Why Iceland Will Not Pay Up

[spivT]

But you are happy that I as a taxpayer stump up the money whenever the Icelandic taxpayer doesn't fancy it.

You wouldn't. The deficits is above 10%, are you currently paying more income taxes ? Has VAT gone above the 17.5% ?

Has your council hiked taxes this year becuase it hasn't yet been reimbursed, if indeed it had an icesave account ?

Stop sounding like a Daily Wail headline.

[bogbrush]

You wouldn't. The deficits is above 10%, are you currently paying more income taxes ? Has VAT gone above the 17.5% ?

Has your council hiked taxes this year becuase it hasn't yet been reimbursed, if indeed it had an icesave account ?

We're paying more than we would if we had a budget surplus, so these things are linked albeit not instantaneously. One day we'll pay for everything. We shouldn't have to because nobody should have got anything more than a guarantee.

Edited January 10, 2010 by bogbrush

[Cygnus Alpha]

Yes they had a guarantee scheme, funded (like the FSCS one) by levies on member banks. You haven't established that the Icelandic scheme was backed by a legally-binding state guarantee. The question of what happens when one of these schemes goes bust has always been interesting; when I looked into the FSCS scheme (which is often blithely referred to as "government backed") I could find no such commitment. In the event, the UK govt bailed the scheme out as needed, and even went further than the FSCS rules required. But that was done for political reasons and to preserve confidence, not because of direct legal obligation.

According to wikipedia, "the Icelandic government has repeatedly asked that the matter be taken to the EFTA Court". If UK/NL are confident of their ground, why don't they call Iceland on this? Choosing coercive measures over court sounds like bullying to me, as does inducing a small nation to go beyond what it's signed (which seems already to have happened, since they've agreed to a repayment programme, with the haggling now being about timing and terms).

Apart from the obvious reason for avoiding a legal decision, I guess that the UK and NL -- and the central institutions of the EU -- don't want too much light shed on the exact nature of the banking guarantees, because of the confidence-draining revelations that would ensue.

Huw, according to Urdur, the Icelandic scheme does not have a state guarantee. He has provided no proof to back this up. The PDF he linked to was not relevant to the Icelandic Government.

You are right that even the FSCS in the UK would only have a certain capacity. I gather that similarly Iceland's scheme would only have a certain capacity.

What you have missed is the point I made earlier and that is the Icelandic banks did not fail with zero assets. If it was in the UK, the FSCS would make recoveries against the failed bank and use this money first to pay out and would only rely on the levy after that.

Similarly, the Icelandic scheme would have made substantial recoveries from the failed banks - enough certainly for the 20,000 euro limit. Instead of doing this of course, they gave Icelandic savers 100 percent of their money back leaving NOTHING for UK and Dutch savers.

In short they have nicked the Dutch and UK savers money and given it to Icelandic depositors. I repeat, the assets of the failed banks did not simply disappear.

I think we're agreed that they owe us the money - the current disagreement is over how, when and how much.

I don't agree though with the 'bullying' word. The IMF will only lend the money under certain conditions. One of those conditions is that they don't renege on their debts. Not unreasonable is it? Would you lend money to Iceland? I wouldn't!

[Cygnus Alpha]

You lose all credibility when you come out with the 'think of the taxpayers' line.

My council is probably going to have to fork out millions due to equal pay legislation, it has signed a huge outsourcing contract with

pie in the sky 'efficiency' savings, it borrows several million pounds each year.....sometimes it comes out in the media pleading poverty

and using the 'tax rises' line to try and stake the moral high ground when it comes to things it doesn't want to pay out for.

It pays out millions in consultants which it happily continues to do unless it's higlighted in the media.

If we added up all these costs incurred and the rest, you'd be looking at a serious hike in council tax bills, but the

council is a politicial org seeking to be reelected into governance at intervals, you will not have tax hikes because of

each cost overrun or overspend. Sure they can look to make savings or 'cuts' but proper financial management and

organisation in the first place could avoid threats to 'cuts' to services. The same applies to any money not reimbursed

from the money they had in icelandice savings accounts. They'd haveto take it on the chin like any other cost which doesn't

provide for a service or a saving further down the line.

And council budgets are still in a large part reliant on central govt. grants. Ultimately it's up to the govt., they want to take the

easy options in terms of budget cuts, they could increase grant funding, force council tax reductions for local taxpayers,

pay out for the icesavers in the UK, and it wouldn't necessarily mean increased taxes for the 'taxpayer'. If they choose not

to do that it'd be for politicial reasons, so no point blaming the icelanders.

It's not politically conveinent to shave a couple of billion off the budgets of the sacred cows and other areas, and it's not

politically conventient to increase the budget deficit [although technically that isn't a problem at all], but it is convenient for

them to go after iceland for a few billion.

Don't be an twit. I'm only reflecting back the "Icelandic taxpayer" line that was originally put. Strange you don't have such a strong objection to that being used but drone on for 2000 words when someone responds with "UK taxpayer".

Edited January 10, 2010 by Cygnus Alpha

[Cygnus Alpha]

You wouldn't. The deficits is above 10%, are you currently paying more income taxes ? Has VAT gone above the 17.5% ?

Has your council hiked taxes this year becuase it hasn't yet been reimbursed, if indeed it had an icesave account ?

Stop sounding like a Daily Wail headline.

More whining about the use of the "UK taxpayer" but it's ok to use the words "Icelandic taxpayer" right.

[spivT]

Don't be an twit. I'm only reflecting back the "Icelandic taxpayer" line that was originally put. Strange you don't have

such a strong objection to that being used but drone on for 2000 words when someone responds with "UK taxpayer".

I'm sorry, but your the one who's making erroneous arguments about increased taxes for UK taxpayers in the event the

the UK carrys the can for refunding depositors.

ergo, your the twit.

[Injin]

Only those people who signed contracts shoudl be involved in all this, surely?

Lead swan must admit this is faur, no?

[Cygnus Alpha]

I'm sorry, but your the one who's making erroneous arguments about increased taxes for UK taxpayers in the event the

the UK carrys the can for refunding depositors.

ergo, your the twit.

But you have no objections when the original "Icelandic taxpayer" argument was put. Amazing. Truly amazing.

[Injin]

But you have no objections when the original "Icelandic taxpayer" argument was put. Amazing. Truly amazing.

Quite right.

For moral and intellectual consistency the correct position is that no one should pay tax ever.

Problem solved!

next?

[spivT]

But you have no objections when the original "Icelandic taxpayer" argument was put. Amazing. Truly amazing.

I have a problem in people missing the point entirely. From what i can see, the icelandic and UK govts. thought

they could reach an agreement, without accounting for the system in Iceland which allows for what happened to transpire.

Icelanders [whether taxpayers or non-taxpayers] objected to the settlement as not being in their interests. This obviously

creates a thorny issue for Icelandic politicians, but then it's foolhardy of our own politicians to think they can always

thrash out agreements by entirely bypassing or without acounting for the opinions of the populace of a foreign nation.

the financial situation in iceland may be very different to here in the UK as far as the impact on Icelanders of such settlements.

But the reality is that it's no burden on the UK taxpayer, and it's likely that there are very few who would consider it a financial

burden on them via increased taxes.

Can the same truly be said in Iceland ? If so, then fine, both 'taxpayer' arguments are errenous.

but this is more about democratic census trumping who promised what to whom. If the Uk govt. doesn't like it, it needs to

take it's case to an arbitrary settlement if that's acceptable to Iceland. It's preferable to grandtanding like this, isn't it ?

Ultimately both countries have the right to consider their own interests, and bring the 'taxpayer' into it if they wish. But if the

Icelanders are objection to a decision made by their politicians, where does that leave the UK ? With the moral high ground ?

Does that have a legal foundation ?

[spivT]

Just to add, wouldn't it be the case that it would be a financial burden on the Icelanders because they'd be settling the amounts

in foreign currencies. A debt burden denominated in foreign currency is very different to the UK reimbursing or coverying UK icesaver

depositors in sterling ? And iceland would prefer to settle in their own currency but that wouldn't be acceptable to the UK and Dutch ?

Aplogies if i've got that wrong.

therefore it could be said that it really is a very genuine burden on iceland and it's 'taxpayers'. Can the opposite be said of the UK ?

Let's put it to a referendum......let's say how many can be arsed to turn up.

[Saving For a Space Ship]

someone should harpoon the bellend.

It's called a 'Prince Albert'

http://en.wikipedia.org/wiki/Prince_Albert_piercing

[Cygnus Alpha]

Just to add, wouldn't it be the case that it would be a financial burden on the Icelanders because they'd be settling the amounts

in foreign currencies. A debt burden denominated in foreign currency is very different to the UK reimbursing or coverying UK icesaver

depositors in sterling ? And iceland would prefer to settle in their own currency but that wouldn't be acceptable to the UK and Dutch ?

Aplogies if i've got that wrong.

therefore it could be said that it really is a very genuine burden on iceland and it's 'taxpayers'. Can the opposite be said of the UK ?

Let's put it to a referendum......let's say how many can be arsed to turn up.

Yes, I agree with a lot of that. It would be a much greater burden on Iceland's taxpayers than it would be for the UK taxpayer* - mainly because of the population of Iceland being a lot lot lower. What you have got a little bit wrong is that the assets of the failed banks are mostly in foreign currency too. The "Iceland are hard done by" brigade don't tell you about the assets (apart from Urdur who has been honest on this point) and pretend that the Icelandic taxpayers will have to pay £100,000 each of whatever made up figure it is.

Now if you'd have put forward a sensible argument in the first place rather than a 2,000 word how dare you mention the UK taxpayer rant then we'd be fine!

(*apologies for using the words "UK taxpayer" again - I hope you are not too traumatised by it)

[spivT]

Now if you'd have put forward a sensible argument in the first place rather than a 2,000 word how dare you mention the UK taxpayer rant then we'd be fine!

(*apologies for using the words "UK taxpayer" again - I hope you are not too traumatised by it)

double cheeky ba$tard.

Edited January 10, 2010 by spivtastic

[huw]

Huw, according to Urdur, the Icelandic scheme does not have a state guarantee. He has provided no proof to back this up. The PDF he linked to was not relevant to the Icelandic Government.

It's up to those claiming payment to provide documentation. If it exists you should be able to find it; conversely Urdur can never prove the negative which is what you're asking him to do. I believe the PDF was relevant (assuming you're referring to the EU compensation regulations) because that's what Iceland relied on in operating its banks within the EEA. The link I posted earlier confirmed as much. Again, if that's not the governing agreement, those making the claim need to point to the agreement that WAS in effect, and you still haven't done so.

No agreement = no claim.

What you have missed is the point I made earlier and that is the Icelandic banks did not fail with zero assets. If it was in the UK, the FSCS would make recoveries against the failed bank and use this money first to pay out and would only rely on the levy after that.

We've already discussed that, and everyone including Urdur seems to agree that any residual assets should be distributed to creditors as normal. I'm not aware that Iceland has somehow seized these assets -- if so, that would be disgraceful (if you have come across evidence confirming this then please share it, otherwise we're debating something entirely theoretical). The last I heard, many of the assets were frozen in the UK and in theory available to recoup losses.

Personally I'm inclined to believe SNACR when he says that the assets are not as juicy as many hope:

"Cynically, I'm afraid one of the most likely reasons that Britain invoked terror legislation to seize assets was to prevent them being sold for the benefit of all creditors. The pitiful bids the businesses would have attracted would have shone a very harsh light on our Emperor's New Clothes economy and loan books like HBOS's, who were as recklessly overextended to UK retail and commercial property sectors as the Icelandic banks. And would hit the exact same rocks.

To take the best known example Baugur. At the end of the day these 'assets' were mostly a load of leased shops selling things in a business model that was only plausibly, if even then, viable whilst operating in a bubble economy of excess credit."

I don't agree though with the 'bullying' word. The IMF will only lend the money under certain conditions. One of those conditions is that they don't renege on their debts. Not unreasonable is it? Would you lend money to Iceland? I wouldn't!

We appear to agree that the relevant debts (the ones being pursued, related to the compensation scheme) are NOT valid, hence they have not reneged on them. In fact they have offered to pay, subject to conditions that UK and NL found unacceptable.

While we can debate about the assets, and try to find more information about what happened to them/whether they are still frozen, this bullying/pressure has nothing to do with those. And again, if we did some digging and found that assets have been stolen, surely the first line of attack would be through the courts? Whether this supposed debt arises from the compensation scheme or from the improper disposal of bank assets, trying to recover it via IMF pressure seems highly improper, similar to a private creditor threatening someone's kneecaps instead of using the small claims court. You have to question why UK/NL are choosing the kneecap course, since they would normally (claim to be) in favour of the rule of law.

Edited January 10, 2010 by huw

[Urdur]

We've already discussed that, and everyone including Urdur seems to agree that any residual assets should be distributed to creditors as normal. I'm not aware that Iceland has somehow seized these assets -- if so, that would be disgraceful (if you have come across evidence confirming this then please share it, otherwise we're debating something entirely theoretical). The last I heard, many of the assets were frozen in the UK and in theory available to recoup losses.

Personally I'm inclined to believe SNACR when he says that the assets are not as juicy as many hope:

While we can debate about the assets, and try to find more information about what happened to them/whether they are still frozen, this bullying/pressure has nothing to do with those. And again, if we did some digging and found that assets have been stolen, surely the first line of attack would be through the courts? Whether this supposed debt arises from the compensation scheme or from the improper disposal of bank assets, trying to recover it via IMF pressure seems highly improper, similar to a private creditor threatening someone's kneecaps instead of using the small claims court. You have to question why UK/NL are choosing the kneecap course, since they would normally (claim to be) in favour of the rule of law.

The assets are in the hands of the special commitee that took over Landsbanki.. Their job in the next years is to put these assets into value, without putting them on firesale. Due to the emergency laws passed by the Icelandic parliament where depositors were prioritized above creditors, all recovered money will go directly to the British and Dutch Governments..

It is true that no one knows the exact value of these assets, but we have heard that they may be as you said..."not as juicy as many hope". The most optimistic opinion about these assets states that they will possibly cover 90% of Icesave deposits.

Still, even if we get 90% back, we will still have to pay half the money of the current 3.9 billion pounds/euro's "owed" to the British and the Dutch due to the interests on the loan.

On a side note, Alain Lipietz a member of the European parliament and a co-author of Direktive 19/94/EC was interviewed on Icelandic TV today..He states that there is no legal foundation to be found in EU laws which obligate the Icelandic state to pay for this mess..He says that the responsibility lies only with the UK and Holland..

[bogbrush]

On a side note, Alain Lipietz a member of the European parliament and a co-author of Direktive 19/94/EC was interviewed on Icelandic TV today..He states that there is no legal foundation to be found in EU laws which obligate the Icelandic state to pay for this mess..He says that the responsibility lies only with the UK and Holland..

Interesting.

It's a commercial bankruptcy; the assets go to the creditors and people lose. It happens every day, i don't know why anyone thinks there should be a claim on people who happen to live on the same Island.

It's just more Brown idiocy and a cover up of the Ponzi scheme. Thankfully the Icelanders will vote it down.

[Injin]

Interesting.

It's a commercial bankruptcy; the assets go to the creditors and people lose. It happens every day, i don't know why anyone thinks there should be a claim on people who happen to live on the same Island.

It's just more Brown idiocy and a cover up of the Ponzi scheme. Thankfully the Icelanders will vote it down.

I recently started the HPC hdge fund. Unfortunately, it didn't go all that well. I bet llyyoodd blankfein of gollum sucks I could make him look less like a shaven cross eyed badger and get him laid without tens of millions in the bank. it didn;t go well, but luckily he bought his way off the sex offenders register, so say no more.

However, as members of HPC you'll be expected to pay all my failed companies debts.

Cygnus alpha can explain why, apparently.

[Cygnus Alpha]

It's up to those claiming payment to provide documentation. If it exists you should be able to find it; conversely Urdur can never prove the negative which is what you're asking him to do. I believe the PDF was relevant (assuming you're referring to the EU compensation regulations) because that's what Iceland relied on in operating its banks within the EEA. The link I posted earlier confirmed as much. Again, if that's not the governing agreement, those making the claim need to point to the agreement that WAS in effect, and you still haven't done so.

No agreement = no claim.

We've already discussed that, and everyone including Urdur seems to agree that any residual assets should be distributed to creditors as normal. I'm not aware that Iceland has somehow seized these assets -- if so, that would be disgraceful (if you have come across evidence confirming this then please share it, otherwise we're debating something entirely theoretical). The last I heard, many of the assets were frozen in the UK and in theory available to recoup losses.

Personally I'm inclined to believe SNACR when he says that the assets are not as juicy as many hope:

"Cynically, I'm afraid one of the most likely reasons that Britain invoked terror legislation to seize assets was to prevent them being sold for the benefit of all creditors. The pitiful bids the businesses would have attracted would have shone a very harsh light on our Emperor's New Clothes economy and loan books like HBOS's, who were as recklessly overextended to UK retail and commercial property sectors as the Icelandic banks. And would hit the exact same rocks.

To take the best known example Baugur. At the end of the day these 'assets' were mostly a load of leased shops selling things in a business model that was only plausibly, if even then, viable whilst operating in a bubble economy of excess credit."

We appear to agree that the relevant debts (the ones being pursued, related to the compensation scheme) are NOT valid, hence they have not reneged on them. In fact they have offered to pay, subject to conditions that UK and NL found unacceptable.

While we can debate about the assets, and try to find more information about what happened to them/whether they are still frozen, this bullying/pressure has nothing to do with those. And again, if we did some digging and found that assets have been stolen, surely the first line of attack would be through the courts? Whether this supposed debt arises from the compensation scheme or from the improper disposal of bank assets, trying to recover it via IMF pressure seems highly improper, similar to a private creditor threatening someone's kneecaps instead of using the small claims court. You have to question why UK/NL are choosing the kneecap course, since they would normally (claim to be) in favour of the rule of law.

You're an odd one. Why is it up to me to provide documentation? I haven't made any claims on the matter I'm just saying that Urdur's claim that there isn't an agreement is not supported by his documentation. If the PDF was so relevant then please please please look up the entry for Iceland and post it on here. To save you some time, it isn't on there because Iceland is not in the EU. I'm sure you know that, but you just choose to ignore it.

You agree that the assets should be used to repay the debt and yet you say no agreement no claim. Very bizarre. Iceland has taken these assets and used them to compensate their own savers. The assets did not just disappear. Assets have been frozen in the UK but other assets such as loan assets (which can't be frozen) and assets held abroad have not been frozen.

I agree that Iceland have not reneged on the debts yet. But people like you would prefer they did.

[Urdur]

Interesting.

It's a commercial bankruptcy; the assets go to the creditors and people lose. It happens every day, i don't know why anyone thinks there should be a claim on people who happen to live on the same Island.

It's just more Brown idiocy and a cover up of the Ponzi scheme. Thankfully the Icelanders will vote it down.

Here's the interview..

http://dagskra.ruv.is/sjonvarpid/4472547/2010/01/10/0/

And another one with Dr Michael Hudson..from the same show today..

http://dagskra.ruv.is/sjonvarpid/4472547/2010/01/10/2/

[Urdur]

Iceland has taken these assets and used them to compensate their own savers. The assets did not just disappear.

These assets have not been sold yet..so no they have not been used to compensate anyone is Iceland!!!!!

[mightytharg]

Interesting.

It's a commercial bankruptcy; the assets go to the creditors and people lose. It happens every day, i don't know why anyone thinks there should be a claim on people who happen to live on the same Island.

It's just more Brown idiocy and a cover up of the Ponzi scheme. Thankfully the Icelanders will vote it down.

Sorry, did you say the assets go to the creditors? Or did you say the assets are stolen by all the Icelandic creditors (helping themselves to extra if there is any left over) leaving foreign creditors with nothing?

I didn't quite hear you.

[Authoritarian]

Sorry, did you say the assets go to the creditors? Or did you say the assets are stolen by all the Icelandic creditors (helping themselves to extra if there is any left over) leaving foreign creditors with nothing?

I didn't quite hear you.

Didn't we use Terror legislation to seize the icelandics banks' British assets? I seem to recall that we did.

[Pindar]

The Icelandic case is a nice micro example of the dilemma of life and value and obligation and personal responsibility.On the one hand you have savers who are happy to accept a too-good-to-be-true return on their "investment".You then have their reluctance to accept any associated risk for their "investment".The savers trumpet "something must be done" to the government that they have been robbed by unscrupulous governments/people/countries.The government responds by placing Iceland on a list of terrorist nations and demands compensation.All of the above is accompanied by popular disgust at how much taxpayers money has been used to rescue the failed casino that was/is the British banking system yet without the realisation that many of the ones protesting are also demanding that they be permitted to enjoy risk-free investment in some offshore savings asylum.The hypocrisy must surely now be evident and the solution must surely now scream out loud to anybody with even half a brain.There can be no investment without risk. Our government is a reflection of our collective unease at taking responsibility for our own lives. It's easier to let it be somebody else's problem but the price that is paid for this is loss of personal sovereignty and dis empowerment on a grand scale.We are quite happy to have people steal on our behalf all the time we benefit, but the moment we are adversely affected by mass-theft, we cry "something must be done" and the likes of Gordon Brown comes to the rescue with draconian and inappropriate proscription of innocents as terrorists and wrong-doers as the real thieves sneak off unnoticed.

[bogbrush]

Sorry, did you say the assets go to the creditors? Or did you say the assets are stolen by all the Icelandic creditors (helping themselves to extra if there is any left over) leaving foreign creditors with nothing?

I didn't quite hear you.

What I said goes for all commercial failures.

And I was typing, not talking. That's why you couldn't hear me.

Edited January 10, 2010 by bogbrush