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Are the UK and Holland standing in the way of Iceland seeking its legal rights?

A couple of weeks ago I mentioned in a blog post that our [then-] minister for health Ögmundur Jónasson had resigned over the Icesave issue. Yesterday we finally got the full details of why exactly he resigned.

Those of you who have been following us for a while will know that we’ve got a nightmarish situation known as the Icesave agreement going on. Icesave is the name of online bank accounts that the now-collapsed Landsbanki operated in the UK and Holland, and through which it managed to collect some 7 billion pounds Sterling in the roughly two years that Icesave operated.

When Landsbanki collapsed, it transpired that Icesave was actually a branch of the bank operating in the UK and Holland – not a subsidiary, which would have made it subject to Dutch/British laws and covered by the deposit insurance funds in those countries. The Icelandic deposit insurance fund was nowhere near large enough to cover the deposits, so the authorities in those respective countries stepped in to compensate their citizens. Predictably they would now like their money back from the Icelandic authorities – read: the Icelandic taxpayer.

The debt incurred by the Icesave debacle is catastrophic for our nation and will, along with all the other debts left by the collapse of the Icelandic banks, make a severe dent in our welfare system. The main point of contention in this whole affair, and what has caused outrage among the citizens of this country, is that the bank that ran the Icesave accounts was a private bank, not a public one, and many of us find it grossly unfair that the citizens of Iceland – normal people who had no involvement in the operations of the bank – should have to cover those colossal debts. Privatize the profits, socialize the losses.

The legal contention centers around whether or not there should be a sovereign guarantee on those deposits – whether the Icelandic state is legally liable to cover those deposits, when it did fulfill the required directive, i.e. it had a deposit insurance fund in place, which was the only stipulation required for the bank to open a branch overseas. Also, whether a sovereign guarantee applies in the event of the collapse of an ENTIRE banking system, something that simply was not foreseen when those directives were drawn up.

Complicating the matter is the fact that Icelandic depositors in Landsbanki had their deposits covered in full when the banking system collapsed – so should not British depositors of the same bank be entitled to the same treatment? Some say yes – other say no, because each country should be responsible for ensuring the interests and well-being of their own citizens.

Others argue that British and Dutch authorities should have regulated the banks on their own soil; this argument is in fact moot because Iceland is party to the EEA [European Economic Area] agreement and so Icelandic companies were legally entitled to operate anywhere within the EEA area.

However, there is something else, a development that has enraged many, many people in this country. That is the by-now open secret that the International Monetary Fund and the EU have gotten behind British and Dutch demands for Iceland to sign the agreement for the repayment of those deposits – an agreement that has been argued over and debated in parliament for months now, and which is completely draining the strength of the current government. The IMF has refused any further aid to Iceland until the agreement is signed [which most people consider outrageous, as the original founding premise behind the IMF was NOT to act as debt collector for the rich nations of the world], and the EU and British/Dutch have made it clear in no uncertain terms that Iceland will not be granted admission to the European Union unless it signs the agreement.

Icelanders are proud people and we want to pay our debts. The only question is whether the debts are solely our responsibility, or whether that responsibility should, perhaps, be shared – as renowned magistrate and corruption hunter Eva Joly pointed out in her excellent article on the subject. To that end, the Icelandic negotiating committee went over the agreement previously drawn up with the UK and Holland, and came up with a few amendments.

One of those amendments stipulates that Iceland should be able to take the Icesave matter to a court of law, to have it determined whether or not Icelandic taxpayers are responsible for those debts incurred by a private banking institution. In other words, the Icelandic state does not wish to abandon its right to have legally determined whether or not it is obliged to undertake such payments in the event of a systemic collapse.

It has now been revealed [in a rare instance of transparency] that the UK and Holland have rejected that amendment to the agreement. The government wanted to push the agreement through anyway – and that is why Ögmundur Jónasson resigned.

As yet there has been no formal response from the UK or Dutch authorities on these allegations [as far as I’m aware], but our PM Jóhanna Sigurðardóttir has confirmed that this is the case – and has also said that Iceland cannot and will not abandon the amendment relating to the legal determinations*

If this is true,  it must be considered OUTRAGEOUS that the UK and Holland are standing in the way of Iceland seeking its legal rights over the Icesave agreement.

Seriously, this whole affair is such a nightmare that most of us would like nothing more than to pull the duvets over our heads and wish it away. However, we cannot allow ourselves to be bullied. The denoument of Robert Jackson’s article in the Financial Times yesterday kind of says it all:

The country finds itself at a crossroads. One route sees a debt-burdened nation embrace Europe, adopt the euro and gain the greater financial security that EU membership would provide. The other is a One Nation path: a country isolated, weakened and vulnerable, and yet imbued with a belief in its talent, fortitude and ability to work through its problems. If it rejects the European path, there is a real concern that Iceland will turn in on itself, making real Laxness’s fictional Bjartur – a lonely figure stumbling battered, bewildered and yet stubbornly defiant into the arctic wilderness. For many Icelanders that would be the desirable alternative.

WEATHER: cold and wintry. Right now it’s 5°C [41F]. Sunrise was at 8:04 am, sunset at 6.22 pm.

* Which kind of contradicts Ögmundur’s claim, which is rather confusing.



Comments on this entry are closed.

  • RK in Los Angeles October 12, 2009, 11:36 pm

    Im a bit surprised at the discussion here, especially because I feel like the point of view opposing the Icelandic one is not welcome at all which I dont think is usually your style Alda and that is why I love your blog so much. I think Alexandra expressed her POV in a rather extreme manner but I have to say I can sympathize, maybe even empathize. Its hard to hear these things but I feel it is necessary. Kris’ words on “owning” up to our own government are to me the core of the matter. This happened in our country, the bankers and the government messed up THAT bad and unfortunately that is OUR burden to bear. I still fail to see why it has to be someone elses, even if it ends up destroying us.

    Im also tired of listening to other Icelanders moan and groan about how they werent rich, they didnt play the game so they shouldnt pay. Ive been away since 1996, I visited every year for a while then at some point I was stuck in the US waiting for my green card to clear. I wasnt able to go home for a few years while waiting for the INS to issue me papers. When that finally happened, I was absolutely shocked to see the change that had taken place while I was away. I really have never seen as much materialism in one small place, it was very different from the Iceland I grew up in. “Regular” Icelanders who had no real means to spend money where buying up a storm. The lifestyle that a large portion of the population was living I have only seen in the rich neighborhoods of Los Angeles when I was working there. Whenever I met up with Icelanders traveling everything was about shopping and holy crap the amounts I see my family spend, yet they were just working the same jobs from 20 years ago. Everything was borrowed money, even the wage increases when you think about it. This is not the lifestyle of people here in LA. If you are an elementary school teacher in Los Angeles, you dont go on spending sprees like Icelanders do. I think the Icelandic mentality shifted, people kept raising the bar for a standard of living and a very affluent lifestyle became the norm. Icelanders borrow a lot of money for personal spending. The observations made here by many I have to say I wholeheartedly agree with. And this mentality as a whole affected the nation as a whole, so that it became all too easy to turn a blind eye to what was happening. I remember the public outrage when papers were published forewarning a possible crash or at least a decline. I had been paying my student loans back home with my earned US dollars, and my payments went up 40% because of the inflated Krona (and lets not get into details of how the friggin inflation index does to you when you live in a country with an inflation rate a fraction of what it is in Iceland and yet you have to pay it). Everyone in my family knew of the hardship I went through because of that, yet THEY ALL took out loans in foreign currency thinking somehow this wouldnt happen to them, or maybe that I was just a fool to not be there and participate in all this. Although I warned them all what would happen to their loans, NOT IF but WHEN the Krona went back to normal state or god forbid – crashed. So why did they take out those loans when they had been warned? Because of arrogance. Because of inflated everything, inflated optimism, inflated pride, inflated ego. The Icelandic Friggin Financial Miracle. So Im apologize, but I too am angry because I – an Icelander – have been stuck in this nightmare a lot longer than those at home, where it began 1 year ago. And I completely, absolutely, sympathize with Alexandra and agree with pretty much every foreigner who has commented on this post.

    That said, I want the nightmare to be over and Icelanders to be able to move on and away from Icesave. I dont care if it takes the legal route or what, maybe this needs to go to court, maybe not. But to hear more self pity from my fellow Icelanders, I cant stand it. The majority of the country elected the thieves and idiots that got us into this situation. Be mad at the 40% of Icelanders that voted for them, and STILL DO. So forgive me Alda for saying “I love my country BUT…”

    And finally – I would like to be one Icelander to apologize for the fact that my country chose to pay their own depositors and no one else. I have not heard an official apology from anyone, not the government and not individual Icelanders. I am appalled and ashamed for that. I hope people come around soon on this issue, you know, after the “anger” phase.

  • Alexander E. October 13, 2009, 12:00 am

    Fred 10.12.09 at 4:51 pm
    I keep wondering about a question nobody else has mentioned (this happens a lot).
    How can the British and the Dutch control what the IMF is doing?

    A priori, it seems that they must have persuaded others to go along with them. In which case there might be a diplomatic solution, if Iceland can persuade those others to let the IMF do its job.

    Fred. I think it’s easier for UK/NL and IMF executives** “to persuade” others – like Poland or other countries that depends on IMF – to support their case than for “mighty” Iceland…

    Marc 10.12.09 at 6:48 pm
    The IMF is mainly there to make sure that debts stick.
    That is the other part that is not often enough talked about. Everyone talks about the IMF as a provider of emergency funds. Alas, that is not what they are primarily there for. Their main function is to make sure that creditors interests are served in the best possible way.

    Marc. This is from IMF’s site

    “The IMF performs three main activities:
    * monitoring national, global, and regional economic and financial developments and advising member countries on their economic policies (“surveillance”);
    * lending members hard currencies to support policy programs designed to correct balance of payments problems; and
    * offering technical assistance in its areas of expertise, as well as training for government and central bank officials.”

    “The IMF’s regular monitoring of economies and associated provision of policy advice—known as surveillance—is intended to identify weaknesses that are causing or could lead to trouble.

    If you read the link further you’ll see that that IMF fell short of it’s goals…
    Like “limit “moral hazard“—that is, the possibility that the private sector may engage in risky lending if it believes that potential losses will be limited by official rescue operations.”
    Sounds familiar, doesn’t it?

    But I fully agree with you about this

    Iceland is a small price to pay on the altar of universal debt servicing.
    And while we’re at it, you may not be aware of it but different rules apply to big countries. It’s a question of size.

    And this is the main point of the whole matter. As it’s not Icesave or depositor that UK/NL authorities are “concerned” about.
    The matter is about fundamental issues.

    1. The “near perfect” European economic machine couldn’t cope with three small banks from the far away place of 300,000 people! Oops…what it is good for after that? And how will it cope when big players go down? You can print euros for a while but what’s next?

    2. The matter exposed the conflict between principles of “free market” and politically motivated non-market actions. Why should private banks activity be “guaranteed” by public money at all? And please don’t tell me that government (aka politicians) are concerned about my well being. All these “guarantees” emerged as pure political idea originated (and sponsored) by bankers.
    Why are shareholders not compensated/guaranteed when stock market falls? If I invest money into manufacturing business – why don’t they “guaranteed”?

    ** Because of all the above neither IMF nor UK nor current nor old Icelandic government want to look into the matter. What they want – to close it as soon as possible for their own personal interests. And should I mention those persons who in fact made all mess and got all money? For sure they are more then happy to move pay-off job to fellow Icelanders.

    PS. So Bromley86, with all due respect to your knowledge about finance – Iceland is not just a case of bad financial management. Iceland exposed in full the fact of system failure – but too many “very important” people don’t want to admit that and do everything in their power to limit the trouble within Iceland shore.
    We are really at turning point – but not for Iceland only.

  • Paul H October 13, 2009, 12:00 am

    I like what Dadi Rafnsson posted on his blog:
    I hope the people *truly* responsible get what’s coming to them, and the people who don’t deserve that, to not be burdened with it.
    Whether they be American or Icelandic or British or Dutch or Whatever.
    Fair is fair.
    I appreciate honour in people.
    And I note when it is absent.

  • alda October 13, 2009, 12:02 am

    I wonder if your sentiments would be the same RK if you lived in this country and had to pay up. It is perhaps easier to throw rocks from across the pond, even as an Icelandic citizen.

    I’ve said it before and I’ll say it again: we did not ALL participate in the economic fricking miracle. I do not have a foreign currency loan. I do not have a new car. I do not have a plasma TV. I do not live on borrowed money. I do not live beyond my means. I have NEVER voted IP and I never will.

    I have not had the time nor energy nor inclination to engage in pointless arguments in this space. However I can’t help but find it ironic that this post is not about whether or not Iceland should pony up for Icesave – which is what people seem to have read from it. It is about whether we should be entitled to take the Icesave issue to a court of law at some point in the future. As it stands now, no court of law exists that can rule in this matter – but the point is to have that option open for the future if anything changes. Surely we must have that right, like other nations.

    That’s all.

  • KB October 13, 2009, 12:18 am

    Iceland ’s thieving bankers, in collusion with Iceland ’s corrupt government, elected by the complicit Icelandic people, abetted by the worthless Icelandic media, and pimped by the amoral Icelandic President, stole billions from other nations. Your collective efforts (yes, collective, because despite your claims to the contrary, all of you were involved) destroyed lives and bankrupted charities that once provided relief for the poor, the indigent, and the disabled.

    Wow Alexandra!

    I have to agree with you about the “thieving bankers” and “corrupt government” but regarding “our collective efforts”… well, you are VERY wrong in that one!

    Your comment is very personal so I reply also from a very personal point of view. I have to begin by saying that I am not an icelander, but I leave here, this country opened its doors for me and I´m very thankful for that, so I can say that I feel like one of them, and like one of them I´m experiencing “kreppa”.

    I, as many people in this country, did not participate nor benefit from any of the bankers deals.

    In my case I don’t have a big jeep on foreign loan, I don´t have a big house, nor a flat panel TV hanging on my wall. I am a hard worker honest person (as many in this country) who is suddenly on the verge of bankrupcy because of some “bankers thievers” and “corrupt politicians”. I´m about to lose my flat (which is not on foreign loan!), my husband lost his job, we can barely buy the food we need, we not even have money to pay our daughter´s kinder garden!!!! and then you tell me (yes I took your comment very personal) , that it is my fault, that I was part of a collective effort to steal all that money and that I have to pay back all those millions.

    No, it is not my fault, it is not our fault and I´m not paying! (don´t have the money anyways!). I´m sorry for all those charities that lost their money, but hey, when I think about charities I think about the charity many families in this nation need! And keeping this reply personal, the charity my family need! Not having money to even go to the supermarket and buy the food we need! My daughter who is only one year old has inheritated a debt of millions! IT IS NOT OUR FAULT!

    Blaming the hard working regular icelandic families for this is equivalent as blaming you and all the regular hard working and honest people of your country for all the deads of the irakis that the british soldiers might have killed because of some bad decisions of your politicians who decided to participate in that war, those politicians elected by you! (assuming that you are from the UK)

  • RK in Los Angeles October 13, 2009, 12:32 am

    Alda I came back to say that my comment about self pity is not directed at you. I think your post is very good and I think all these factors need to be debated and examined. I also think that as James point sounds rational to pick one way – either go to court or draft a contract but dont try to do both. I can see how that would tick off the other parties involved in the negotiation.

    “I wonder if your sentiments would be the same RK if you lived in this country and had to pay up. It is perhaps easier to throw rocks from across the pond, even as an Icelandic citizen.”

    The thing is Alda that I have been paying up. You have no idea how much. Ive been paying for many years. To be really honest I have been living a nightmare dealing with my LÍN loans and the extra loans I had to take out on market value that literally ruined my life because as everything inflated back home, my wages stayed the same here in the US. Many years ago I had the feeling that this was going to happen in Iceland, and I lost all desire to return back. I have been in the exact situation as Icelanders are this year for many years now. Thats why I dont have much tolerance for the “poor me” frenzy that seems to have taken over. I think this is a very complex situation, I certainly dont think the average Icelander deserves this hardship. I just dont think its the English or the Dutch that put us through it, I think it was our government more than anything else. I dont vote for the IP either and neither does my closes family so when you say it isnt fair, I feel you 100%. I also live in the USA and cant stand the ideology that the majority of the country stands for. I see myself as a California Liberal Lefty and would like to think that I live in a bubble but every now and then I have to face the truth that my taxes are being used to kill people in the Middle East. I regress, but I hope Ive gotten my point across.

    What I would like to see my country do is to deal with this gracefully and empathetically, not in this us vs them manner. People lost their life savings because of our bankers and our government, but Icelands first response was to put their friends and family on the life boats. I feel its really important for us to listen to people like Alexandra, no matter how uncomfortable that is for us.

  • Alexander E. October 13, 2009, 12:36 am

    2 RK in Los Angeles

    I think Alexandra expressed her POV in a rather extreme manner

    If this was the case I would be happy but read what she said once again

    Having raped us and bloodied us…
    We, the victims of your crimes …
    But we have our ethics.
    We value modesty and we honor truth.
    And as we read your excuses we see, from afar, an arrogant, self-absorbed, deluded little nation, wallowing in their latest lie.
    You have lost our trust.

    The words good for UK Prime minister but as POV of a “common person from street”? One person speaks on behalf of WE and accusing ALL? So I don’t give a sh*t if I lost “their” trust 🙂

    But you point about Icelanders getting crazy about spending is correct. They were like kids… but you have to admit this virus* has spread over other “western world” too.
    And there is at least one really good thing in kreppa – shopping generation finally realize that money don’t grow on trees.

    * I’m a foreigner and this might explain that all Icelanders I know didn’t get this virus. But have I met wrong Icelanders then? 😉

    PS. When you say “that is OUR burden to bear” – be careful. I doubt USA can guarantee its foreign “depositors” (like China) . Then we’ll see what you’ll say 😉

  • Easy October 13, 2009, 3:27 am

    Alda Please!!, we all took part on this fantasy, in the few months i have been reading your blog, you have gon in I dont know how many trips abroad, one of them even shoe shopping in iItaly, you been in few trips inside the country, and so on, this kind of life style can only be afforthed by rich people in every country, but here we all enjoyed it, I am not criticizing you like I said we all did it, some way or another, we all were living beyond normality, calculate the times you went abroad in the last 9 years, and then compare it with somebody of your same status to say it some way, and you will see that we all took part of it, or the times you went shoping for new clothes, or buy something for the house, etc, etc, hope you dont get offended, but I think we all have to wake up and accept the facts, it doesn´t matter if they sold us that idea at the moment, or if we could afforth it at the time, we all took part.

  • Easy October 13, 2009, 3:28 am

    I ment “gone”

  • Bromley86 October 13, 2009, 5:49 am

    >The matter exposed the conflict between principles of “free market” and politically motivated non-market actions. Why should private banks activity be “guaranteed” by public money at all? And please don’t tell me that government (aka politicians) are concerned about my well being. All these “guarantees” emerged as pure political idea originated (and sponsored) by bankers.
    Why are shareholders not compensated/guaranteed when stock market falls? If I invest money into manufacturing business – why don’t they “guaranteed”?

    An easy one. Shares are tradable and, at the basic level, do not affect the operation of the company. So if I, as a holder of Landsbanki shares, panic and sell them, then someone else secures a bargain (or so they hope) but Landsbanki doesn’t need to find the money to redeem those shares.

    Deposits are very different. They are liquid whereas the investments that the bank places them in are illiquid. Therefore, when I as a depositor in Landsbanki panic, Landsbanki is put under pressusre to find cash. Now, with perfect information, there probably wouldn’t really be a problem because the bank would just head gracefully towards insolvency. But I’ve been using the word “panic” because that’s what happens when a run on a bank starts.

    Take Kaupthing. Was it an unholy mess? Yes. Did everyone need to get their money out of Kaupthing Edge in October last year? Probably not. But they did anyway.

    Now, in that case, too much confidence had been lost in brand Iceland for deposit insurance to make a difference. But remember that both Icesave and Kaupthing had been under intense scrutiny in September. If deposit insurance was not available, they’d have collapse then or earlier. That, you might say, would have been no bad thing, but you’d only say that because they *did* eventually collapse. In most cases, deposit insurance means that you never have to get to that situation.

    And I don’t buy that there’s no one in the world other than you who’s willing to face the prospect of system failure. It’s very much in the interest of the government of Iceland to do so and, indeed, they’ve said that the European system failed almost every time they’ve issued a statement on Icesave. But AFAIK they’ve yet to try to make the distinction between Landsbanki and Icesave that you do.

  • Marc October 13, 2009, 7:36 am

    @ Alexander E
    When I say that the IMF is mainly there to protect creditor’s interests I did not invent that myself. It may not be written up word for word in the IMF charter, but facts speak louder than words. The IMF has one cure for all sovereign debt problems: Lending hard currency to enable the troubled country to repay its creditors while forcing the country to cut its expenditures and devalue its currency to make its economy more competitive and restore the trade balance.

    You mention the topic of Moral Hazard. What will happen if we would go down the route of debt forgiveness? Politicians might be inclined to think they can spend spend spend and the debt will at some point be forgiven. You can’t have that.

    That reasoning is correct, but it’s just one side of the debt/credit coin. Because sovereign debt is deemed to be repaid at all times what you see is that private debt creeps up the ladder until it becomes sovereign debt. The Icesave example is typical. Thousands of private customers have a private claim on a failed bank. Because the failed bank (and its insurance fund) fails to come up with the repayments the UK & The Netherlands step in and repay the customers, forcing onto Iceland a sovereign debt. Because Iceland’s inability to repay that debt they get a bailout from the IMF. So where initially Iceland is facing a problem to repay thousands of private debt holders, in the end they are stuck with a debt obligation towards the toughest creditor in the world. This is a type of reverse Moral Hazard that I do not agree with.

    You also question the usefulness of deposit guarantees, as it leads to customers putting their money with the highest yielding savings account regardless of the financial health of the recipient. Personally I believe a deposit guarantee is a good thing, but this crisis has clearly shown that the varying size of nations make a national deposit guarantee a stupid concept in the increasingly internationalised world of finance. Financial regulation should be international and arbitrage (see Switzerland, Liechtenstein, Virgin & Cayman Islands, etc) should not be allowed.

    Well, fat chance of that huh? Not unless citizens demand it. And given the mess that we are heading towards, they just might.

  • Frederic October 13, 2009, 8:34 am


    I am one of those foreigners closely linked to Iceland who as been writing those “I love Iceland BUT” comments and stated that most Icelanders elected and reelected DO and/or his friends, uncritically looked up to the very same oligarchs they now despise, blatantly refuted any attempt by foreigners (specially if they were Danish… for obvious historical. BTW, I am not) to question the systemic risk posed by an out-sized banking industry and the never ending acquisition spree of the Útrásar-Víkingar and clearly lived beyond their mean (not to mention extremely dangerously by refusing to see the dangers posed by taking loans in foreign currencies. I know the banks sold them aggressively, but…). I do realise that those views are generalities that are both offensive and unfair to the minority of Icelanders who didn’t fit into those generalisations, but I never the less maintain that because of all this most Icelanders bear some responsibility in the fate of their nation.

    When that is said, and I hope you haven’t given up on me yet, I would like to tell you of much I AM GRATEFUL FOR YOUR BLOG (in capitals letters just in case you had given up on me :-). I always refused to read the Baugur owned media and stopped reading Mbl the day DO started working there. You are therefore one of my only remaining source of information regarding what is going on in a country to which I am, through my family, very close to (and have visited yearly since… and lived in from… blablabla). PLEASE KEEP INFORMING US.

    Otherwise, the more I think about the Icesave agreement, the more I believe that from a moral point of view (and therfor legal ?) the only real question is : Who should reimburse the Brits and Dutch who had deposited money on UK & NL Icesave accounts ?

    Should it be the Icelandic taxpayers (through the Icelandic government) whose (beware, I am going to repeat myself here…) majority elected and reelected DO. and or his friends and unquestionably did let their banking industry & business tycoons behave both recklessly and very probably dishonestly ?

    Or should it be the British and Dutch taxpayers (through their respective government) whose majority elected governments that should maybe have imposed a stricter regulation on Landsbanki activities in their country ?

    None of those alternatives is 100% fair, but is seems to me that the first one is the less unfair of the two as Icelandic voters & tax payers do have a larger responsibility than the Brits and Dutch one regarding the Icelandic banks debacle (as the Brits and Dutch do have a larger responsibility in the debacle/lack of control of let say Northern Rock or RBS on one hand or Fortis on the other than other countries in which those banks had subsidiaries/branch). Democracy is based on the acceptance by the minority of the consequences of the choices made by the majority. It sucks… but it is the base of democracy (and I am not implying you do not agree with that Alda).

    Another principle of Democracy is that people, no matter who they are, should submit to the same laws. Owners & managers of the banks & companies whose unethical business practices are no well documented will hopefully be prosecuted (and tax payers will hopefully recoup some of the money they paid to compensate the Brit an Dutch depositors). Of all the things I wish for Iceland and Icelanders, that one as to be on the top of the list.

  • James October 13, 2009, 9:05 am

    “It is about whether we should be entitled to take the Icesave issue to a court of law at some point in the future. As it stands now, no court of law exists that can rule in this matter – but the point is to have that option open for the future if anything changes. Surely we must have that right, like other nations.”

    Alda – I read that as the main point of your article and thought it strange that only my comments (8 and 22) discussed that point. I guess that shows the pent-up passion concerning Icesave! Anyway, I explained in those two comments why it is reasonable to expect that such rights be waived as part of dispute agreements; otherwise the disputes aren’t fully resolved. Icelanders may not want to waive those rights (for good reason), but it is not outrageous that the UK and Netherlands expects them to be waived as part of resolving the dispute. In particular, if Iceland insists on retaining the right, then any resultant agreement would merely serve interim purposes and the dispute wouldn’t be resolved until a binding legal judgement was eventually obtained; so such an agreement clearly wouldn’t resolve the dispute. And resolving the dispute isn’t such an outrageous goal 😉

  • Peter -London October 13, 2009, 9:05 am


    If lived in Iceland you gained financially from the banks – they were responsible for at least 20% of the GDP directly and much more indirectly. Their employees paid taxes which provided for you welfare system and services. Wages from these banks were spent in shops which provided jobs and more taxes for the government. If you sold your house its value will have been boosted by the demand from bank workers. The infrastructure (tourist industry, power, roads) all benefited by the economic wealth and borrowing possible with a strong currency manipulated by the banks. If you bought anything imported or travelled abroad you gained by the artificially high exchange rate provided by the banks actions.

    You now have the banks tax stream and influence removed and its called a Krappa, when its actually normality.

  • D_Boone October 13, 2009, 9:24 am

    Well that blog released a deluge!
    * The Iceland stats link on household mortgages was really good info
    * The giraffe was apt
    * I will now look sideways if anybody has a zimmer frame
    However, speaking as a person far away
    * to some extent you have to hold people accountable for Iceland’s banking mess. In no way has that yet happened in Iceland and I think that inflames people who lost money from outside the country. For Iceland’s mental health as a country a few politician’s and bankers have to do porridge “Pour l’encouragement d’les autres”.
    * to some extent you also have to forgive and get on with life. That goes both for borrowers and lenders.

  • Arnarsson October 13, 2009, 9:28 am

    @RK in Los Angeles

    Can see your point of view, but why tired of people that are saying that they didn’t participate in the “party”? I and maybe more than half of the people I know had the same lifestyle as before this boom. Our paychecks were the almost the same as before, probably on par with what people in many western European countries got for similar jobs, still what we had at the end of the month was less, because of the rising prices of housing and rent and food. For a person with around 200.000 ISK and had to rent a small apartment, about 140.000 ISK went to pay for the rent. about 30.000-40.000 was then spent on food and necessaries. What was left was maybe spent on 2 or 3 trips to the movies, paying for Internet connection and TV. Is that any different from what many people in the US and western Europe are spending their salaries on? In most cases they spend much less of their income on housing, food and other necessary items. Do not tell me that this portion of the nation was taking part in all this. Just normal people trying to survive in a really expensive and fucked up economy. It was not an option for these guys to buy an apartment, unless taking 100% mortage and pay three times as for a small apartment compared to what they would have paid few years before. Some people made the stupid decision to buy apartments and houses on foreign currencies loans and taking loan and buy without owning anything in the apartment. The real estate market here was just ridiculous, but people have to live somewhere. Real estate debts are the debts that are driving most people into bankruptcy these days. I know that a portion of the population, an rough estimation would be around 20-30% were living the good life, buying really expensive cars and too big houses and taking expensive trips and often taking stupid loans to finance it. These guys got the attention. I am sure that in every family you can find such people. That doesn’t mean that everybody was getting their share of the cake. I spent four years in the USA myself and I can say that I have never seen such unnecessary consumption and waste of resources as there. A similar portion of the people (20-30%) that I knew there had new cars on loans, nice apartments and all the latest gadgets and furnitures and ate at restaurants every day. This in my eyes was no different from what this “richer” portion of yesterdays Iceland were doing. The lifestyle was actually really American. I don’t know if you live in East LA or if you come from a wealthy people in Iceland. But this is my point of view. The part of the population that didn’t take part in this stupid party are angry and will not pay for those damn people that got us into this mess. I don’t see why we should have to, it is really simple to just move away from this mess made by other people. It is not ours to deal with. I will at least not pay for a party that I was not invited to or wanted to be in.

  • DD October 13, 2009, 9:38 am

    “So in case Iceland defaults, they’ll receive a bit less money in the short term,… The IMF is mainly there to make sure that debts stick.”

    History knows other stories. Negotiations that granted not only short term relief to debtors but also reduction of the debt burden. So creditors can actually lose money if a country defaults on its foreign debt. If someone is familiar with the Brady Plan, he knows what I mean.

  • alda October 13, 2009, 10:30 am

    Easy – if you must know, those trips abroad that I have taken this year have all, with the exception of one, been paid in fully by the parties that invited me. The other was paid for with credit I had with one of the airlines.

    And it’s as much as I find it ridiculous to be justifying myself to someone I don’t even know, I will say that, yes, I bought one pair of leather boots in Italy. It is the first pair of winter boots I have bought in several years.

    And on that note, I think that’s enough worms out of one can. Thanks to all who participated.

  • Joerg October 16, 2009, 12:20 pm

    I am very surprised about the large number of comments sympathizing with the first comment (“Alexandra”). I found this one extremely hostile and hateful.

    First – This person claims to speak on behalf of a group of people, using “We” instead of “I”. But who is “We”? There is no clue given. This seems to be a matter of self-importance. I am not an Icelander and definitely don’t want to be included in this “We”.

    Second – Those generalizations about all Icelanders being equally responsible is just ridiculous. E.g., the younger generation and children, who will have to bear the burden of Icesave, can’t be held responsible in a moral sense for something, they could not influence. Those generalizations leave no room for more sophisticated reasoning. This “We”-against-“You” phraseology is the breeding ground for xenophobia and racism.

    Third – The problems of the Icelandic banks were on the table long before the crash – publicly available and for everybody visible, who cared. Nobody had been forced to deposit into Icesave and Kaupthingedge accounts. People, who nevertheless did so, should ask themselves, why. I did myself deposit money into Kaupthingedge, it was partly my own mistake. I have my reservations against Icelandic bankers, who acted fraudulent and Icelandic politicians, who did not stop them. But I do NOT blame the average Icelander.

    Forth – The passage about destroyed lives and bankrupted charities “that once provided relief for the poor, the indigent, and the disabled” is just plain gallery talk. It is very sad, that charities and other entities deposited money into obviously unsound and precarious banks. It should be time to ask, who was responsible at these institutions for investment decisions and why they just did not act more prudent.

    Fifth – I am personally getting sick of those commentators, who pop up everytime, the name Icesave is somehow involved in an article or a blog post, not at all caring about the actual subject, and repeat their ever recurring tirades, fuelled by some grudge against Icelanders acquired in the past. I don’t doubt, that there has been arrogant behaviour of some Icelanders in the past but this does not give a right to generalize.