Tuesday, Jan 05, 2010
You can't get blood out of a stone
Times: Iceland blocks repayment of £2.3bn to Britain
Last year UK investors in Icesave were compensated with money from the UK Treasury. Last week Iceland's Parliament passed the "Icesave bill" - which would have allowed the repayment to the UK government to be made over 14 years.
"However, Iceland’s Olafur Grimsson, Iceland's president, today refused to sign off the bill after fierce political pressure from the country's opposition party and a petition against the bill signed by nearly a quarter of the country's voters.
Under Iceland's constitution there must now be a referendum on the issue."
Posted by mountain goat @ 01:15 PM (1794 views) Add Comment
31 Comments
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1. jack c said...
BBC are now running this story - Iceland's president has announced plans to hold a referendum on the payment of compensation resulting from the collapse of the country's banks
See http://news.bbc.co.uk/1/hi/business/8441312.stm
2. inbreda said...
That's a shame - I'd imagine Gordons already spent that money
3. bidin'matime said...
So they expect us to foot the bill instead, do they...? It's all part of the 'poor me' reaction that you get from people who over-borrowed, over-spent and now dont want to pay for their own excesses. I hope they all have to go back to eating whale meat and living in igloos.
4. jack c said...
Same old story (IMHO) a minority of people spoil things for the majority - I douby very much if the average Icelander had much idea of what was going on (best ask the Russian Mafia for clarification)
5. icarus said...
"A debt's a debt" For an alternative view with regard to this matter, and a recap on how Brown and Badger bungled this one:
http://www.counterpunch.org/hudson08182009.html
6. mountain goat said...
Iceland is broke so they can't repay us in cash, it is foolish to expect this. Instead we should look at what they can offer us. Fish and geothermal energy perhaps?
7. gone-to-colombia said...
They enjoyed the benefits of their false boom, now pay the debt. Sieze the assets of any Icelandic company as a start.
8. letthemfall said...
How many cod and chips does £2.3bn buy?
(Salt and vinegar please)
9. Ads said...
How can the Icelandic people be held to account for the losses of a private bank? The money hasn't disappeared, it must have gone somewhere. Howcome the British and Dutch governments are so reluctant to bring this to court (suspect frauds involved)? Whats the legal obligation of the Icelandic people to repay this money?
I suggest Olafur is very careful, otherwise we may decide we need "regime change" in Iceland as well. Can't we just print some documents that say Iceland is trying to develop nuclear weapons?
10. mountain goat said...
Icarus @5- good article thanks. I agree with the article that there is little point in trying to force a repayment and destroying what is left of Iceland's small economy. They won't accept it, just like I find it hard to accept that I have to bail out our insolvent banksters, although in our case our economy is arguably in a better position to afford this.
Should the UK Treasury have bailed out UK investors 100% who put their money at risk in the first place? Maybe they shouldn't have lost everything, but surely a haircut was in order? But in an orgy of government spending "every debt was sacred". So many stories at the moment come down to this. Crash Gordon and Banana Ben saved the world by propping up crumbling bad debt, the depression that never happened, house prices rising once again, everything back to normal, but .... oops forgot to consider sovereign debt crisis further down the road, not to mention the moral hazard of bailing out losing investors.
11. icarus said...
mg @9. Another facet of the article @5 is that it supports jack c's point @4 - Icelandic banks emptied by international kleptocrats while the average Icelander was in the dark. Similar problem to a dictator emptying a country's coffers and doing a runner. Should the people pay the debts he leaves behind? Even if doing so progressively weakens the economy and its ability to continue those repayments?
12. mander said...
What happened to the £ 230 bn of CDOs related to the this Iceland £ 2.3 bn debt?
13. mrmickey said...
In the good old days we would have just sent the Royal Navy up there to get our money back.
14. icarus said...
@13 - a whiff of the grape?
15. mountain goat said...
Mr Grimsson, who is serving his fourth term as the elected president, said it was in the interests of democracy to put the legislation to a referendum, given the importance of the issue to Iceland’s future.
“It has steadily become more apparent that the people must be convinced that they themselves determine the future course,” he said. “The involvement of the whole nation in the final decision is therefore the prerequisite for a successful solution, reconciliation and recovery.”
He made clear that an earlier bill passed in August, which authorised the repayments with various conditions attached, would remain active regardless of the outcome of a referendum. Some of those conditions – including a cut-off date for guaranteed repayments – were rejected by the British and Dutch governments, forcing Reykjavik to seek fresh parliamentary approval last month for a compromise deal agreed with the two countries.
More than 60,000 people – about a quarter of Iceland’s voting-age population – have signed a petition against the revised bill, and opinion polls indicate that more than two-thirds oppose it.
FT
Pity we never had a chance to vote in a referendum about bailing out NR, HBOS et al. Now let me see, what would I have voted....
16. will said...
The compensation given out following the ICESAVE collapse was guaranteed under the UK's Financial Compensation Scheme. That's why savers were paid out under the scheme.
Our FSA must have permitted ICESAVE into the scheme as they set up a head office in the UK which operated the business, but quite how Iceland's obligation with the UK government stands is uncertain.
Would the UK be liable to foreign investors if one of our banks went bust abroad?
17. drewster said...
Let's do the maths. £2.3bn divided by 320,000 people is just over £7,000 per person. Spread that over 14 years (as was intended) and that's barely £500 a year per head. That's barely a drop in the ocean compared to what Gordon and Darling have burdened on the UK's taxpayers.
18. shipbuilder said...
Err.....isn't the general consensus on this site that our banks should have been allowed to fail? And who would have compensated the foreign investors that lost out?
19. keith thomas said...
Good on the people of Iceland - shame the British people didn't have the gumption to tell the Government not to bail out our banks. I don't see why the British Government bailed out account holders anyway - anyone dumb enough to invest in an Icelandic bank deserves to lose their money. There's probably no point in giving them their money back anyway as no doubt they'll lose it again in some hair brained property scheme in Albania.
20. letthemfall said...
As dumb as someone prepared to invest in a British bank?
21. rumble said...
Government protect the precious people. Package them in bubble wrap and store them in a warehouse. Nothing will harm them. Utopia.
Heaven forbid people should learn to look out for themselves.
22. will said...
I lost money with Icesave - but got it all back.
And yes it was paying the highest rate at the time guranteed by Gordon Brown.
23. quiet guy said...
@Drewster
I'm not sure that comparing Iceland's position with our position is fair. If you have the time, try exploring this blog:
http://newsfrettir.com/alive/
I found the 'interviews' links quite interesting as well (http://newsfrettir.com/alive/housewife.) The reluctance by the country to take on more debt that most people had no say in isn't hard to understand.
P.S.
I would be very interested to hear from anybody about cash estimates of what we in the UK will have to pay for the bankers fraud.
P.P.S.
I remember considering switching some of my savings to Kaupthing about a year before the crackup. Snigger if you like but it looked pretty safe judging by their website at the time as I recall.
24. Bear Of Little Brain said...
Well done, Iceland! At last one electorate may be prepared to stand up to the bankster's financial rape and pillage.
25. tom101 said...
Same here quiet guy, very close!
26. keith thomas said...
Will - I've got a property development opportunity in Albania - are you interested?
27. tenyearstogetmymoneyback said...
Will and Quiet Guy.
Interesting to hear you side of the argument. If they had let people go uncompensated
then next thing there would have been queues forming to withdraw their money from
National Savings in case they went bust as well.
The BIG failure was with the regulator for letting these banks operate here.
I hold various shares. There is always a warning that the value of shares can
down as well as up and in many cases it has. I have never seen that sort of
warning on a Bank Account, mainly because most people assume that a reasonable
percentage of the money is safe in a vault somewhere.
28. the number cruncher said...
drewster at 17
with the Netherlands debt it is £11,000 per person, including children and none income earners - thats a lot. Now compare that to the earning power of the average Icelandic person over the next 10 years or so and you can see that it is crippling, when you take into account the state of their economy and the exchange rate.
If it was British we would have riots in the streets.
My sympathies are with the Icelandic people.
The real criminals should be in prison and that is the bankers and the politicians that allowed this to happen, both British and Icelandic(and Russian by some accounts).
29. ianbe said...
Will@16 said...The compensation given out following the ICESAVE collapse was guaranteed under the UK's Financial Compensation Scheme. That's why savers were paid out under the scheme.
Not strictly true. The scheme involved the Icelandic compensation scheme paying the first £15K (approximately I think) and the UK FSCS paying the rest. The UK government decided to pay the whole lot and then go after Iceland for their tranche - that they initially refused to pay, then said they would, and now say the won't.....
30. fallingbuzzard said...
You can't blame them really can you. If we had a choice to support the banking system or not, let banks fail or not, I think a referendum would let banks fail. That we don't do this was decide by an unelected Prime Minister that didn't want to let a bank with Scottish origins fail. There's a bit of history there with Scottish banks having a history of failure and crisis, and Gordon was a historian, a PhD one at that. Personally I would back Iceland's decision and feel aggrieved by the UK government's decision to bail out greedy savers that were over the compensation limits.
31. letthemfall said...
Those who chose to invest up to £50k in Iceland banks were covered by guarantees (Kaupthing by the UK scheme I believe, Icesave partially). Therefore they chose to take a balanced and quite small risk in return for good rates. With hindsight they made a good call. I call that intelligent investing myself.