http://online.wsj.com/article/SB10001424052748704641604576254661016938274.html
For the second time, Icelanders voted down a deal to repay Britain and the Netherlands billions of euros lost in the island nation's 2008 financial collapse—at once a bold popular rejection of the notion that taxpayers must bear the burden for bankers' woes and a risky outcome that will complicate Iceland's efforts to rejoin global markets.
The money in question, about €4 billion ($5.8 billion), was placed by British and Dutch depositors in an Icelandic Internet bank called Icesave, and then lost when Icesave's operator, Landsbanki Islands, collapsed along with the rest of Iceland's big banks in October 2008.
Nearly 60% of 175,000 voters rejected a plan to compensate the British and the Dutch governments, who had stepped in to pay their own Icesave depositors when Iceland's deposit-insurance scheme ran out of money.
The deal was the result of months of negotiation that saw Iceland win far better terms for the repayment. An earlier agreement was demolished—93% of voters said no—in a another referendum, in March 2010.
But Iceland's president, Ólafur Ragnar Grímsson, in February vetoed a Parliamentary bill that would have sealed the new deal. That triggered Saturday's referendum. Mr. Grímsson's role is largely ceremonial and vetoes are extremely rare.
Both Britain and the Netherlands expressed disappointment and indicated they would fight it out with Iceland in court. "The time for negotiations is over," said Jan Kees de Jager, the Dutch finance minister.
Sunday, Mr. Grímsson said Iceland had, again, spoken clearly. "The leaders of other states and international institutions will have to respect this expression of the national will," he said. He pointed out that the U.K. and the Netherlands would, despite the rejection, receive "immense sums" from Iceland because the countries hold claims to Landsbanki's estate.
Iceland is a member of the European Economic Area, which means it has signed up to many of the European Union's financial and trade rules—among them a requirement that countries maintain deposit-insurance systems.
The EFTA Surveillance Authority, a body that polices the EEA agreements in Iceland, Norway and Liechtenstein, has already started legal proceedings against Iceland. The authority says Iceland violated rules by not backing Icesave depositors—and by reimbursing domestic depositors before foreigners.
The dispute will be heard by the Luxembourg-based EFTA Court.
The Icelandic government said the result of the referendum would delay "by some weeks" the next assessment by the International Monetary Fund of Iceland's progress toward economic recovery. The IMF and Nordic nations rescued Iceland with a bailout.
The government said the referendum result wouldn't affect Icelandic government bond repayments in 2011 or 2012.
But it seemed clear that Iceland, already isolated by the financial-system collapse, would remain in a tenuous position. Though neither Britain nor the Netherlands addressed the matter Sunday, either country could veto Iceland's pending application to join the EU.
Still, in the view of many Icelanders, continued isolation may be the better option.
"It is totally insane that taxpayers foot the bill for failed private companies," said Frosti Sigurjónsson, an Internet entrepreneur who is a spokesman for an anti-Icesave group. "It was odious. We had to say no."
The banking disaster is widely seen in Iceland as the folly of a few financiers, and there is profound resistance to assuming their debt.
Iceland's banks collapsed in 2008 after years of growth that depended on foreign loans. When their funding dried up after the Lehman Brothers collapse, the banks found themselves short of cash, and the Icelandic central bank had little foreign currency to offer them.
The Icelandic krona sunk like a stone, and foreign exchange still remains limited. Capital controls keep foreign assets from fleeing Iceland.
The deal rejected Saturday called for Iceland to cover around £2.35 billion ($3.8 billion) of payments to the U.K. and €1.32 billion to the Netherlands—a sum that equals about half a year's economic output on the island of 320,000 people. It would have until 2046 to repay the money at an interest rate of around 3%.
You didn't activate your link.
you could have put an activated link in your reply
I'm reminded of the scene with Gene Wilder...."DO YOU REALIZE WHAT YOU'VE DONE"!?
Why do I have to clean up after you?
If you'd like, I can just bin every post you don't activate the link in. That's less clicks for me, which I am sure you can appreciate how I might not want to go the extra mile since you can't be bothered to either.
The answer is that the people of Iceland did not agree to pay the depositors. If so then please show me where every tax payer put thier name on the contract with the bank. So it must be the government of Iceland entering this agreement. So let them pay it. If the government of Iceland is broke which it is, then too bad for the Brits and Dutch who did not have pay the depositors either.
GO ICELAND!!!! That is what I call "Kicken ICE". They put these useless bankers and stupid tax payers in the UK and Netherlands on ice.
When will depositors or worse, bond holders, have to absorb risk instead of walking around with their heads in the clouds being able to take higher returns back nominally by taxpayers or currency holders.
"If you'd like, I can just bin every post you don't activate the link in. "
Or you could not do anything which would be even less clicks.
Quick question, will the forum ever be fixed so the links will be automatically activated like in every other forum?
I regularly visit this message board and another one - letsrun.com. How about you go to www.letsrun.com and check out their message board? Then come on here and complain.
So if one board is inferior to the Mises forums, we have no right to complain about the latter?
By that logic we could say that North Korea is more oppressive than the United States, so we should not complain about our own government.
No, I'm just saying that people that complain need a sense of perspective. You complainers come off as spoiled brats. This is probably the best forum I've visited. Of course it's not perfect, but the tone is very whiney from the brats.
limitgov:Quick question, will the forum ever be fixed so the links will be automatically activated like in every other forum?
No. I don't think LvMI cares one hoot about what happens in here. But I do, so activate your links.
It is the fault of the depositors, there is always a risk when you have a lot of money and people should always know the bank that the money is deposited in. But in all honestly this bank and the way it was sold since 2003 clearly looks like a bit fraudulent. But you would have to investigate that and i am sure with Billions at stake the people have already been dealt with. I am a bit hazy around the insurance part though, I almost get the idea that the British tax payer in the end will be picking up the tab through some sort of convoluted scheme. The state has already bailed out failed banks in the UK so it would not be such a stretch to think it would be handling depositors insurance of foreign banks as well.
Originally I heard that the councils themselves had invested "savings" in icesave which has been lost. Which as a tax payer annoyed me, but on further thinking I was surprised that the councils had savings in the first place, considering how high their annual payments are. info
Didn’t the brits just seize Icelandic assets to repay their depositors? What an outrageous insult not seen since the heydays of the Reich.