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Demonstration this evening in front of Althingi

So a demonstration has been called for this evening at 7.30 in front of the parliament buildings, when PM Jóhanna delivers her keynote speech.

I have a feeling it is going to be major.

Yesterday on Silfur Egils I heard someone say he would like to see the government step down within ten days, and for the president to salvage what he can of his reputation by appointing an extra-parliamentary government to take over.

I’m starting to think this is a realistic scenario.

A video has been making the rounds, urging people to come out this evening and protest. Against a backdrop of clips from the Kitchenware Revolution it summarizes the key points of anger in Icelandic society today, and ends with the statement: WHEREVER WE STAND, IT IS OUR CIVIC DUTY TO DEMONSTRATE, FOR THE CHILDREN, FOR THE FUTURE.

I just hope people remember to refrain from violence. Loud is OK — inflicting injury is not.

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  • Easy October 4, 2010, 12:31 pm

    Lets hope it’s for reall this time. Hope people are really starting to realize the game the gobernment, or better said the people that controll the gobernment has been playing for the last 2 years, people have to demostrate and demostrate untill we get an extraordinary parlament, it won’t be an 100% extraordiary, for sure they will manage to slip in some of their own but will be a step forward and easier to spot them.

  • RLJ October 4, 2010, 12:58 pm

    S/he (on Silfur Egils) wants the PRESIDENT to APPOINT a government? From whom? From the uselss politicians we didn’t vote for? To replace the useless ones we did vote for?

    Just a shame we don’t have an army or we could have a proper coup d’etat.

    “Realistic” (well, I don’t agree, but I’m an optimist); bloody terrifying though.

  • kevin oconnor,waterford,ireland October 4, 2010, 1:57 pm

    Yea flak is hitting the fan here too, Is it true that 40,000 households can not meet their new mortgage obligations thats a lot for Reykjavik basically, I thought the foreign indexed loans had been declared illegal, looks like a real groundhog day in Iceland, progress so for ICESAVE has just gained interest on the bill not a penny has been paid.

    Are you going to be there Alda ,Please try to keep the molotov cocktail’s to a minimum, OK OK I’ll let you have an allowance of 3 and thats it 🙂

  • alda October 4, 2010, 1:58 pm

    Yes Kevin, I’ll try to restrain myself. Three should be plenty. 😉

  • kevin oconnor,waterford,ireland October 4, 2010, 2:13 pm

    How silly of me its October of course the October revolution, keep the red flag flying there comrade citizens, unemployed of the world unite you have nothing to lose apart from your welfare cheques comrade citizens to the Althingi or the Dail depending on if your Irish or Icelander.

  • Blank Xavier October 4, 2010, 2:17 pm

    Thing is, they can demonstrate – but what are they expecting to be done?

    Iceland is profoundly in debt. Demonstration won’t change this. New Government won’t change this.

  • hildigunnur October 4, 2010, 2:26 pm

    I for one don’t want resignation, not because this government’s all that great (even though I know some people in there are really trying their best – not an easy situation to be in) but because all the other possibilities are so frighteningly much worse at the moment. Independence or Progressive? Horror, no!

    Hoping against hope for Stjórnlagaþing to get some results, but for that to happen we mustn’t vote any opportunists and populists in there!

  • alda October 4, 2010, 3:01 pm

    @ BX – Two things to start. 1) change laws so that people who are forced to declare bankruptcy have their debts written off four years later and can start with a clean slate. As it is now, creditors can chase people until the day they die, while the oligarchs and their cronies are having BILLIONS in debts written off. 2) change laws so that people who can no longer afford to keep their homes (and there are thousands who will be out on the streets in the next few weeks, unless something is done) can simply drop off their keys at the credit institution and walk away. As it is now, the credit institution sells the property for whatever price they can get (which is almost always way below the market value) and the difference is owed by the debtor. And again, they can hunt them down until the day they die for the remainder of that debt.

    We need a new government because parliament has become a joke — most of their time and energy goes into partisan politics, they devote their precious time and resources in parliament to attacking the opposing parties solely in an effort to get back into power. That seems to be their primary aim — not working for the good of the people of this country. Yes there are exceptions — but those people don’t appear to be listened to. This to me is the best argument for appointing an extraparliamentary government, made up of professionals who truly understand the issues at hand, not career politicians who are in office just because they belong to a particular party, and often have NO qualifications for the office they hold.

  • Rik Hardy October 4, 2010, 5:08 pm

    @Blank Xavier

    It’s a simple question of who pays the bills:

    The people who built up a system doomed to bankruptcy and refused to listen to logical criticism – I mean the chief bankers, the people who took risks WITH OTHER PEOPLE’S MONEY, and concealed the risks from those people; the same people who had the personal wealth to afford cunning lawyers to find the loopholes which would allow them to sneak money into their private accounts while nobody was looking. OUR money –
    – Or are the victims of this unscrupulous scam supposed to pay AGAIN, while the rich bankers have even more loans written off?

    This money was essentially stolen from us by the banks, and the banks are now clearly attempting to persuade the present government to make the victims pay for the theft – and with apparent success, until now.

    THAT is what the otherwise diligent and cool-headed Steingrímur apparently fails to understand; THAT is what the Alþingi appears not to have the slightest interest in understanding and THAT is why Icelanders are going to protest until a government actually keeps its word, remembers WHY it was voted for in the first place and REALLY tackles corruption.

    For two years we have had “just pretend” activity on this front.
    That’s long enough for the average Icelander to see through it.

    Finding an impartial alternative is always going to be difficult in this close-knit society, but failing even to try is no longer a viable option. As many have said, people will simply leave.

    Who knows? Perhaps a deal has already been struck with the U.S.A. to allow certain citizens first-refusal on taking over the vacant homes and enjoying the unbelievable luxury of clean air and clean water in the newly-abandoned country…?

    I certainly wouldn’t be surprised, even if the truth took the same amount of time the 1940s experiments on Guatamalan people took to see the light of day…
    There are people controlling things today who are really people you don’t want to know.
    They are bad people and I’m in favour of trying to stop them. That’s why I’ll be protesting.

  • andy KJ October 4, 2010, 5:35 pm

    Sometimes the Stalin approach to politics has its merits. Whilst democrcy is the best of some bad methods of governance, it doe soccasionally need the body politic to be refreshed …..a genteel revolution.

  • Andrew October 4, 2010, 5:38 pm

    Icelanders never seem to demonstrate in the Summer! They always wait for the weather to get colder! 🙂

  • Mike Richards October 4, 2010, 5:43 pm

    @ Blank Xavier

    There is one choice. Iceland could simply do an Argentina and default on its debts. It would put them in the firing line with the IMF and ruin any chance of accession to the EU, but it might do what it did for Argentina – kick off an economic boom.

  • Bromley86 October 4, 2010, 6:04 pm

    I suppose the biggest problem with appointing a dictator/council of regents is that you’re trusting a part of the Establishment to appoint them. Would not most likely candidates also be drawn from the elites (no one wants Steve from next door as the Finance Minister) and thus risk having ties to the current power structures?

    If the LG (who might be expected to be those least connected to the old, “evil” structures) have not been able to fix some of the obvious problems (either because they’ve not been inclined to because they are actually connected or because they’ve been prevented to by reality), then how likely are other appointees to be able to?

    Regarding handing the keys back, surely there’s just no way that’s going to work? Fair enough, a person should be able to file for bankruptcy, although even then that risks the transfer of that loss to the Icelandic state. But allowing people to hand in their keys yet retain any other assets they have will massively increase that risk.

  • alda October 4, 2010, 6:56 pm

    @ Andrew — there’s a very simple reason: Althingi is on holiday then. 🙂

  • alda October 4, 2010, 6:58 pm

    @ Bromley — the LGs have become just as messed up and torn apart as the other parties. The power struggles within the party are killing it. As for handing the keys back — it works in some parts of the US, why not here?

  • Michael Lewis October 4, 2010, 8:28 pm

    Limited/Non-recourse loans should be the norm for real estate loans. It would increase the cost of mortgages but ensure retail banks take onboard some risk. It would also help the market – prices would drop when they really need to.

    As I said, but it got ‘lost’ , its really not on to ride roughshod over law and say that the president should just do away with the pesky will of the people expressed through the parliament (i.e. parliamentary democracy). That is a ‘we know better’ attitude, seldom do the ‘we’ actually know better. Far better for the government to fold and let people decide a knew one.

  • Bromley86 October 4, 2010, 8:36 pm

    >As for handing the keys back — it works in some parts of the US, why not here?

    Usual IANAexpert disclaimer. IMO because of where you are in the lending cycle. My understanding of the hand-the-keys-back argument is that the lender has a greater access to information and might be more reasonably expected to make informed rather than emotive decisions. Therefore, if you give the borrower the ability to hand back the keys, it forces the lender to be a little more conservative and to actually think about the risk of that particular loan. (Although that doesn’t seem to have stopped the US housing bubble – I don’t know enough about that situation to know why that might be).

    In Iceland though, those loans have already been made and they were made at a time when the banks could reasonably assume they’d be able to persue someone to the grave. Allowing large-scale defaults with no comeback would lead to Banking Crisis v.2.

    Of course, the same argument can be applied to any form of debt relief, including real bankruptcy laws for the individual. Perhaps even that would be too much for the Icelandic system to handle, which might explain why it hasn’t already been introduced?

  • Joerg October 4, 2010, 10:09 pm

    It seems to be pretty crowded on Austurvöllur as I can see on the webcam. Unfortunately, the sound is missing.

    I wasn’t able to follow the development in Iceland very closely during the last weeks. What’s the reason, that things are escalating right now? Just the second aniversary of the crash or some other event? After all, the incompetence of the political class isn’t really something new.

    Is there really hope, that an extra-parliamentary government would not be ground down between quarrels and factionalism in parliament?

  • kevin oconnor,waterford,ireland October 4, 2010, 10:24 pm

    Above comment jingle mail Alda one is either socialist or capitalist in our euro trash socialist world we are neither one or the other, we have a property bubble who is going to take the hit comrade citizen.

  • Rajan Parrikar October 4, 2010, 10:29 pm

    I was there at Austurvöllur square this evening (it is right by my hotel) for about an hour (8-9 pm) watching the proceedings. I understand it was a big turnout (for Iceland). Icelanders are a very civilized people. In most nations I know (which shall remain unnamed) this kind of thing would have resulted in loss of life, breakage of limb, and damage to property. The most exciting thing that happened here were a few rounds of egg-pelting. Even the implements of noise-making were mild – I think there is room for improvement here. I hope this becomes the Oct 4 revolution (so that I can have my bragging rights).

  • jpeeps October 4, 2010, 10:39 pm

    It looks like it’s getting pretty lively on the inspiredbyiceland webcam (21.30 GMT). Be careful guys and keep your powder dry – it’s perhaps a little premature to torch the Althing.

  • Joerg October 4, 2010, 11:20 pm

    My understanding of an extra-parliamentary government is, that it would still be accountable to the existing elected parliament. In this sense I can’t see anything undemocratic, should the executive power be assigned to people with real expertise. But I am still not yet convinced that a new government would have much leeway for popular decisions.

  • James October 4, 2010, 11:33 pm

    It looks like it was really noisy in Reykjavik this evening:
    http://www.youtube.com/watch?v=jhFBDYtI2ac

  • sylvia hikins October 4, 2010, 11:57 pm

    I’m trying to imagine the scenario. Your banks used to be nationalised. Then along comes a bunch of politicians/ bankers who adopt the ethics of the free market and privatise a national asset. Corruption. Sleaze. Fraud. The privatised banks collapse and are re-nationalised and 300,000 Icelanders are expected to take on the debt. Forever.All the things your forefathers and mothers fought for, healthcare, schools, work, a decent standard of living….vanishing. Isn’t democracy supposed to be government of the people, for the people, by the people.? Time to reassert those principles. I think it is going to be an interesting winter right across Europe. Maybe Icelanders will be in the vanguard. You lead. Hopefully we might follow.
    sylvia from viking wirral

  • alda October 5, 2010, 12:11 am

    @ James — yep. I’ve got a video of my own coming up. It was actually quite interesting after we got home, we could see what was going on downtown on the Austurvöllur webcam, which is without sound, but we could hear it all the way here. So the picture went together with what we heard in the distance.

  • alda October 5, 2010, 12:20 am

    @ Joerg — this latest demonstration is prompted (mostly) by the fact that thousands of people are going to be evicted from their homes over the next few weeks. Parliament officially convened for the winter last Friday and there was a demonstration then. This evening, Jóhanna delivered her keynote speech, hence the protests tonight.

  • kevin oconnor,waterford,ireland October 5, 2010, 12:33 am

    @sylvia hikins yea right on Iceland does seem to be better than here, anyway they declare independence from Denmark and no one dies, unlike here when Sir Roger Casement with german rifles and James Connelly go upto Dublin town to read out a tiny declaration of the Irish Republic.We too are going for election fever too after “Black Thursday”.

  • Bromley86 October 5, 2010, 1:11 am

    >I’m trying to imagine the scenario.

    “Your banks used to be nationalised. Then along comes a bunch of politicians/ bankers who adopt the ethics of the free market and privatise a national asset. Corruption. Sleaze. Fraud. The privatised banks collapse and are re-nationalised . . .”

    I cut it there because I was wondering just who should take responsibility in the scenario that you’ve given?

  • cargocultist October 5, 2010, 1:24 am

    @ Bromley86

    The US housing bubble – and the ones in the UK, Ireland, and elsewhere were a direct result of loan securitisation aka Mortgage Backed Securities. Essentially, allowing banks to sell loans broke a centuries old implicit control between the amount banks have on deposit and the quantity of loans they can issue against those deposits. So not only could they make considerably more loans than they could previously, but also since they were selling the loans on to third parties, they didn’t particularly care about their quality.

    The situation in Iceland is a little different. The problem here is a combination of loan securitization, but also a very rapid expansion in the money supply due to the Icelandic banks making loans to each other which allowed them to expand both the loan supply and the money supply simultaneously.

    The big problem there is that Icelandic loans in ISK are inflation linked. So you have a banking system generating inflation through excessive lending and the consequent money creation, which then inevitably increases the amount owed on the loans outstanding. There is no way to resolve any of this within the constraints of the current system at all, never mind fairly. Iceland is a small enough economy that you could probably go in, calculate a “system reset” and more or less sort things out that way, but that would require considerably more political will than anybody has shown up here to date.

    And as Alda says, individuals can’t even discharge debt in bankruptcy, it really is the worst possible set of conditions imaginable.

  • kevin oconnor,waterford,ireland October 5, 2010, 2:30 am

    @cargocultist yes the ctr-alt-delete solution for such a small country but of course you have the moral hazard types ie renters who say to themselves why did not I go out and end up knee deep in a nice house and 4X4 loan and of course if its foreigners money then thats closed too.

  • Rik Hardy October 5, 2010, 3:33 am

    @ Cargocultist

    Exactly.
    And add to that the fact that the money being loaned was linked to assets which were no more real than pure pushiness on steroids.
    It never really existed at all.

    We all know the types who market such froth. It’s genetic, and we see them in TV ads every single day. Of course they shouldn’t be allowed within a million miles of government, but they frequently seem to manage to bribe members of parliament to acquire vested interests. I believe it’s similar to what is called “lobbying” in the U.S.A.
    Heck, for all I know, they blackmail them.

    We need the rodent exterminators in – quickly.
    Really good ones.

  • Jonathan October 5, 2010, 4:29 am

    @alda 3.01pm
    @Rik Hardy 5.08pm
    Right on Alda! Right on Rick!
    This is a really great blog. Tell you what I think…The world would be a much better place if people actually did their jobs. What they mostly do is instead is pursue their own cheap little personal agendas. Where are the checks and balances in your government?

  • Bromley86 October 5, 2010, 11:34 am

    Thanks Cargo. One thing I’ve never understood is the emphasis that people put on the evils of ISK indexation. Surely the effect would be substantially the same if indexation was included in the interest rate rather than separated out?

    Something relevant to the shield wall appeared on Icenews today:
    http://www.icenews.is/index.php/2010/10/05/no-debt-write-offs-for-icelandic-households/

    The reasons given in the letter for no debt write offs (for the peons):

    1. the enormous and unaffordable fiscal cost,
    2. the need to reserve an operating and stable banking system, and
    3. the detrimental impact this would have on Iceland’s payment culture.

  • sylvia hikins October 5, 2010, 12:45 pm

    Bromley 86: Who should take on the responsibility? Well, should the corruption of a few individuals allow an entire people to become bankrupt? These are exceptional and extraordinary circumstances and surely some slates simply have to be wiped clean. OK, that means other European countries may have to take a hit, but as a UK tax payer, I am prepared for that. Why do I now think this way? Well, I have just returned from a tour of Iceland and amongst the tour group was a wealthy doctor and a wealthy dentist who both had money in Icesave and were FULLY compensated by Darling and Brown and now ordinary the ordinary working people in Iceland across the board, regardless of circumstances are expected to pay off those debts for the rest of their lives. Probably to an economist, my argument seems unscientific and unsustainable. But I believe in one race, the human race. We are here to help each other.
    sylvia from viking wirral

  • sylvia hikins October 5, 2010, 12:46 pm

    Too many ordinaries in the above text…sorry about that!
    sylvia from viking wirral

  • Bromley86 October 5, 2010, 7:39 pm

    One race 🙂 . So, on the suffering scale, how does an Icelander’s situation stack up against someone caught up in the Pakistan floods? There are far more people with ties to Pakistan in this country than with ties to Iceland and, as we now know post-Labour, money is finite. So surely we should be forgiving Pakistani state debt rather than Icelandic state debt?

    And (generalising here, but fairly) why should Europe shoulder the burden when Iceland is not interested in taking part in the european experiment?

    The decision to pay the amount above the guarantee was made to safeguard the UK banking system. As such, that cost of bailing out that doctor and dentist is being bourne by the UK taxpayers, to the tune of £1bn to 2bn. The amount that Iceland is on the hook for is ~£2.2bn, which would have been the case whether or not the UK increased its guarantee from £35k to £50k or from £50k to 100%.