Tomorrow the citizens of Iceland will vote on whether or not Iceland should honour its so-called 'Icesave Bill'. This is a piece of legislation whereby Iceland must pay back the debt it supposedly owes to the United Kingdom and the Netherlands due to the collapse of one of its own banks, Landsbanki, in 2008 and, in turn, the collapse of Icesave.
Landsbanki offered their 'Icesave' brand as an online savings account - the draw being very high interest rates (read: greed) on this savings loan, thank you very much. Hence, the large number of investors who bought these loans - over 400 000 in the UK and Netherlands combined. When Landsbanki went into receivership in 2008, so too did their online savings buckeroo. For 6-8 weeks people holding these loans could not get their money out. A diplomatic row broke out between Iceland, on the one hand, and the UK and Netherlands on the other as to how Iceland would pay out these debts to so many foreign account holders.
But one has to first ask the question: Why did all of Iceland's three biggest banks, including Landsbanki, collapse in 2008? Some analysts have been critical of the way that Iceland's banks were so heavily leveraged (i.e. the amount of debt they had over and above their assets) by international standards. It was estimated that Icelandic banks were leveraged by more than five times Iceland's GDP. Not good economics.
With the collapse of Lehman Brothers in 2008 (beautifully orchestrated by the likes of JP Morgan and those mega-scheisters, Goldman Sachs - more on that another time) came uncertainty as to the solvency of Icelandic banks. There was a rush on foreign accounts held in Icelandic banks and, well, the whole Icelandic banking system went into crisis, their three biggest banks collapsed and, suddenly, the Icelandic government and its parliament, the Althing, were left holding the baby.
The Althing formulated this 'Icesave Bill' as an attempt to bring into law a means by which these foreign account debts could be 'honoured' and it was passed in December 2009 (this after previous similar bills had been rejected by the British and Dutch as unacceptable). The proposed law was highly unpopular with Icelandic citizens, given how much debt Iceland would incur as a nation.
Then, on January 5th of this year the Icelandic President, Olafur Ragnar Grimsson, stunned many by refusing to sign the bill into law. All hell broke loose. The Brits and Dutch threatening that Iceland's plans to join the EU would be vetoed, not to mention threats of international lawsuits against Iceland, and so forth.
My admiration of President Grimsson's refusal to sign into law measures that would be so prejudicial to Iceland knows no bounds. I have included a picture of him in this post. The man showed enormous courage and determination in refusing to succumb to the threats and bullying by the British and Dutch governments.
So, is Iceland really to blame? If you listen to the analysts 'critical' of their over-leveraged banks then, yes, the Icelandic banking system should take the rap. Please note these analysts tend to be of the CNN-MSNBC-BBC-Sky-News ilk, i.e. Wall Street and City of London parakeets to the hilt.
I mean, Iceland should be held accountable for its banks, right? These foreign accounts should be paid back by Iceland, right? Ummm, no.
Why do I scoff at these supposedly erudite analysts? And why do I make the assertion in this post that the Icelandic government and its people should not be held accountable for this debt? I'll tell you why:
1. Because just about every major bank in the world was super-leveraged by the time the global financial crisis hit in 2008, folks! Why the hell do you think so many major banks, especially in the USA and the UK, had to bailed out with government aid packages, i.e. taxpayer money?! They were in hock to the bloody hilt.
2. Because, unlike many other countries, Iceland's government simply did not have the public money to bail out its own banks. The money just wasn't there because international speculators, those economic terrorists from hell, had specifically targeted the Icelandic kroner and it had devalued enormously in 2008. Remember, Iceland is not a member of the EU and so did not have the 'comfort blanket' of the Euro (the bittersweet irony is that now the Euro is itself coming under attack from these speculators! Don't you just love globalized finance?)
3. Because, why must Iceland be vilified for its banking practices, when most banks worldwide, especially most of the big ones in the US and the UK, were being operated along the exact same, unsustainable lines?
4. Because why must, if the Icesave Bill is finally signed into law in Iceland, the country's citizens be okay with the fact that the country's debt will then be the equivalent of 13000 euros for every single citizen? Iceland will become the most indebted nation per capita on the planet. Would you be willing for your country to take on that amount of debt because of the shenanigans of a few of your own country's bankers in full cohorts with international bankers and financiers in other countries? Not to mention the fact that your country's currency had been specifically targeted for obscene speculation by a bunch of economic terrorists?
No, I didn't think you would be happy to do that? So why must Iceland?
5. Because why must Iceland be threatened with being vetoed entry into the EU or threatened with huge lawsuits just because it may choose not to honour a debt that will be so prejudicial to its national debt per capita? Why is it acceptable that the UK and the Netherlands are allowed to be such bullies against such a relatively small economy? Would they do that if the country in question was Italy? Or Spain? Or the United States? Hmmmm, interesting question that...no?
6. Because I hope that a 'NO' vote tomorrow in Iceland will force that country to review its way of getting out of its current financial nightmare. I do believe that being denied a bailout by the IMF, that Antichrist of international government aid, will be a very dark cloud with a beautiful silver lining to it for Iceland. An IMF loan always comes with stipulations designed to further enslave a nation to the whims of international investors and international (Mafia) finance, not to mention the slashing of public spending (read: education, healthcare, etc) and the lowering of labour costs and protections.
Don't let the Chicago Boys in, Iceland!
7. Because, quite frankly, I don't see why there should be any need for a country to 'honour' debt in an international financial system that is obviously so inherently rotten to the core and which it, like most countries worldwide, had been duped into believing was a basically 'honourable' and safe capitalist system. It is NOT honourable and it is not safe - the globalized capital market has become a Mafia domain. Countries are having their economies taken out by economic hitmen in the shape of investment banks and financiers (Greece, anyone?) and being forced (somehow) to have to pay for the mess and debt chaos that these economic terrorists wreak upon their economies. Why be honourable with a bunch of crooks? Stuff them.
8. Because for all the talk of 'innocent' account holders in this Icesave scandal, the majority are nothing but a bunch of middle- to upper-income people and organizations who wanted to make a quick buck with a savings account promising higher interest rates. Understandable, but still an element of greed existed. So, you got burned - I am sorry but, as they say, boo hoo. Welcome to the modern form of global capitalism. There is no level playing field in the markets, you dupes. Nice, isn't it? Time yuppies who love to 'play' the markets thinking they were so clever learned that often all that happens is they get played yourselves by a bunch of economic conmen.
And to all those municipalities who invested in these types of accounts and junk bonds just to try and 'raise more money' - shame on you for playing the markets with public money. You had no right to do so.
Let the UK and Dutch governments have to pay out these debts themselves if they care so much about all these account holders. Maybe then they'll think twice about allowing their own financial systems to become so rampantly unregulated and so at the mercy of international bankers and speculators.
9. Because the current globalized financial system is corrupt, perverse and is not here to serve you or I. It is in the hands of a very few of the mega-rich and the mega-bought-out and they are holding entire country economies and currencies to ransom. THIS is what you get when you allow capitalism to become unregulated uber-capitalism and allow for rampant speculation to become normative.
10. Because Iceland's vote tomorrow is a litmus test for just how much anger there is against the current global financial system. And because this could very well be the starting point of a citizen-led revolt worldwide against this sick, perverse system. This Icelandic vote may yet prove an interesting chapter in years to come about just what led the international uber-capitalist system to be overhauled.
Iceland needs to regain its dignity. And by saying 'NO' to its international debt obligations it will, paradoxically, regain a sense of self and a sense of nationhood. Any nation held hostage to the arbitrary vagaries and collusion of globalized finance should do just that.
Therefore, for all the above, and so much more, I can only hope that Iceland will vote a big, resounding NO tomorrow in the Icesave referendum.
Do you get my point?
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