Iceland under financial attack from UK

adalstef

Iceland is currently under financial attack from UK and Holland

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

If you can't be bothered to outline your/their/the lizard men's argument, I can't be bothered to view your video.

adalstef

Actually the vid says it all but, in a nutshell;
Icelandic banks fell- they had branches in UK and Holland _ these were private own banks - now they want the public of Iceland to pay the bill

Hellm0

I think the OP has said enough in describing the content of the video, Iceland's predicament is quite serious and should not be ignored just because you are too lazy to investigate yourself.

If you want to make a point on this forum, please write it.

This allows people to read it, analyse it and quote it.
I'm not spending the time going backwards and forwards through a video to put forward an argument, should I have one.

If you have the text, then paste it here. But it is insulting to your audience if you won't take the time to write out your argument.

Hellm0

Deleted User wrote: »

If you want to make a point on this forum, please write it.

This allows people to read it, analyse it and quote it.
I'm not spending the time going backwards and forwards through a video to put forward an argument, should I have one.

If you have the text, then paste it here. But it is insulting to your audience if you won't take the time to write out your argument.

Since I don't see a tag indicating your mod-ship over this forum, I fail to see how your posting a completely unrelated opinion on the structure and form of posts within this forum within this thread makes sense.

On topic however, Iceland has some routes out of this. They have recently begun talking quite a bit about data security and storage using their immense renewable energy. There is a very interesting video to do with this on youtube featuring the guys who run wikileaks.

I am actually quite excited about Iceland at the moment, considering the population size they have a huge capacity to adapt and change, unlike other small island economies I know.

adalstef

Here´s the text, more or less:

Iceland is under financial attack from UK and Holland
Corrupt politicians, like Balkenende and Brown want to cover up their mistakes by forcing the public of Iceland to pay for their own financial mistakes

They allowed corrupt Icelandic bankers to open banks in UK and Holland
NOTE : These were private owned banks

When the world crises hit it hit Iceland hard
Icelandic banks stumbled and Mr. Brown lost his nerve

He declared war on Iceland
He did this by using terrorist law against Icelanders
That equals declaration of war against fellow NATO member
No European country objected to this act, they were to scared of UK
The result of the terrorist law led to bankruptcy of Landsbanki, a private owned bank operating in UK and Holland who had been offering high interest rate accounts called ICESAVE

Huge amounts of money were lost and Mr Brown and Mr Darling had the banks assets frozen
The crooked owners however got away with tons of money
Mr Brown´s and Darling´s mistake had been allowing the banks to operate without control and following regulations
Now they had to cover it up and turn the focus away from them selves

Iceland was severely weakened by the crises and IMF was called in to aid
Also, Iceland applied to join the EU
Now Brown demanded that the Icelandic government (the Icelandic public) would pay back all that was lost when Landsbanki fell, even though it was a private own bank, operating in UK and paying taxes there.
The Icelandic government surly wanted to pay for the losses of the people of UK and Holland and signed an agreement to that
However clauses were put in the agreement that Icelandic assets nor natural sources could be claimed if Iceland couldn’t pay. That agreement was passed as law and signed by the President.

Still UK and Holland wanted more and threatened the Icelandic government to block all payments from IMF Still UK and Holland wanted more and threatened the Icelandic government to block all payments from IMF and stand in the way for Iceland to join EU
The weak Icelandic government passed the new agreement as law through congress, most voting for it with heavy heart

The only formal act left was for the president to sign it to pass it as law

Now the people had become angry, they would not be bullied like this, making them slaves to UK and Holland. They would not become ICESLAVES
A group, InDefence, collected signatures from 1/3 of the population
A petition was handed the president begging him not to sign the new law

The president, Mr Ólafur Ragnar Grímsson, took almost a week to consider this matter
Finally he called a press meeting where he said he would NOT sign the law because of the will of the people. This would cause the law to go to referendum, the people would vote on it
This caused international interest on what was really going on with Iceland
All over the world people saw that the Icelandic public were not the crooks, but just a handful of crooked bankers and incompetent politicians.

So- where is all the money?
Well, it´s not in Icelanders pockets. They are empty.
Its in UK !
Some of it is in frozen assets, some of it is in a bank in London and some of it, the crooked Icelandic bankers transferred to Tortola, a British tax heaven island

So where are these crooked bankers?
They are in UK !! at least many of them, living the good life sheltered by the British government!!
IMAGINE THAT !!!

The Icelandic public is NOT the crooks, they are the victims, already half drowned in dept caused by the collapsing of the currency, mortgages doubled, unemployment and political chaos.

scotchy

Some interesting reading.

http://uk.finance.yahoo.com/news/cool-response-to-iceland-s-aid-pleas-reuters_molt-0b767985bb77.html?x=0



STOCKHOLM (Reuters) - Icelandic pleas for further aid met with a cool response on Thursday as the IMF suggested its hands may be tied by an Anglo-Dutch debt impasse and Sweden signalled no immediate funds were on the way.

Dominique Strauss-Kahn, head of the International Monetary Fund (IMF), said a solution for the so-called Icesave issue was not a condition for aid but the Fund still had to listen if members raised issues.

"If a lot of members think we have to hold on, we have to hold on," Strauss-Kahn told journalists in Washington. Britain and the Netherlands are both important members of the fund.

The IMF is due to carry out a review of its aid programme this month. Icelandic officials have said money could be held up until it agrees a deal to pay back more than $5 billion (3 billion pounds) to Britain and the Netherlands for money lost in the 2008 financial meltdown.

That could take time after the Icelandic president's rejection last week of an Icesave bill.

The country now must hold a referendum, due by March 6.

Icelandic Prime Minister Johanna Sigurdardottir urged the IMF not to leave the country starved of cash.

"The review of the Economic Programme is of fundamental importance for the recovery of the Icelandic economy," Sigurdardottir wrote to Strauss-Kahn, saying it was "very important" the review take place as soon as possible.

The Icelandic government released a copy of the letter.

But Strauss-Kahn, speaking later in a French television interview, suggested Iceland might want to try sort out Icesave first before seeking the next aid instalment.

The IMF chief said he hoped IMF shareholders did not want to block aid so that it could move ahead swiftly. "That will depend a lot on the government itself, which may want to sort out its banking problem first with the referendum etc and restart with the IMF after and not mix the two up."

Time, however, is in short supply if Iceland hopes to avoid an economic relapse. The country needs funds so it can safely reduce high interest rates and remove capital controls.

The Icelandic finance minister has visited Nordic capitals in recent days to drum up backing. Yet Sweden said on Thursday no Swedish funds would move until the IMF gave a green light on its own aid programme.

"We want Iceland to stick to these international ... obligations and then we will follow through with our own commitments," Prime Minister Fredrik Reinfeldt told journalists in Stockholm.

NORDIC HELP

Reinfeldt said he spoke with Sigurdardottir, but insisted the next tranche of a 1.8 billion euro (1.59 billion pound) package of Nordic aid must wait at least until the IMF held a review.

British and Dutch depositors in high-interest Icesave accounts lost their money when Iceland's banks collapsed in 2008 after years of aggressive expansion fuelled by debt. The two countries compensated savers in full and want their money back.

Reinfeldt's comments weighed on market sentiment.

"This might be seen as increasing the chances that the IMF programme will be delayed," said Jon Bentsson, economist at Islandsbanki in Reykjavik. "Conceivably, the programme might be delayed by a month and a half."

The cost of insuring Iceland's debt against restructuring or default rose to six-month highs. Five-year credit default swaps widened more than 36 basis points to 544 bps, data showed.

The government is trying to avoid a vote, which polls suggest could see Icelanders reject the bill, and has sought to keep lines open with London and Amsterdam in the hope of starting new negotiations.

There has also been speculation Iceland may seek a third party as a mediator with Britain and the Netherlands, though the Icelandic foreign ministry said on Thursday the government had not approached the EU or any other parties.

"The authorities are seeking to solve this internally. They are engaged in discussion with other political parties," foreign ministry spokeswoman Urdur Gunnarsdottir told Reuters.

(Additional reporting by Johan Ahlander, Lesley Wroughton in Washington and Carolyn Cohn in London, Editing by Noah Barkin).........


.

adalstef

And I always thought IMF stood for International Monetary Fund, not British/Dutch Monetary Fund

Économiste Monétaire

Have the Icelandic government paid at least €20,000 to each deposit holder with Icesave? I'm pretty sure that Landsbanki was placed under receivership before the British government froze Icelandic assets, so assigning the reason for its failure to the British government is incorrect.

Buiter and Siebert

This might interest you; (from here:http://www.voxeu.com/index.php?q=node/2498)

Buiter and Siebert wrote:

Policy mistakes Iceland made

During the final death throes of Iceland as an international banking nation, a number of policy mistakes were made by the Icelandic authorities, especially by the governor of the Central Bank of Iceland, David Oddsson. The decision of the government to take a 75 percent equity stake in Glitnir on September 29 risked turning a bank debt crisis into a sovereign debt crisis. Fortunately, Glitnir went into receivership before its shareholders had time to approve the government takeover. Then, on October 7, the Central Bank of Iceland announced a currency peg for the króna without having the reserves to support. It was one of the shortest-lived currency pegs in history. At the time of writing (28 October 2008) there is no functioning foreign exchange market for the Icelandic króna.

In addition, outrageous bullying behaviour by the UK authorities (who invoked the 2001 Anti-Terrorism, Crime and Security Act, passed after the September 11, 2001 terrorist attacks in the USA, to justify the freezing of the UK assets of the of Landsbanki and Kaupthing) probably precipitated the collapse of Kaupthing – the last Icelandic bank still standing at the time. The official excuse of the British government for its thuggish behaviour was that the Icelandic authorities had informed it that they would not honour Iceland’s deposit guarantees for the UK subsidiaries of its banks. Transcripts of the key conversation on the issue between British and Icelandic authorities suggest that, if the story of Pinocchio is anything to go by, a lot of people in HM Treasury today have noses that are rather longer than they used to be.

The main message of our paper is, however, that it was not the drama and mismanagement of the last three months that brought down Iceland’s banks. Instead it was absolutely obvious, as soon as we began, during January 2008, to study Iceland’s problems, that its banking model was not viable. The fundamental reason was that Iceland was the most extreme example in the world of a very small country, with its own currency, and with an internationally active and internationally exposed financial sector that is very large relative to its GDP and relative to its fiscal capacity.

Even if the banks are fundamentally solvent (in the sense that their assets, if held to maturity, would be sufficient to cover their obligations), such a small country – small currency configuration makes it highly unlikely that the central bank can act as an effective foreign currency lender of last resort/market maker of last resort. Without a credit foreign currency lender of last resort and market maker of last resort, there is always an equilibrium in which a run brings down a solvent system through a funding liquidity and market liquidity crisis. The only way for a small country like Iceland to have a large internationally active banking sector that is immune to the risk of insolvency triggered by illiquidity caused by either traditional or modern bank runs, is for Iceland to join the EU and become a full member of the euro area. If Iceland had a global reserve currency as its national currency, and with the full liquidity facilities of the Eurosystem at its disposal, no Icelandic bank could be brought down by illiquidity alone. If Iceland was unwilling to take than step, it should not have grown a massive on-shore internationally exposed banking sector.

This was clear in July 2008, as it was in April 2008 and in January 2008 when we first considered these issues. We are pretty sure this ought to have been clear in 2006, 2004 or 2000. The Icelandic banks’ business model and Iceland’s global banking ambitions were incompatible with its tiny size and minor-league currency, even if the banks did not have any fundamental insolvency problems.
Were the banks solvent?

Because of lack of information, we have no strong views on how fundamentally sound the balance sheets of the three Icelandic banks were. It may be true, as argued by Richard Portes in his Financial Times Column of 13 October 2008, that “Like fellow Icelandic banks Landsbanki and Kaupthing, Glitnir was solvent. All posted good first-half results, all had healthy capital adequacy ratios, and their dependence on market funding was no greater than their peers’. None held any toxic securities.”1

The only parties likely to have substantive knowledge of the quality of a bank’s assets are its management, for whom truth telling may not be a dominant strategy and, possibly, the regulator/supervisor. In this recent crisis, however, regulators and supervisors have tended to be uninformed and out of their depth. We doubt Iceland is an exception to this rule. The quality of the balance sheet of the three Icelandic banks has to be viewed by outsiders as unknown.

If there is a bank solvency problem, even membership in the euro area would not help. Only the strength of the fiscal authority standing behind the national banks (and its willingness to put its fiscal capacity in the service of a rescue effort for the banks) determines the banks’ chances of survival in this case. If there were a serious banking sector solvency problem in Iceland, then with a banking sector balance sheet to annual GDP ratio of around 900 percent, it is unlikely that the fiscal authorities would be able to come up with the necessary capital to restore solvency to the banking sector.

The required combined internal transfer of resources (now and in the future, from tax payers and beneficiaries of public spending to the government) and external transfer of resources (from domestic residents to foreign residents, through present and future primary external surpluses) could easily overwhelm the economic and political capacities of the country. Shifting resources from the non-traded sectors into the traded sectors (exporting and import-competing) will require a depreciation of the real exchange rate and may well also require a worsening of the external terms of trade. Both are painful adjustments.

If the solvency gap of the banking system exceeds the unused fiscal capacity of the authorities, the only choice that remains is that between banking sector insolvency and sovereign insolvency. The Icelandic government has rightly decided that its tax payers and the beneficiaries of its public spending programmes (who will be hard hit in any case) deserve priority over the external and domestic creditors of the banks (except for the insured depositors).
Conclusions, lessons and others who might be vulnerable

Iceland’s circumstances were extreme, but there are other countries suffering from milder versions of the same fundamental inconsistent – or at least vulnerable - quartet:
(1) A small country with (2) a large, internationally exposed banking sector, (3) its own currency and (4) limited fiscal spare capacity relative to the possible size of the banking sector solvency gap.

Countries that come to mind are:

* Switzerland,
* Denmark,
* Sweden

and even to some extent the UK, although it is significantly larger than the others and has a minor-league legacy reserve currency.

Ireland, Belgium, the Netherland and Luxembourg possess the advantage of having the euro, a global reserve currency, as their national currency. Illiquidity alone should therefore not become a fatal problem for their banking sectors. But with limited fiscal spare capacity, their ability to address serious fundamental banking sector insolvency issues may well be in doubt.

I would agree with you that the actions of the British were heavy handed, however your picture of the innocent Icelander is not quite accurate.

Systematic failures were made by the Icelandic government and these were not the only economists who raised warnings. However, as like there, they were ignored and now, again as like here, the citizens of Iceland must pay for the boom which they enjoyed over the last decade.

Another paper, which gives a good and non technical overview of the situation is here: http://www.voxeu.com/index.php?q=node/3029, basically says the same as the above but with more historical context which you might be interested in.

adalstef

It is an issue who is to pay the 20000.
This was a privately owned bank and usually goverments dont bail out private companies, banks or other.
The goverment took over Landsbanki, as a favor to uk and Holland and pumped money into it. It was fine until UK frose it´s asssets.

adalstef

Like I said, Landsbanki was being rescued and proubably had been ok if not for the freezing of it´s assets.
Another point, Landsbanki´s UK brance was supposed to be regulated in uk, not the least because it paid taxes there, and they should have seen warning signs.
Therefore it´s equally UK´s fault and equally UK´s responsibility to pay.

adalstef

adalstef wrote: »

Like I said, Landsbanki was being rescued and proubably had been ok if not for the freezing of it´s assets.
Another point, Landsbanki´s UK brance was supposed to be regulated in uk, not the least because it paid taxes there, and they should have seen warning signs.
Therefore it´s equally UK´s fault and equally UK´s responsibility to pay.

Not quite, to take the second report I published.

The Icelandic government put control of a de-regulated banking system into the hands of people who had no experience in the industry

The banks then became highly interconnected with little independence between them, this makes it very hard for external regulators such as the BOE to comment on them. Effectively, the banks became a hedgefund.

Warnings made by many people were ignored and countered by the Icelandic central bank. Yes there were errors on behalf of the British and Dutch regulators, but the only institution which had the complete picture of the icelandic system, was the Icelandic central bank, which produced exceptionally over optimistic reports.

Iceland gambled and lost - and now it has to pay its debts.

Économiste Monétaire

Landsbanki was placed under receivership and nationalised, along with other banks, so that Iceland would have a financial infrastructure, not as a 'favour' to other governments. Depositors were refused access to their deposits. Failure to redeem this money should invoke any deposit liability scheme, which the Icelandic government knew. The minimum €20,000 deposit guarantee was well known to the Icelandic government, and if they didn't want to have to take on this liability and put Tryggingarsjóður in a position to meet this, they should have limited their banks to domestic operations only. We now arrive at a situation of tough shit Iceland; pony up the cash that the British and Dutch depositors are entitled to, or face international isolation.

Hasschu

The British and Dutch gov'ts are well aware that they cannot get blood out of a turnip. Both gov'ts are now posturing in order to show how tough they are on the nefarious Icelanders so as to impress the voting public. The Dutch and British had their own online banks operating around the world most of whom have now retrenched to the homeland. Both the Brits and the Dutch have been engaged in banking almost as long as the Italians and have the know how and regulatory structures gained from over 400 years experience. The Icelanders by comparison were naked elves in the forest ready ot be taken. I am tempted to make comparisons with Eire but I resist.

dan719

Économiste Monétaire wrote: »

Landsbanki was placed under receivership and nationalised, along with other banks, so that Iceland would have a financial infrastructure, not as a 'favour' to other governments. Depositors were refused access to their deposits. Failure to redeem this money should invoke any deposit liability scheme, which the Icelandic government knew. The minimum €20,000 deposit guarantee was well known to the Icelandic government, and if they didn't want to have to take on this liability and put Tryggingarsjóður in a position to meet this, they should have limited their banks to domestic operations only. We now arrive at a situation of tough shit Iceland; pony up the cash that the British and Dutch depositors are entitled to, or face international isolation.

Although I agree with the jist of you're post, I don't think anyone can deny that the Brits and Dutch are being heavy handed. In particular, Britain seems to be seeing this as an opportunity to get a bit of delayed revenge for the cod wars. (See Monday's FT's letter section for evidence of this). Let Iceland pay back it's debts, but let her do so in a manner that doesn't completely cripple the Icelandic economy.