First Iceland, then the World

The public is angry. Why should the public pay for the bankers mistakes. Iceland blogger Halldor Sigurdsson

Who cleans up the mess when ignorant, greedy bankers rack up massive debt then go broke? The people of Iceland made a strong statement Saturday. The sins of big bankers and government regulators shouldn't fall on the citizens. By a 93% to 2% margin, they voted down a proposal requiring them to cover bad debt incurred by one of the nation’s oldest and largest banks. Covering the debt would have cost Iceland's 317,000 citizens around $17,000 each.

Iceland's national referendum was the first opportunity for the people of any nation to vote directly on who pays when the financial elite fail.

As citizens voted, Iceland's Prime Minister was dismissing the importance of the vote and promising to negotiate a payment scheme obligating citizen subsidies for bad debt created by Iceland's beyond-bad bankers.

Icelanders are struggling with a collapsed economy. Businesses are failing at a startling rate, unemployment is soaring, and the prospects for the future are simply not there. Yet the British and Dutch governments demand that their swindled citizens receive compensation from beleaguered Icelanders. Where were the British and Dutch central banks and politicians while their citizens were being fleeced? Aren't the rulers of these countries aware that the failed Icelandic bank was owned by wealth investors, not the citizens?

Iceland's size and the very dire circumstances offer a focused preview for citizens around the world. The banks make bad deal after bad deal. When they're about to fail, the government steps in with a taxpayer bailout. It doesn't matter which faction of the narrow political spectrum is in charge. The message is starkly clear -- when the banks fail, you pay. The solution is presented to citizens as a fait accompli, a mandatory submission to indefinite financial slavery for the benefit of the failed financial elite. The will of the people doesn't matter even when there's a direct vote.

The failed financial enterprises that control global commerce are opening their new show on the road in Iceland. Greek citizens are next in line for indentured servitude, thanks to their lying leaders and Wall Street's Goldman Sachs.

Citizens in the United States remain overwhelmingly opposed to bailouts for Wall Street and big banks. Like Iceland's Prime Minister, members of Congress and the president don’t care. Big banks have now received at least $12 trillion in credit and cash from the US Treasury and Federal Reserve Bank. The 17 million citizens out of work, their families, and the eight million forced to work reduced hours are barely mentioned and get just a pittance compared to the ultra wealthy bankers.

How did the financial elite and their political minions do it in Iceland? The lesson is instructive.

Tiny Iceland's Bankers Fool British and Dutch Regulators

Iceland's second largest bank wanted some new customers. In 2006, the bank created the Icesave banking service. For the British market, Icesave pushed high fixed interest rates and easy access to online banking. The Netherlands sales pitch was based on banking transparency, seeing how the bank functioned online, with a 5% interest rate on deposits.

British regulators voiced no major problem with Icesave's policies until the bank collapsed in October 2008. The Netherlands central bank (just now in a liquidity crisis) gave its stamp of approval to Icesave even though there were substantial warning signs that the bank was in trouble.

By the time Icesave was insolvent, its 300,000 British depositors and over 100,000 in the Netherlands saw their money vanish. The finger pointing began. The Dutch central bank claimed Iceland's regulators lied to them. British regulators were shocked at the disarray of Iceland's banking system.

Dutch and British regulators failed to mention that they'd outsourced regulation for their citizens to tiny Iceland's central bank. These financially savvy nations couldn't be bothered with their own people until the Icesave scheme did its damage.

Dutch and British political leaders somehow forgot to mention that Sweden and Norway insured the deposits of their citizens when another Icelandic bank failed in those countries.

Icelanders Stuck with the Bill

Icesave's failed business tactics, negligent regulation by Iceland's government, and indifferent British and Dutch authorities created the problem. But citizens are taking the fall.

The usual suspect, the International Monetary Fund (IMF), offered up billions in cash in return for covering the lost deposits for British and Dutch citizens. IMF backed off of this position as it became clear that Icelanders would reject the March 6 referendum. (Image)

Ultimately, the financial machinations by international bankers and G-20 leaders don't matter. The people of Iceland are in no position to pay the bill. Pretending otherwise only prolongs the charade of some order for the comatose global financial system. Who benefits? The financial elite who continue to accumulate more and more money as though it's actually worth something.

Furious Citizens - Bloggers Won't Give Up

Icelanders take their voting seriously. Turnout is usually above 80%. But the turnout for this referendum was 57%, the lowest figure in years.

The very good news is that Icelanders are providing real analysis and hitting the streets on a regular basis to protest the big con pulled by their leaders and financial elite. This is a sample of the vibrant dialog of the people who choose to fight back.

Independent Icelandic News - The Icesave Fraud Case

"The public was deliberately lied to and the deception was complete. The banks fell, the Brits and Dutch, and Germans too are pissed off and we Icelanders have to loose our savings, our homes, our jobs, our dignity. We also have to pay for the Germans, the Dutch and the Brits.

"We are only starting to 'feel the cold dead hand of the neoconservatist financial free market monster' that tore through the world and is still squeezing the Icelandic nation, even after its death. We don’t get a recession, we get a complete collapse." June 23, 2009


Economic Disaster Area - Arrogant, Humiliating, Short Sighted, and Stupid

"Right now the nation is numb. Everyone is waiting for something while trying to stay afloat. Businesses and individuals who have been watching their cash fly out the window atop exorbitant interest rates for years are experiencing a drowning feeling. It seems like many are just shutting their eyes and resigning their fate to fate itself while still waiting for rescue to appear somewhere on the horizon.

"Most people agree that something must be done. They just cannot agree on what exactly." @ Dadi, May 24 (Image)


The Iceland Weather Report - Johanna (Iceland's Prime Minister) sends a clear message


"As if the government wasn’t in enough trouble with public opinion here at home, Prime Minister Johanna Sigurðardóttir has publicly announced that she plans to shun the referendum tomorrow.

'To me it is pointless and I find it is very sad that the first referendum since the founding of the republic revolves around legislation that is already obsolete. Consequently I see no point in taking part in this referendum,' (said Iceland's Prime Minister). alda March 5, 2010


Iceland Banking Crisis News and More

"According to numbers, 1.5 % percent have said yes to the agreement to pay Icesave, but 93.6 say not to that. But this does not change anything. The Prime minister and finance minister say that there is a new deal on the table. Iceland's President says that a Referendum makes the democracy stronger. The outcome of the referendum does not have any affect on the government in Iceland." Halldor Sigurdsson, Mar 7


Economic Disaster Area - National Referendum - A Sad Day for Democracy in Iceland

"Tomorrow is the first national referendum Icelandic citizens have been allowed to participate in by the political elite since the conception of the republic in 1944. By all measures, this should be a happy day for democracy in Iceland.

"But instead it is not a cause for celebration but a large milestone in the farcical power play which has taken place between the four largest political movements in Iceland since 1944.

"Yes, a farce.’Isn‘t that what this whole thing really is', asked a Dutch journalist yesterday after surveying the scene? It is a sad day.' March 5 @ Dadi


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Its Ice Day

I think the entire globe is admiring Iceland at this moment...

They won't go quietly into the midnight sun

It's going to get rougher up there. There are protests almost every day. Some turn into shoving matches between police and truckers, for example. I do like the bloggers.

The global system is broken, so much so that it's difficult to see it repaired. Any ideas on a new system?

need a good global finance overview post at this point

I know some of the issues, but it seems anything that would fetter the "free flow of capital" is squished and nations are not cooperating with each other here, just a lot of rhetoric with no legislation, law in concert.

But it seems derivatives, our friend, cause great contagion, even currency swaps. So, to me they would start with banning and regulating globally a host of derivatives.

As far as Iceland raising hell and refusing to be saddled with the uber rich profits, I wrote up many a post on how Sweden dealt with their crisis and they just nationalized them, put the hair cut on the perpetrators.

EU Central Bank - A "Lost Decade" economically

here (h/t CR).

"Unsustainable fiscal positions" in "many countries," Stark warned, now raise the risk of a "sovereign debt crisis." Stark didn't single out Greece in his remarks.

and the article goes on about the refusal to enact real financial reforms. ECB, that's the Bernanke of Europe saying this.

Interesting that democracy

Interesting that democracy is sufficiently alive in Iceland to permit a referendum of this kind. I believe their President is to be given the accolades for this achievement. And here we have a "people's moment" of sorts for Iceland, something that in the United States will only be realized through strikes and mass public demonstrations so corrupted by the filth that run it has become our government. Instructive, no? Iceland, apparently, is a mature enough democracy to insure that their political leaders aren't eventually detained behind barbed wire, later to be interrogated and publically tried in some enormous football stadium environment. Ours, driven as much by self-seeking as they are, are not likely to avoid that kind of fate. Imagine for a moment, if you will, a much slimmed-down Larry Summers confessing in tears in public session to complicity in the rape of the American people.

The crimes against the people diet

I think is charitable of you to include a trial in the fate of those who've stolen so much from so many. Maybe they could be tried during half time at the next Super Bowl.

I'd be just as happy ignoring them after taking back their fraud profits.


Hasn't the UK tied an aid package to their demand for repayment?

So you pay us back what we say you owe us and we give you some money to live on and you pay that back too.

Iceland just needs a printing press and some paper. Thats how we do it.

there you go

How could $5 bil mean so much to the Brown government. Apparently, that's not enough to refrain from crashing a tiny nation. Sweden and Norway let in Iceland's other big bank with similar results. But these two countries admitted their error and paid back depositors in full, leaving the citizens of Iceland alone. Apparently, the Dutch and British lack the decency to make the same decision.

This vote has frightened many at the top. It should. It's a devastating indictment of the indifference of all of the governments involved.

Frightened at the Top

Between this vote and the situation in Greece I can see where that would frighten some of them.

What happens in Iceland though without an outside aid package?

Nuclear Winter?

Detroit just sold $250 million in bonds with no financial statements since 2008 and a warning attached that they are danger of filing Chapter 9 bankruptcy yet they sold out in less than 6 hours and they could have sold twice that amount since $500 million was offered.

So no matter how dire the situation here is borrowing continues unabated. I mean selling long term bonds to pay this years shortages doesn't seem like a credible strategy when overseas countries with less debt percentage wise are being told they have to cut expenses to get help.

We seem bullet proof as long as we continue to borrow more more more and Wall Street loves it so far.

There's a better plan

See Hazel Henderson's editorial "A win-win plan for Iceland" at There are definitely better options that will benefit everyone involved.