaos?

Given that local authorities were amongst the primary depositors its a little misleading to claim the depositors were all mom and pop style operations. Icesave was an internet based service, Id very much doubt the bulk of their depositor base were grey haired old dears. Even if they were the UK govt have already bailed them out. The depositors and their plight are pretty much irrelevant. This referendum will have no impact on them at all.

Its just down to the UK and the Dutch trying to do a shakedown on Iceland, trying to force their taxpayers to pay for the UK/Dutch policy on bank failures.

The UK and Dutch voters have taken it up with their elected representatives. fortunately they used rather extreme measures to freeze the assets of the bank before they could take them out of the country, now those elected representatives are trying to get their tax payers money back.

Where is the problem?

lets get sensible here, this is an online bank with massive assets we are talking about, not a loan shark or a south seas type company.

incidentally, where did all the tax revenuse Landsbanki generated go to? where were the majority of share holders?

adalstef

I´m Icelandic and know the situation pretty well.
The point is, we are not interested in paying dept for crooked bank shareholders.
These were private own banks and the shareholders are responible.
Eaqually, UK is responsible, they shoul have controlled the branches in UK.

Anyway, this explains the whole matter pretty well :

http://www.youtube.com/watch?v=HK2P78yP5ic