Yesterday, Iceland set the date for a referendum that will decide the fate of a £3.6 billion loan made by Britain and the Netherlands during the banking crisis. Well that will be a “NO” then. The general population will be voting on whether they should be personally punished further for the mistakes of their banks and Britain has warned Iceland that it faces isolation if it does not pay.
Well, I for one would be amazed if most of us here don’t have some sympathy with the Icelandic majority who believe that it would be unfair to expect them to be responsible for a small number of highly irresponsible banks and individual bankers.
How can there be such a vast divide between the opinions of the people and the decisions of the government? How come it is down to the taxpayers to repay the loan when they don’t even get asked?
When are we going to insist that we should be consulted on the future of banking in our country before it’s too late – we need to do this before the election. We need to do it NOW.
AND WHILE I’M ON A RANT…I would like to suggest that we somehow find enough money to pay a reasonable salary to our MP’s – so that we can get reasonable applicants who have experience and knowledge in the real world and who would be an asset to us instead of a liability. We simply do not pay our MP’s enough and maybe if we did, we wouldn’t have to employ people who feel justified in boosting their income via a new sofa/carpet/house/holiday….
Ok. I’ll shut up now.
January 7th, 2010 at 8:17 pm
yeah and sorry but who does britain think he is? x j
January 7th, 2010 at 9:05 pm
Well, yes there is that…..Lx
January 7th, 2010 at 9:19 pm
Given the personal privations that the Islanders are experiencing I would be amazed if they vote to repay this – afterall they weren’t signed up to any savings guarantee scheme
The bog standard, man in the street, Islander is really suffering from the fall out from the financial crisis – why would they vote for cash to leave Iceland ?
And don’t forget it was widely reported that the ‘elite’ were drinking champagne in a boutique hotel whilst Iceland’s economy fell apart overnight
January 7th, 2010 at 11:29 pm
Well quite. Not fair at all. Lx
January 7th, 2010 at 10:58 pm
Well, I am afraid that the Icelandic Government was elected by the people (as was ours), to govern among other things, a responsible banking system. Like ours, the Icelandic Government failed miserably and had to bail out it’s banking system. The British Government is currently borrowing 160 billion per annum from other governments and banks, and has a legal duty to repay the money. The British Government has in turn lent the Icelandic Government 3.6 billion to bail out it’s banks.
Therefore, the Icelandic Government has a legal duty to repay this money to Britain.
It follows that the Icelandic tax payers will ultimately have to stump up the cash, in the same way the you and I will. In our case this will possibly take up to fifty years, remember, the War Loans from the USA granted in the forties and fifties, were only finally repaid in the late seventies or early eighties!
I have every confidence that the good people of Iceland, and I know several, will vote not to repay the 3.6 billion…..interesting times.
Who do we blame? The Government or the Bankers?
I think that in this case we should blame the chicken rather than the egg….!
January 7th, 2010 at 11:27 pm
I think we should blame the government AND the bankers….the UK bankers will presumably be quite relieved that we aren’t quite as sovereign as Iceland, but nevertheless it still highlights the massive void between the two.
January 7th, 2010 at 11:13 pm
Iceland; I think you need to read up on this topic and re-post – this was not irresponsible Icelandic bankers – per se, but rather the Icelandic Government, who gave a legal undertaking to repay the debt…..
January 7th, 2010 at 11:20 pm
Yes but my point is that it was the irresponsible bankers that got everybody into the mess in the first place and then the government gave a legal undertaking – without asking the general public – to repay the debt. Beyond that I clearly don’t know what I”m talking about and certainly CBA to read up on it….Lx
January 7th, 2010 at 11:38 pm
I was going to say something about not knowing the food shop needed that kind of help, but that was too reductive..
the bankers just wont go away will the.
January 8th, 2010 at 6:19 am
I’m simple-minded when it comes to hard sums, and I do have a deal of sympathy with the Icelanders, but doesn’t it boil down to the fact that when you borrow money, you pay it back? I mean, we haven’t threatened to send in “Duh Management” to duff them up or anything, have we?
If this principle has changed recently, I think I’ll borrow a lot of money, go to Carnival in Rio, and then refuse to pay it back citing Iceland as a precedent.
Lord, I’m turning into a reactionary old git!
January 8th, 2010 at 8:44 am
Remember that if the Icelanders vote no, the country will become technically bankrupt and will lose all financial credit worthiness for years to come, that will have a catastrophic effect on the the Icelanders themselves.
My point has been that when we drive our cars on the public road for example, we do so under rules set out by our elected government. Failing to do so will result in having our motoring nuts cut off!
For fifteen years, the our current government has failed to establish a responsible (not overly restrictive) banking environment. This is not to excuse some of our Bankers behaviour, remember Barclays and Llyods Tsb Bank remained secure and highly profitable until the knock-on effect of the banking crisis (Barclays remains so). But at the end of the day, the reckless speculation of some high risk bankers was entirely legal!
I’m off to Rio with Di…
January 8th, 2010 at 9:11 am
Legally, it is vital for the Icelandic Government to stand by its obligations. Whatever your opinions are of capital markets, the consequences of not abiding by the rules are not worth thinking about. Unfortunately this little place can’t afford the telephone numbers involved when they are trying to nurse their own fragile recovery. Conversely, total forgiveness would cause Britain to lose face, which would be an untenable position for us. If we did, we could have a credibility crisis which would lead to a sharp fall in the pound and damage the Gilt market. The third way would be to enter negotiations to reduce their debt to a more manageable level so that Iceland is seen to stand behind its obligations, but give us something in return. That could be some long term mineral rights under the icecap, fishing concessions or even Bjork. The forgiveness/reduction could even be shared by EU members.
We live in a new age where telephone number debts are out of control. The solution is to cut deficits by making difficult decisions. That means we have to stop trying to buy our way out of recession on a spend now, worry about it later basis. That journey will lead to a situation similar to Iceland’s. At least we can sell them David Beckham and Jordan.