In the comments to the last post, a few readers expressed their views — which note bene we have heard before — that the people who took the foreign currency loans were really the ones to blame and should be held accountable for their actions. It was they who failed, not the system. Others, more prudent, should not be made to pay for their mistakes. After all [the theory goes] Icelanders were “well versed” in the fluctuations of the Icelandic krona and should have been aware of the risk they were taking.
It is interesting to me that these comments come pretty much exclusively from outside Iceland. I have not heard one single Icelander express this opinion. Personally, I strongly disagree with this view. I did not take out a currency basket loan and have not been subject to the same nightmare as those who did; however, not for a moment do I begrudge those people this ruling, even if it means I have to carry some of that cost indirectly and even though I still have my mortgage, which is indexed to the rate of inflation, and for which there appears to be no correction in sight, unlike that for the currency basket loans.
Clearly we have opposing viewpoints here, and I tend to avoid trying to convince people of something they clearly have a fixed opinion about, since everyone is entitled to their viewpoint. [Plus I’ve learned it’s not worth the aggravation.] That said, Lára Hanna today bumps up a comment from one of her readers [from this post], who I feel gives excellent insight into the situation from the Icelandic point of view. He/she writes:
1.Those who took the currency basket loans did not do so to make money, but rather to save money. One shouldn’t pay more for a product/loan than one has to, and the currency basket loans held more economical interest rates for the longer term. It was supposed to be a good option for those who could stand normal exchange rate fluctuations. The decision [to take a currency basket loan] was not based on risk taking or greed, but was a well-calculated and sensible decision, taking into account the household budget. In some cases the currency basket loans were the only loans offered.
2. People who took currency basket loans did not cause collapse of the krona, the banks did. The banks worked against the interests of their customers, engaged in unscrupulous business practices AND offered illegal loans. Exchange rate fluctuations were calculated as part of the currency basket package, BUT the entire premise on which those loans were based collapsed in this country. The banks and politicians LIED about what was really going on, the owners of the banks robbed them, and the entire financial system melted down. This is what you call the collapse of a premise [ísl: forsendubrestur]. The takers of the loans did not have the same information as the banks/politicians. You could just as well say that all Icelanders were thrill seekers/risk addicts for having lived within a system that was bound to collapse in the end.
3. The unity between debtors was broken when the people with the indexed loans agreed to sacrifice those who took the currency basket loans.* Both groups were given unfair treatment, but those who received a little less unfair treatment agreed to sacrifice the others. Putting everyone in the same boat was not even under discussion. Can they demand justice now? YES of course! EVERYONE can demand justice, but the problem is with the bank, that is where the injustice lies, not in that one got off a little better than the other. If someone breaks into the homes of two neighbours and steals more from one than the other, should you be angry with the thieves or the neighbour who was a little more fortunate? The mean-spirited would be angry at the neighbour; others look to the thieves and the root of the problem.
4. I made my bank an offer to pay off our currency basket loans as if we had taken an Icelandic indexed loan. The bank rejected the offer and made my spouse and myself responsible for their ISK 30 million exchange rate loss, threatened to go straight for our co-signers, and showed the most crass arrogance in all their interactions. Do these people really think we are prepared to make a deal now? No thankyouverymuch, hell will freeze over before we cut that bank any sort of slack. What goes around comes around.
5. I wish those who hold indexed Icelandic loans all the best in their struggle and hope we can stand united against injustice, not as divided and mean-spirited individuals. People who laugh at the misfortunes of others and allow injustice to prevail until it comes knocking on their door do not have many allies when the chips are down. Let us not allow that to be the fate of the Icelandic people, we are really all on the same team here.
* Must confess: I’m not sure what this person means here.