Iceland is right
Iceland is right. Britain (and the Netherlands) should give way on the demand that it should pay them back in full for losses in the collapsed Icesave online bank. They will probably have to do so — but before they give way their stubbornness may drive Iceland, now within sight of joining the European Union, to the level of international basket case.
President Grímsson’s decision to block a Bill that would repay Britain and the Netherlands the £3.6 billion their savers lost has triggered a storm of abuse. But the tiny nation of 320,000 people has a good case for saying it won’t pay back all the debt on the dates set out. It has an even better case for saying it can’t.
When Landsbankii, the parent of Icesave, collapsed in 2008, Iceland questioned whether it was obliged to compensate foreign savers. To cool the panic and demonstrate leadership, the British and Dutch governments decided to pay the savers right away, and try to get the money back from Iceland.
Under EU law it’s very debatable whether Iceland is obliged to pay them. It signed up to “passporting” rules that allow banks to operate across national borders if they take part in their home country’s system of guaranteeing deposits. But crucially, these guarantees vary between countries, in their level, and in who runs them. In Britain, the guarantee comes from the Government, and shortly before Landsbankii collapsed, was raised to £50,000. In Iceland, insurance was offered through the Depositors’ and Investors’ Guarantee Fund, set up by private banks, and in value equal to only 1 per cent of deposits. That was within EU rules, which did not foresee the simultaneous collapse of the country’s entire banking system.
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Popularity: 4% [?]
Male, retired and the rest is of little interest to anyone. The site keeps me busy and if it helps others to stay abreast of daily events then my time is well spent.
Undecided Voter Says:
Lets hope China doesnt pull the same thing on the US with their huge debt.
Posted on January 9th, 2010 at 4:07 pm
Jack Says:
Re: #1 — That’s my concern also. What would happen if China called the US debt?
I’ll tell you — nothing.
The US won’t go bankrupt — China will.
China would be out billions of dollars and the US would motor on.
People can correct me if I’m wrong. I won’t be offended.
Posted on January 9th, 2010 at 4:38 pm
Undecided Voter Says:
Heres another thought, what if China started to call in the US loans but at a gradual pace?
Heres another one, what if China decided not to loan the states any more money? Could the states then go to someone like the International Monetary fund with (empty) cap in hand?
Posted on January 9th, 2010 at 4:46 pm
Jack Says:
Re: #3 — As I’ve noted before, UV — I know someone like you. He never sees the good side of things, only the bad but I love him to pieces.
Having said that what happens when a country like the US goes bankrupt? We’ve never seen that before. What do they do?
I don’t know but here’s a thought. They do as all people who are bankrupt do. They declare and protected by bankruptcy law, in five years they are back on their feet.
And who loses?
China (and many other false friends).
Watch for it. It could happen.
Posted on January 9th, 2010 at 4:59 pm
Undecided Voter Says:
Love you too, Jack – Hugs & Kisses butt, an old american wise man once said ‘Question everything’ and I have never forgotten that advice.
Posted on January 9th, 2010 at 5:25 pm
Jack Says:
Fair enough.
Posted on January 9th, 2010 at 5:30 pm
jema54 Says:
Undecided voter – have you been listening to Glen Beck? “Question with Boldness” – I think that quote was attributed to Martin Luther King. Correct me if I am wrong. It is a very good line to live by, IMO but faux questioning is a msm stunt and should not be given credence, IMO.
Posted on January 9th, 2010 at 5:41 pm
Undecided Voter Says:
#7. Use to watch him but since he went to fox, I can no longer get him as my cable carrier does not include fox in my package.
Posted on January 9th, 2010 at 5:46 pm
nomdeblog Says:
“Trust but Verify” was a phrase Ronald Reagan used with Gorbachev during Cold War negotiations at Reykjavik Iceland.
That’s a very good way to think positive but not be naïve.
This all comes full circle because Iceland was very strategically important to the USA during the Cold War and when it ended the massive funding that had pored in there with the US Navy and Air Force ended. The Icelanders had to reinvent themselves. It’s just another story on adaptation to a new environment and a very bumpy ride.
Posted on January 9th, 2010 at 6:09 pm
Mr.g Says:
I have only one thing to say to you people:
http://www.dailymail.co.uk/news/worldnews/article-1232625/Germany-paying-50million-reparations-following-World-War-One–90-years-on.html?ITO=1490
Posted on January 9th, 2010 at 8:44 pm
jema54 Says:
Thank-you for that very interesting link, Mr. g. I did not know that the reunification of Germany would cause such hardships. I wonder if the German people knew?
Posted on January 9th, 2010 at 8:56 pm
Mac Says:
I doubt China is interested in calling the US on their debt. At this point, the Americans are still making their payments and the majority of what they’re paying is servicing their debt rather than biting into the principal… I expect China is perfectly happy taking the American’s money.
Posted on January 9th, 2010 at 9:10 pm
Undecided Voter Says:
As long as theres an America – China will have great income thanks to the american debt.
Posted on January 10th, 2010 at 8:05 am