In tackling the banks, ICELAND set an example for the world

[Lite Beer]

EDITORIAL
In tackling the banks, ICELAND set an example for the world

THE "TOO BIG TO FAIL" THEORY IS TESTED IN REYKJAVIK AND FOUND WANTING AS THE ISLAND NATION THROTTLES TOWARD RECOVERY

If the struggle to recover from the 2008-09 global economic crisis were to be viewed as a competition among the benighted nations, neutral spectators would be rooting most for Iceland, a perennial economic underdog that has done what the United States and other countries refused to do. It let its banks fail. It let them fall on the swords they forged themselves. This is moral common sense at its finest.

In denying that its banking institutions were "too big to fail" - that contemptible claim still echoing from Washington - the government of Iceland has taken on defaults totalling US$85 billion. But it is also citing the banks' mishandling of investors' money as justification for prosecuting their executives on various fraud-related charges.

Letting the banks fail is an enormous gamble, economists around the world have warned, but it's also the right thing to do morally. "Why should we have a part of our society that is not being policed, that is without responsibility?" special prosecutor Olafur Hauksson declared in triumph after Iceland's supreme court upheld the convictions of three bankers and sentenced each of them to between four and five-and-a-half years in jail. "It is dangerous that someone is 'too big' to investigate - it gives the sense that there is a safe haven."

There is no safe haven for the corrupt and the criminal, and stopping these people in their tracks pays dividends. The International Monetary Fund says Iceland is achieving economic recovery without undermining its ability to continue funding healthcare and education. In fact, Iceland is widely expected to become the first crisis-hit European country to get production not just back to pre-crisis levels but above them.

The United States, where the crisis began in a swamp of risky investments and secret deals, chose to rescue its bankers at massive expense to the taxpayer. The measures implemented afterward by the White House and Congress were intended to look tough, and several key market traders did go to jail, but not

the top executives chiefly responsible for taking the world to the brink of economic catastrophe. By most accounts they are back in business today, running variants on the same old scams. Their institutions are "too big to fail" only because their influence in election politics and the news media is so pervasive. The top echelon is regarded as untouchable.

Iceland has had to summon tremendous political will to stop the rot in its finance industry. Hauksson is a police officer from a small fishing village who shouldered the daunting task only because no one else dared take on the role of special prosecutor. Parliamentarians did their part by loosening laws that protected financial dealings, opening the information gate for government lawyers.

With a measure of success now in hand and growing optimism for the future, Iceland still faces hurdles. There might well be an outflow of capital that would devalue the krona. But such risks are worth taking, even if for no other reason than Iceland becoming the first nation to act ethically and decisively, in the genuine interest of ordinary citizens rather than in the interest of the privileged class.

Two schools of economic thought are clashing here. Iceland is trying to prove that banks are not too big to fall if their executives behave imprudently or fraudulently, heedless of the damage their greed does to people lower down the fiscal ladder. By contrast, the United States is adamant that the collapse of major financial institutions would trigger a disastrous domino effect for the economy as a whole.

Morally, Iceland is the country on the right path. Economically, Iceland appears to be outpacing every other nation in terms of post-crisis recovery.

There are certainly economists who believe the bank executives have learned their lesson and that tough, well-enforced measures will prevent a repeat of the 2008 nightmare. They say letting crooks off the hook is preferable to putting the entire economy at risk.

We join Iceland in rejecting that advice.

Source: http://www.nationmultimedia.com/opinion/In-tackling-the-banks-ICELAND-set-an-example-for-t-30263246.html

-- The Nation 2015-06-27

[ezzra]

Yeah right,,, with a population of 329,100 I think they better shut up and don't boast,

you'd be an example to the world if your nation is in to the several millions people

and having enemies and political turmoil, Island in nothing but a big and freezing

Club Med.....

[WitawatWatawit]

"It is dangerous that someone is 'too big' to investigate - it gives the sense that there is a safe haven."

I like this. Now who can I email it too? I know! oh wait, he's incommunicado for another 10'days.

[NeverSure]

Just one question. Since that was the depositors' money the banks loaned and lost, do the depositors take the loss to pay for the banks' failures? Everyone loses money?

That happened around the world in the crash of 1929 and that was a real depression, not a recession. It took many years to recover. In fact it was government spending ramping up during the early 1940's for WWII production that finally boosted it out. It was a lost decade or more of poverty for many.

Is Iceland going to be the deposit insurance company of last resort, or are they going to let the masses lose their money and be unable to spend to keep the economy going?

[godden]

i only have admiration for them.

[shaurene]

The Banks in every country need to be monitored for sure. They are free to impose new charges on their customers.

The charge that really pisses me off is the charges for using your credit card. If you buy something in another currency they convert this at a very low exchange rate were they make a good profit in the exchange rate and then charge you a fee for the service of the exchange, bloody theft, the banks make millions in profit from this charge.

The Banks look for any extra chages they can impose on customers and governmentsdo not control them.

The charges you get on your statements now, service fee, account management fee and a few others, they make millions on these. And management get big bonuses for this and any other new fee they can come up with.

[sammygood]

they defended their country by denying the savings of other people that invested in their banks, right ?

[shamrock09]

Just one question. Since that was the depositors' money the banks loaned and lost, do the depositors take the loss to pay for the banks' failures? Everyone loses money?

That happened around the world in the crash of 1929 and that was a real depression, not a recession. It took many years to recover. In fact it was government spending ramping up during the early 1940's for WWII production that finally boosted it out. It was a lost decade or more of poverty for many.

Is Iceland going to be the deposit insurance company of last resort, or are they going to let the masses lose their money and be unable to spend to keep the economy going?

Do you understand fiat currency? Do you truly understand how money is created? Banks can lend 90 times more than they have assets, and remember banks make money by lending money. If you borrow 1,000,000 somethings, the bank only needs assets of 1,00,000 to make the loan. They don't pay you with real money, they create the money on a computer screen. Then the fun begins, because you have to pay the money back at compound interest. You can't create the money out of thin air, it has to be real money. True if you default on the loan, the bank assets are degraded but not anywhere near the extent of the loan, and a percentage of new money is removed from money supply. Of course if everyone did this the cash supply would dry up but in effect nobody loses anything.In fact this would be a good thing as it would remove private banks as the creators of cash and take the whole issue back where it belongs, to Government. JFK tied this by issuing green back dollars. Look what happened to him! Oh, the bank forefits a fat profit. The dangerous bit is when people lose confidence in the banks they go and withdraw their savings, so the bank has no margin with which to lend. Squeezing the populace to pay the so-called bank debt is criminal. I really suggest people should study this subject at depth. I guarantee you will receive several shocks!

[BuaBS]

Smoke and mirrors . The banksters did not do much time .

http://www.zerohedge.com/news/2013-07-22/different-view-iceland-recovery

The new system they've got is much like the old one. Same same.

Punish banksters , should be COMPLETE asset seizures , incl their houses with everything in it , all assets /trustfunds of wife & children that can not be accounted for, seizure of funds & dummy corporations inland & offshore, and ofcourse decades of effective prison sentences with no early parole/release.

And like other said : Iceland is not comparable to other countries , barely inhabited , living on massive murdering of sealife & near free geothermic energy.

[ALLSEEINGEYE]

Even if they decided that the banks were too big to fail and needed to be bailed out (which I don't agree with), that doesn't explain why none of the crooks that blatantly stole countless billions were not prosecuted. They could have arrested, charged and imprisoned all involved and kept the banks running.

These incredibly greedy sociopaths will never learn their lesson. They own the politicians and they are running the world. I can only pray for a revolution one day.

Hang the rich!!!

[Bignose]

Yeah right,,, with a population of 329,100 I think they better shut up and don't boast,

you'd be an example to the world if your nation is in to the several millions people

and having enemies and political turmoil, Island in nothing but a big and freezing

Club Med.....

And you are of course an expert on international financing and fiscal management?

Whether or not they have the same population as America or any other of the major countries matters not! Iceland were left with a huge fiscal deficit that threatened their standards of living at every level, and yes they were to blame for putting themselves into this position.

From memory the local councils (who were among'st the largest losers in Iceland) took full responsibility for their badly advised decisions.

The fact is the Iceland debt after the GFC was (per ca-pita head) as high as any other country in the world, they have performed remarkable well to recover in the time it has taken and deserve all credit for doing so.

This article is a well written piece that explains the "other side" to the possible recovery options, there is more truth to this article than the IMF and World Bank would admit to as they had their own involved agenda's post GFC, that is plain to see now...

[jpinx]

The EU would do well to learn from Iceland while the dealings with Greece continue.

[elgordo38]

Just one question. Since that was the depositors' money the banks loaned and lost, do the depositors take the loss to pay for the banks' failures? Everyone loses money?

That happened around the world in the crash of 1929 and that was a real depression, not a recession. It took many years to recover. In fact it was government spending ramping up during the early 1940's for WWII production that finally boosted it out. It was a lost decade or more of poverty for many.

Is Iceland going to be the deposit insurance company of last resort, or are they going to let the masses lose their money and be unable to spend to keep the economy going?

Do you understand fiat currency? Do you truly understand how money is created? Banks can lend 90 times more than they have assets, and remember banks make money by lending money. If you borrow 1,000,000 somethings, the bank only needs assets of 1,00,000 to make the loan. They don't pay you with real money, they create the money on a computer screen. Then the fun begins, because you have to pay the money back at compound interest. You can't create the money out of thin air, it has to be real money. True if you default on the loan, the bank assets are degraded but not anywhere near the extent of the loan, and a percentage of new money is removed from money supply. Of course if everyone did this the cash supply would dry up but in effect nobody loses anything.In fact this would be a good thing as it would remove private banks as the creators of cash and take the whole issue back where it belongs, to Government. JFK tied this by issuing green back dollars. Look what happened to him! Oh, the bank forefits a fat profit. The dangerous bit is when people lose confidence in the banks they go and withdraw their savings, so the bank has no margin with which to lend. Squeezing the populace to pay the so-called bank debt is criminal. I really suggest people should study this subject at depth. I guarantee you will receive several shocks!

We the pensioners and savers the old schoolers are being sacrificed up on the alter of greed, borrowing by people that should not borrow that have no clue as to how to handle money, companies borrowing money at almost zero percent to buy up their competition and also to borrow money at almost zero percent to buy back their stock and flim flam investors and governments to finance their huge deficits at basically zero percent interest. We saved scrapped over the years to now be fenced in by governments that do not care a sh*t about us. In the past 50 years we helped to build our individual economies and what is our reward? to be shafted in our "Golden Years". Disgraceful. Have the banks learned a lesson NO

They were let off the hook by individual governments and now are again going down this same insane path. It will be Bail out the banks again when the next catastrophe hits and do not fool yourselves look around you it is coming and soon. These banks broke the law plain and simple and should have been punished. Governments showed their true colors in the way they let them off of the hook. The banks are pushing the envelope at every turn not a week goes by without them paying billions for having their hand in the cookie jar.

[midas]

Interesting topic!

Curiously there are some TV members such as Naam for example (a surreptitious apologist for the banksters ) who even go as far as likening the actions of the Icelandic government as being fraudulent (in another thread regarding the real fraudulent activities of Deutsche bank ). Does anyone else here consider the Icelandic government acted fraudulently because I don’t?

And interestingly economists Joseph Stiglitz, Paul Krugman and even the IMF all expressed support regarding the actions of Iceland because they all thought it was better but private interests absorb the losses rather than the tax payers of Iceland.

Edited June 27, 2015 by midas

[jpinx]

Whatever -- they're paying over 6% on 5 year term deposits

[facthailand]

It's time countries put the banksters in their place. Mexico did it, too. Now it's time for Greece--that should give them the runs (pun intended).

[topt]

Interesting topic!

Curiously there are some TV members such as Naam for example (a surreptitious apologist for the banksters ) who even go as far as likening the actions of the Icelandic government as being fraudulent (in another thread regarding the real fraudulent activities of Deutsche bank ). Does anyone else here consider the Icelandic government acted fraudulently because I don’t?

And interestingly economists Joseph Stiglitz, Paul Krugman and even the IMF all expressed support regarding the actions of Iceland because they all thought it was better but private interests absorb the losses rather than the tax payers of Iceland.

My memory of when it happened was that the general populace suffered big time - and they initially tried to shaft European savers who were under deposit protection schemes.

[SheungWan]

Just one question. Since that was the depositors' money the banks loaned and lost, do the depositors take the loss to pay for the banks' failures? Everyone loses money?

That happened around the world in the crash of 1929 and that was a real depression, not a recession. It took many years to recover. In fact it was government spending ramping up during the early 1940's for WWII production that finally boosted it out. It was a lost decade or more of poverty for many.

Is Iceland going to be the deposit insurance company of last resort, or are they going to let the masses lose their money and be unable to spend to keep the economy going?

Do you understand fiat currency? Do you truly understand how money is created? Banks can lend 90 times more than they have assets, and remember banks make money by lending money. If you borrow 1,000,000 somethings, the bank only needs assets of 1,00,000 to make the loan. They don't pay you with real money, they create the money on a computer screen. Then the fun begins, because you have to pay the money back at compound interest. You can't create the money out of thin air, it has to be real money. True if you default on the loan, the bank assets are degraded but not anywhere near the extent of the loan, and a percentage of new money is removed from money supply. Of course if everyone did this the cash supply would dry up but in effect nobody loses anything.In fact this would be a good thing as it would remove private banks as the creators of cash and take the whole issue back where it belongs, to Government. JFK tied this by issuing green back dollars. Look what happened to him! Oh, the bank forefits a fat profit. The dangerous bit is when people lose confidence in the banks they go and withdraw their savings, so the bank has no margin with which to lend. Squeezing the populace to pay the so-called bank debt is criminal. I really suggest people should study this subject at depth. I guarantee you will receive several shocks!

That's not how the multiplier effect works at all. Gawd knows where people dream up this stuff.

[hhgz]

In reality, what happened. Most of the convicted bankers were jailed for only 60 days. Taxes were raised to all-time highs, and spending was drastically cut. The internet memes don't mention any of that.

[Jonmarleesco]

There should never have been a bank that was too big to fail, but in Iceland's case, foreign investors were ultimately recompensed by their home countries (taxpayers), thus neutering the objective.

[losworld]

Just one question. Since that was the depositors' money the banks loaned and lost, do the depositors take the loss to pay for the banks' failures? Everyone loses money?

That happened around the world in the crash of 1929 and that was a real depression, not a recession. It took many years to recover. In fact it was government spending ramping up during the early 1940's for WWII production that finally boosted it out. It was a lost decade or more of poverty for many.

Is Iceland going to be the deposit insurance company of last resort, or are they going to let the masses lose their money and be unable to spend to keep the economy going?

Either way you are losing money. How much has been lost to future generations by throwing the u.s. banks trillions in what was probably the biggest con robbery in the history of the world.

[Naam]

Interesting topic!

Curiously there are some TV members such as Naam for example (a surreptitious apologist for the banksters ) who even go as far as likening the actions of the Icelandic government as being fraudulent (in another thread regarding the real fraudulent activities of Deutsche bank ). Does anyone else here consider the Icelandic government acted fraudulently because I don’t?

And interestingly economists Joseph Stiglitz, Paul Krugman and even the IMF all expressed support regarding the actions of Iceland because they all thought it was better but private interests absorb the losses rather than the tax payers of Iceland.

there are some TV members such as Midas who's economic understanding is less than the one of a medium intelligent German Dachshund. they conveniently forget, respectively are too ignorant to know that Iceland's "banking regulator", which is a government authority, failed totally by preventing the banksters luring more and more money from unsuspecting small investors abroad when their bankruptcies were already ante portas (indicated by promising fancy interest rates).

conclusion: Iceland's government aided the fraudulent practices of its banks but rejected any responsibility with the lame argument "that was the old government, we the new government have nothing to do with it." one can only hope that the clowns Stiglitz and Krugman who condone fraud and theft will eventually face similar losses because their investments is for sure not rice fields.

by the way, private interests did not absorb the losses but the UK and Dutch taxpayer absorbed the losses by compensating their defrauded small fry investor citizens.

important to mention is that not only the banks but also Iceland defaulted on its sovereign debt and added the dirty fraudulent trick devaluing its currency by 133% by making it "non tradeable" except for ridiculous miniscule amounts "supported" by the above-mentioned Nobel Prize clowns. thieves and frauds all of them!

by the way, you Sir are a dàmn liar by claiming that i was ever apologetic as far as fraudulent bank activities are concerned. you have posted similar mischievous and false claims dozens of times during the last 7 years without any shame. not to mention that your gloom&doom prophecies "any time now" never materialised.

either put up by providing a link to back your claim or simply shut up and rather count the harvest of your often promulgated ricefields which in your opinion are much more valuable than any fiat money.

[midas]

Interesting topic!

Curiously there are some TV members such as Naam for example (a surreptitious apologist for the banksters ) who even go as far as likening the actions of the Icelandic government as being fraudulent (in another thread regarding the real fraudulent activities of Deutsche bank ). Does anyone else here consider the Icelandic government acted fraudulently because I don’t?

And interestingly economists Joseph Stiglitz, Paul Krugman and even the IMF all expressed support regarding the actions of Iceland because they all thought it was better but private interests absorb the losses rather than the tax payers of Iceland.

there are some TV members such as Midas who's economic understanding is less than the one of a medium intelligent German Dachshund. they conveniently forget, respectively are too ignorant to know that Iceland's "banking regulator", which is a government authority, failed totally by preventing the banksters luring more and more money from unsuspecting small investors abroad when their bankruptcies were already ante portas (indicated by promising fancy interest rates).

conclusion: Iceland's government aided the fraudulent practices of its banks but rejected any responsibility with the lame argument "that was the old government, we the new government have nothing to do with it." one can only hope that the clowns Stiglitz and Krugman who condone fraud and theft will eventually face similar losses because their investments is for sure not rice fields.

by the way, private interests did not absorb the losses but the UK and Dutch taxpayer absorbed the losses by compensating their defrauded small fry investor citizens.

important to mention is that not only the banks but also Iceland defaulted on its sovereign debt and added the dirty fraudulent trick devaluing its currency by 133% by making it "non tradeable" except for ridiculous miniscule amounts "supported" by the above-mentioned Nobel Prize clowns. thieves and frauds all of them!

by the way, you Sir are a dàmn liar by claiming that i was ever apologetic as far as fraudulent bank activities are concerned. you have posted similar mischievous and false claims dozens of times during the last 7 years without any shame. not to mention that your gloom&doom prophecies "any time now" never materialised.

either put up by providing a link to back your claim or simply shut up and rather count the harvest of your often promulgated ricefields which in your opinion are much more valuable than any fiat money.

I am not going to search through 600 pages of the financial crisis thread just to satisfy you! But I can clearly remember the many sarcastic posts you made over the seven years defending the actions of the banksters and brushing aside any concerns regarding fraudulent activities just because it suited your personal agenda.

But even your post in the Deutsche bank thread on 20 June 2015 clearly shows where your loyalties are when you wrote

“ the economic success story of Iceland is based on more blunt crimes than those the big multinationals have committed.”

This is clearly a distortion of the truth by you because here is a list of just some of the improprieties by big banks. Can you please provide your list of the crimes committed by Iceland for comparison?

http://www.washingtonsblog.com/2013/03/stunning-crimes-of-the-big-banks-updated-list.html

[Naam]

I am not going to search through 600 pages of the financial crisis thread just to satisfy you! But I can clearly remember the many sarcastic posts you made over the seven years defending the actions of the banksters and brushing aside any concerns regarding fraudulent activities just because it suited your personal agenda.

But even your post in the Deutsche bank thread on 20 June 2015 clearly shows where your loyalties are when you wrote

“ the economic success story of Iceland is based on more blunt crimes than those the big multinationals have committed.”

This is clearly a distortion of the truth by you because here is a list of just some of the improprieties by big banks. Can you please provide your list of the crimes committed by Iceland for comparison?

http://www.washingtonsblog.com/2013/03/stunning-crimes-of-the-big-banks-updated-list.html

Iceland committed a blunt crime without any shame. according to you and your diction the big banks committed improprieties which i also call crimes. anybody who condones these kinds of crimes commited by thieves and fraudsters has the mind of a thief and fraudster no matter whether Nobel Prize winner or rice farmer. period!

[rott]

They left the foreign depositors / savers swinging, after knowing for many years that the figures from the banking and offshore deposit taking businesses just did not make sense.

No decency, ethics or morality there.