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Should we send the IMF packing?

I’ve just finished watching Silfur Egils from earlier and I now understand what all the blogs and Facebook people have been buzzing about all day– two mind-blowing interviews with two different [foreign] individuals who spoke about things that completely turn the world-view of the average Icelander upside down. This totally blows my limited perspective out of the water — even though I hasten to add that much of it we have heard before. Just not spoken of in such a succinct and relevant manner.

Moreover they put our current predicament into a global context that has implications for each and every person on this Earth.

I strongly recommend each of the two following interviews.

[OK — I tried to find the links on the RÚV site and they’re not up, so all I can advise is to go to Lára Hanna’s blog and scroll down a bit in the post — both of the interviews appear there.]

The first is an interview with economist and former Wall Street advisor Michael Hudson [Colin has put up one of his articles on his site], who has some astonishing things to say about our enormous national debt. It’s impossible to sum it up briefly, but basically he makes a very convincing case for Iceland defaulting on its debts — simply because, in his view, we cannot pay. It will be an irrevocable disaster for this nation if we even try — and the crazy thing is that the larger nations that owe colossal amounts — like the United States — have no intention of paying their debts. In Hudson’s view, Iceland is being bullied and pressured by its creditors to sign deals and come to arrangements — all so they can gain control of our natural resources. Very very shocking and scary.

The second interview is with a writer named John Perkins, author of the book Confessions of an Economic Hitman. I’d only vaguely heard of the book before I watched this interview and I’m sure many of you out there are better informed about it than I am [it was a NY Times best seller]. Hildigunnur linked to his Wikipedia profile in the comments to the last post, which speaks volumes about this man’s former career as — you guessed it — an economic hitman. Perkins says there is no doubt in his mind that Iceland is currently under siege by such economic hitmen, governed by a hidden global empire that works systematically to gain ever-greater control of the world’s resources. Perkins’s message is just as alarming as Hudson’s, if not more so, and his advice to Iceland is to “send the IMF packing”. Pronto.

Finally, major, major props to Egill Helgason, who on his show Silfur Egils is doing a remarkable job of educating Icelanders about … well … just about everything that is crucial for every citizen of this country to know right now. Through the guests he invites on his show he is helping us to understand what is happening to us, right here and right now, which is so absolutely vital for us to be able to make informed decisions. A lot of Independence Party supporters can’t stand him because he rocks the system, but for the rest of us he’s doing such a tremendous service. Case in point: he was the one who brought Eva Joly to this country — where the government should have been taking the initiative, it was Egill who invited her to come as a guest on his show, and during the live broadcast asked her if she could please help us with the investigation and prosecution relating to our bank collapse. It was an astonishing interview — and the two I linked to above are just as important.

APRIL SHOWERS BRING MAY FLOWERS
And judging by the April showers we should have a wealth of flowers next month. Scaffolding has just been put up around the building adjacent to ours and the rain pounds on it like on a tin roof. Which was kinda cosy at first, but which now is just becoming kind of annoying, especially with the persistent rain and interrupted sleep [it’s loud].Right now 5°C [43F]. The sun came up at 6.31 and set at 8.31.

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  • Baldvin Jónsson April 6, 2009, 12:13 am

    Engin spurning, pakka þeim hið snarasta.

    Er afar stoltur af því eftir fréttir dagsins úr Silfrinu að nefna það að Borgarahreyfingin ein framboða tekur alveg skýra afstöðu gegn greiðslu erlendra skulda ótengdar ríkinu og yfirráðum AGS!

    http://www.borgarahreyfingin.is/stefnan/

    Sjá þar í fyrsta hlutanum:

    5. Halla á ríkissjóði verði mætt með endurskoðun skattkerfisins, m.a. með fjölgun skattþrepa, hátekjuskatti og breytingum á virðisaukaskatti, frekar en niðurskurði í heilbrigðis- og velferðarþjónustu. Alþjóðagjaldeyrissjóðurinn fái ekki að taka yfir stjórn á landinu.

    6. Strax verði hafist handa við að meta heildarskuldir þjóðarbúsins og að því loknu gert upp við lánardrottna eftir bestu getu. ICESAVE-reikningar Landsbankans og aðrar skuldir bankanna erlendis verði ekki greiddar fyrr en álit óháðra sérfræðinga liggur fyrir um skyldur Íslands, m.t.t. þess að sennilega hafi verið um svikamyllu að ræða en ekki eðlilega bankastarfsemi. Rannsakað verði hvað varð um allar færslur á reikningum bankanna erlendis sem og lánveitingar þeirra til tengdra aðila, fjármunirnir sóttir og þeim skilað til eigenda. Stjórnendur og eigendur bankanna verði gerðir ábyrgir fyrir því sem upp á vantar. Samið verður við grannþjóðirnar um það sem út af stendur m.t.t. neyðarástands efnahagsmála á Íslandi og reynt að fá þær skuldir niðurfelldar. Samhliða því verði gefið loforð um að 2% af VLF Íslands renni til þróunaraðstoðar á ári í tíu ár til að sýna góðan vilja Íslendinga til að verða ábyrg þjóð meðal þjóða.

  • Stephen Cowdery April 6, 2009, 2:18 am

    Let me play Devil’s Advocate for a minute:

    Suppose one were the leader of a tiny, oil-rich emirate with piles of cash and dwindling natural resources facing global warming and rising sea levels. Also suppose that there was a debt-ridden island nation in the cool North Atlantic that was ripe for the picking. Said leader couldn’t just buy the island outright (although he has more than enough cash) but could get it piecemeal, under the guise of debt relief, then take it over before anyone was the wiser. He could then evict the natives, or keep them as indentured servants to run the infrastructure for the new masters.

    Which seems to be about the same net result as the plan of the hitmen.

    Defaulting is an option. Iceland would become a rogue state, but autonomous, until the warships come.

    I think your country really needs a strong ally, and quickly.

  • Michael Gordon April 6, 2009, 3:40 am

    I read the article by Michael Hudson. It’s heavy reading, and yet the very best article of its kind I have ever read. It is neither right wing nor left wing; the problems he identifies are *above* politics. He’s absolutely right that Iceland has only one path to take if there is going to be and Icelandic culture; it would be terrible if 1100 years of culture and your hard-won liberties erased by the actions of a few bankers.

  • Roy April 6, 2009, 8:40 am

    A good start would be to get rid of indexing and proceed from there!

  • alda April 6, 2009, 9:28 am

    Thanks, everyone.

    Baldvin – mér leikur mikil forvitni á að vita hvers vegna þið teljið að Icesave hafi sennilega verið svikamylla.

  • snowball April 6, 2009, 11:45 am

    with all my respect for silvur egils, michael hudson and john perkins. their explanations sound too much of a well planned conspiracy theory against iceland. jesus maria who buys that stuff?! according to their statements the creditors (aka the foreign banks who borrowed the money) have a plan to take over icelands natural resources by indebting it. omg!
    a big fraction was borrowed by german banks, approx 20 billion euros and most of this money has to be written off. banks to mention are commerzbank, hsh-nordbank, bayern lb, hypo real estate as the major creditors. hsh-nordbank and bayern-lb are banks owned by federal states. they were technically bancrupt due to their iceland activities and had to be rescued by the german government aka the tax payer. commerzbank and hre meanwhile are also owned by the goverment. conspirators going bancrupt over their conspiracy plans… so much to that theory.
    the inconvenient truth for iceland: it was sold by its own banksters who were backed by the local (and obviously highly corrupt) politicians. the case of iceland is much more a moral bancruptcy than a financial failure.
    if someone brings the evidence that the old owners of landsbanki, glitnir and kb were forced to take loans for their investments one can buy the conspiracy theory.
    however, it is very human to look for the shit somewhere else than in the own garden. these two interviews are just hell of dangerous as they turn the reality upside down. it’s an old trick of the mind to shift the point of view if things become unbearable.
    the ones profiting from this selective perception are the local and corrupt policians plus the icelandic banksters who look now like victims of a much bigger conspiracy plott.

    imho the imf is just a tool for the creditors to make sure that at least a small fraction of the borrowed money is flowing back.

  • hildigunnur April 6, 2009, 11:55 am

    here: http://dagskra.ruv.is/sjonvarpid/4464762/2009/04/05/2/ and here: http://dagskra.ruv.is/sjonvarpid/4464762/2009/04/05/3/ (second one doesn’t seem to work at the moment, but hopefully they’ll fix it)

    ruv.is has changed the way to the streaming, I had to get help to find it, yesterday…

  • Steve UK April 6, 2009, 12:43 pm

    Has anyone stated the possible effects of a large foreign debt default combined with returning the IMF/others’ loans (or defaulting on that as well)?

    I listened to both interviews and read the Hudson article (although it was more of a skip-read after a bit), but none of them touched on what Iceland might expect to face if it did default.

  • James April 6, 2009, 1:02 pm

    Michael Hudson’s essay provides historical justifications for defaulting on debt and argues that it would be effectively immoral if Iceland *doesn’t* default. It’s written to appeal to the lay person, but draws on the professor’s vast knowledge. As such, I can’t work out whether he is tricking me (eg by omitting overriding counter-arguments) or whether his conclusions really are correct. It’s interesting stuff, but I’d need to read an informed critical review (a counter-essay…) before considering changing my view of the way the world should work. God, I sound like an old fart. But maybe a prudent old fart…

  • Baldvin Jónsson April 6, 2009, 1:04 pm

    Hæ Alda. Ástæða þess að Icesave á að nálgast sem svikamyllu er fyrst og fremst sú staðreynd að Landsbankinn opnar Icesave með pompi og prakt EFTIR að byrjað var að loka á þá lánalínum.

    Almenningur á Íslandi fékk ekki að vita það, almenningur og aðrir fjármagnseigendur í Bretlandi fengu ekki að vita það, en ICESAVE var einungis sett af stað til þess að útvega Landsbankanum meira rekstrarfé (lesist brennslufé).
    Bankar í bæði Belgíu og Hollandi gerðu allt sem þeir gátu til þess að koma í veg fyrir að L.Í. fengi að opna Icesave reikninga þar vegna þessarar vitneskju en vegna laga um ESB og þess að Landsbankinn kom sér þar inn í gegnum kaup á banka í Lúxemborg, var ekki lagalega hægt að stoppa þá.
    Frakklandi tókst það hins vegar með einhverjum leiðum sem ég þekki ekki til hlítar því miður, en þeir eins og Belgía og Holland, héldu því staðfast fram að þetta væri svikamylla og að féð yrði aldrei mögulegt að greiða til baka nema að litlu leyti.

    Að opna slíka reikninga með pompi og prakt á sama tíma og þú veist sem yfirmaður að reksturinn þinn er á leiðinni á hliðina eru afar líkleg svik og ber að rannsaka sem slík. Komi svo annað í ljós að þá er einfaldlega búið að hreinsa mannorð þessara manna á eftir.
    Verði þetta hins vegar ekki rannsakað sem sakamál er afar mikið af upplýsingum sem munu aldrei koma fram og því nánast öruggt að rannsóknarnefndin mun aðeins skila frá sér í nóvember komandi einhverri pólitískri yfirlýsingu um að já, vissulega hafi allt farið á versta veg og það sé afar óheppilegt, en því miður sé bara ekkert við því að gera.

  • tom joseph aka tj3 April 6, 2009, 2:20 pm

    John Perkins and Michael Hudson are known here in the USA in a small way. They have spoken out publicly before the current crisis. I think this is the most important thing about their take on things. They are not “experts” after the fact.

    Even dumb me has heard these guys talk and read some of their earlier stuff.

    The IMF does serve a purpose sometimes but in some other ways it is just a transfer of money from rich governments to rich financial institutions with little or no benefit to the nations they are “helping”.

    In Africa very often the aid went to pay loans from banks on Wall Street. Rather than even give the “money” to African nations it would have been simpler and more direct to just deposit the treasure in big banks. Iceland?

    In many ways we are all just being used. Another commenter Steve UK asked the good question what happens if Iceland just defaults?

    My state Florida in the USA is really starting to fall apart. Mental hospitals closing, teachers by the thousands fired, library hours reduced, the courthouses not funded. The default is not likely by the state only by individuals. Why?

    If Iceland or Florida were a rouge state the issues could be serious, no? But so was World War One and Two and the great depression of 1929. The practical question we might all ask is is this mess at bottom, in the middle or just getting started. No one can know that for sure. But the outstanding debt here in Florida is impossible, it is lifetimes of debt cooked up for what?

  • Mike Richards April 6, 2009, 2:25 pm

    Hæ Alda,

    The weakness of the Hudson article is that it doesn’t say what pain might hit Iceland if they were to default (and he makes a good case for them doing just that).

    The Russian default of 1998 might be a close analogy – that led to the complete collapse of the Ruble, runaway inflation, real, grinding poverty, a flight of foreign investment and a massive political crisis. If Iceland were to do the same, the krona would probably become near worthless and I doubt very much that the European Union would look favourably on any rescue that didn’t include a repayment of debts.

    Russia got out of its mess only thanks to the rise in oil prices, but the country ended up even more unequal and with power concentrated in a few hands.

    Perhaps if Obama does make his visit to Iceland you should charge a landing fee at Keflavik. But don’t think of taking Brown or Darling hostage and demanding the UK pays a ransom – we’d only cough up if you promise to keep them.

  • JoeInVegas April 6, 2009, 4:53 pm

    Hmmm, default. I wonder what the repercussions would be. But how many other countries have done that, and what happened to them? I know you are supposed to back whatever obligations you agreed to, but it seems as if the world doesn’t much follow that philosophy any more.

  • The Other Katherine Harris April 6, 2009, 5:05 pm

    At the risk of saying, “I told you so,” I did. These international banksters ARE sociopaths and they ARE ruling the world. Having anything to do with the IMF/World Bank wrecking crew is a recipe for disaster.

    Props to your media for allowing Icelandic citizens to be informed. None of our major networks would ever air these interviews, which is why the biggest grand theft in history is being carried out now in the United States. We’ve handed about $14 trillion to the predators so far, with no end remotely visible.

    Fond regards from New Mexico,
    Erin

  • Vikingisson April 6, 2009, 6:07 pm

    Grand Theft Planet, indeed.
    That article was a real eye opener. It will be dismissed by the established forces that created this mess and are now trying to ‘fix it’. Ultimately Iceland must decide for itself and this article has some of the best pointers I’ve read thus far.
    I don’t think anyone advocates total default but who cares what anyone says, you have to do what is best. There aren’t any good examples, only bad ones. I don’t think Russia is an example of default that is applicable to Iceland. The objective is to avoid the financial terrorism and slow depletion of real assets that is the object of the creditors. There will be sacrifice and hard times ahead but if you are forced into the endless credit spiral that forces you to give up resources and real estate to pay debt then default is a better way. Why pay off what you can’t anyway and then give away what you are trying to pay off?
    Indexing, wow, that has to go away and was a bad idea from the start.

  • Ljósmynd DE April 6, 2009, 6:17 pm

    Taking a look at countries, which have submitted themselves to a strict IMF regime, should indeed be pretty disquieting. In Argentina, as an example, this lead to a widespread impoverishment, deprivation of natural resources by foreign companies, decline in social services etc. And it couldn’t prevent the country from finally collapsing anyway. Once on the hook it seems to be a debt trap and a vicious circle. For Argentina it was helpful to find some allies – like Venezuela – to finally repay the IMF loan completely. Maybe, Iceland should look for some allies, too. And the indexation of home loans should certainly be one of the first things to be abolished after the elections.

    But I would prefer the consequences being more clearly outlined before taking a stand in favour of Iceland defaulting .

  • Rod H April 6, 2009, 7:05 pm

    Hudson’s argument is persuasive.

    There are debts, okay, but who incurred them? Those who did should pay, not those who did not.

    At the heart of this is the fact that money was used, not productively, but as an end in itself in a series of moves creating false wealth. This could be described as a game for those involved, most of whom cashed in their chips before the casino roof fell in.

    The many who didn’t play should not be expected to honour the IOUs of the few who did.

  • Dora April 6, 2009, 10:25 pm

    The two interviews on Silfur Egils really frightened me. Is our future here in Iceland one of poverty and stagnation if we are made to pay back the debts of the men who got us into this mess? And if we say we will not pay – will we be isolated and shunned by the world. What kind of choices are these?

  • David Heckadon April 6, 2009, 10:34 pm

    Dear Icelanders:

    Read the “Shock Doctrine” by Naomi Klein – before it’s too late!

    “Landid er til solu” – Halldor Laxness (Atomstodinn)

  • idunn April 7, 2009, 12:25 am

    I feel the people of Iceland should look after themselves first. As in protecting and retaining control of natural resources and their land. Creditors and the IMF can come a distant second.

    I´m not sure of all the ins and outs of this problem, but sure there are many in this world that will treat Iceland less kindly than she would herself. If allowed. If repayment is to be made in whole or part then only as possible from a gradually stabilizing and growing economy, but never from sale of the very resources that allow this, and continued future of the country.

  • Michael Gordon April 7, 2009, 1:53 am

    The actual consequences of Iceland’s government refusing to pay the debts of its private bankers is unpredictable. We can look to world history for clues, but only clues, as it makes a huge difference whether people’s sympathies lie. In other words, when Chile nationalized foreign built copper mining, this was seen as a slap in the face to industrialized nations and their people did not at the time have much representation in the developed world. Even so, according to the article cited below, the government had already made some payments and calculated a worth according to themselves, not according to foreign investors. In this manner they satisfied their own sense of honor if not entirely satisfying the foreign investors, which we may presume may have had some very high expectations indeed.

    Iceland is rather different from Chile’s experience. Nationalizing the banks makes pretty good sense to me, eliminate the profit motive and you eliminate a lot of fraud. Also, while not very many Icelanders are abroad in the developed world, a huge number of people whose sympathies support Scandinavian nations ARE abroad.

    Total abrogation of debt would seem unwise and dishonorable, and yet the total burden of unmet expectation cannot be placed on the shoulders and backs of Icelanders.

    A parallel involves a thought-experiment. Suppose that Leifur Eiriksson purchased all of North America for a million Kronur, and he bought it from Olaf who represented himself as owning North America. Can this Olaf actually have title to all of North America? No, that would be absurd. So it is that you have a few bankers who represent themselves as having the power to “bond” all of the citizens of Iceland to this burden, when in fact they do not have this power. Even if your Allthing enacted such a burden, or paved the way for such a burden, where it is based on fraud it can have no virtue.

    There is little doubt that many things purchased and built with these deposits have been opposed by many Icelanders; the big dams for instance. These are investments, and perhaps even good investments, but incredibly expensive and Iceland might never have accomplished these things out of its own pockets. Even so, you have already sold a portion of your beautiful nation to creditors who hold title — maybe not to the land itself, but to its equal — and more — in claim against your future income.

    It is inescapable that some consequences will come. The dams cannot be “unbuilt” and the cost of their construction returned to investors. What should proceed, in my opinion, is a revaluation of their worth and a revaluation of payments to creditors so that you keep what you have built, and investors do get *something* out of the deal, just as I expect to get *something* out of my retirement plan — just not nearly as much as seemed one year ago.

    http://www.infoplease.com/ce6/history/A0834953.html
    “investors must assume the risk of nationalization in the country in which they invest, and developing nations have held that nationalization is a right implied by the UN Charter.”

    http://en.wikipedia.org/wiki/Chilean_nationalization_of_copper
    “This “act of sovereignty” was the espoused basis for a later international economic boycott, which further isolated Chile from the world economy, worsening the state of political polarization that led to the 1973 Chilean coup d’état.”

    “the Allende administration introduced the idea of “excessive profits” into the calculation of indemnization for the mines. This idea was based on the concept that the multinational corporations had reaped profits far in excess of what was considered “normal business practice”. The way this was done was by comparing copper profits in Chile with the companies’ profits elsewhere in the world. It was calculated that twelve percent was the worldwide profit rate for these companies, and that they had made $774 million above this in Chile from 1955 to 1970: ‘This deduction exceeded the book value of the companies’ properties’.”

  • Peter Norton April 7, 2009, 6:52 am

    I was looking at this: https://www.cia.gov/library/publications/the-world-factbook/geos/ic.html#Econ
    (The CIA Fact book is actually pretty reliable because it has to used by US businessmen). What is astonishing is that 5% if the workforce create 40% of the exports. Presumably during the boom many Icelanders used the strength of the Krone to buy their houses, so hopefully they have those as assets. Or did they just put themselves further in debt?
    In the long term the population profile is good, with most people in their productive years, so not too heavy a load of pensioners. The other assets are the high levels of education and knowledge.
    On the negative side the collapse of the Krone, which should encourage tourism, is balanced by the general lack of confidence in the countries which would provide the tourists.
    What Icelanders really have to ask themselves is how they see their economy developing, and how they can create wealth.
    The recent fat years have obvously helped to create an excellent infrastructure, which is an asset.
    The negative may be the level of personal debt, which I don’t know about.
    I think that you have to sell your brains. International IT is your best chance, and nowadays that doesn’t involve moving. Here, once again thanks to the collapse of the Krone, you are competitive.
    Incidentally Alda, debt default might be a hot topic on CIF!

  • alda April 7, 2009, 10:18 am

    Thanks for some very interesting input, everyone.

    Peter – Incidentally Alda, debt default might be a hot topic on CIF! — yes, that’s what I’m afraid of.

    Incidentally, in moderating the comments there were some that are so filled with sweeping misconceptions and lack of understanding of the circumstances that I didn’t approved them. I simply don’t have time to set the facts straight and would not like for these misconceptions to become construed as truth.

  • Sigvaldi Eggertsson April 7, 2009, 10:48 am

    Peter Norton, I would not put as much trust in the CIA “fact” book as you seem to be doing.
    Just to name an example they put the population as 306,694 (July 2009 est.) when the Hagstofa (Statistics Iceland, http://www.statice.is) puts it at 319 368 as of 1. jan 2009 (and 319 326 as of 1. april 2009)

  • kevin o'connor waterford Ireland April 7, 2009, 2:04 pm

    Alda
    Interesting post what is the total debt per icelander these days or does anyone actually know what it is, if the circumstances are so extreme it may be a case for nationalising everthing that Iceland has wether there or abroad seen has you have all been lumped together in some vast generational loan repayment so therefore all assets must go into the kitty to help payoff it all whereas what seems to happening is that guys that failed in businesss want you all to pick the tab up pretty much what is happening with all the bank taxpayer funded bailouts around the world.

  • Mike Richards April 7, 2009, 2:55 pm

    One question for our Icelandic friends.

    Is there any sign of prosecutions being brought against the directors of Landsbanki, Kaupþing and Baugur for taking the country to the brink of ruin? Are extradition orders being served, are assets being seized?

    I wish we were all following the US’s example and hauling the crooks and gamblers who got us into this global catastrophe in front of courts and government committees.

  • alda April 7, 2009, 5:39 pm

    Mike – that’s what Eva Joly has been hired to help us do (see link in post).
    The problem is that there are still laws in place protecting the bankers, i.e. bank secrecy laws. But we’re hoping that will change – soon.

  • Peter Norton April 7, 2009, 8:38 pm

    Sogvaldi thanks for the link. It is much better.

  • Peter Norton April 7, 2009, 8:47 pm

    Ooops spelt your name wrong! sorry sigvaldi.

  • Marc April 9, 2009, 11:32 am

    Hey Alda,

    I was looking at some economic statistics on Iceland just now. Iceland’s balance of payments (=exports – imports) has been redressed from horribly negative to firmly positive. This has happened mainly because of a total collapse in the demand for imported goods. On the export side, the devaluation of the ISK hasn’t boosted demand, apart from one noteable exception, aluminium. There is a huge increase in Aluminium exports which has weighed heavily on the total exports. I know Alcoa produces in Iceland, but they recently reported a collapse in demand (turnover -40% or so). How come this isn’t reflected in Iceland’s exports? Thanks if you know the answer.

  • Lino April 9, 2009, 7:55 pm

    certainly default IS an option but Icelanders should think at leas twice about such “nuclear option” that would relegate them to third country pariah status compounding the predicament they are in.

    Besides the (im)moralilty of defaulting, already Iceland credibility sank with the crisis, it would be completely annihilated if it reneged on IMF commitments after having freely accepted IMF’s help.

    In today’s world, could you conceive a country denied any future credit? Only surviving by barter or cash only transaction, “pay before delivery”? No loan, whether sovereign or commercial on international scale, because NO ONE would trust you?

    Russia and Argentina have defaulted because in the end they have hard assets(though in Argentina’s case, they have the liability of their social system and mindset). What has Iceland? Raw fish and vulcans? That’s all you would be left with…

    credibility is a precious asset: loose that and you forsake not only your generation but your children’s as well.

    Oh, by the way, I do not like big international organisations like IMF, but it does a useful function and forces no one to accept their help (because it is help).
    Accusing the IMF of being dogmatic, overbearing and unreasonable in their conditions, is like saying “gimme your money and don’t bother me” revealing a DEEP misuderstanding, whether by ignorance or convenient bad faith (both criminal anyway) or a mix of the two factors, on how/why money functions.

    About Dora’s dilemma: finally a clearly put, though simplistic, analysis of the choices you have (you do not have ANY other), thought the question “what kind of choices are these?” reveals the unreadiness or incapability of “conceiving” the predicament you are in: that is a weakness in itself.

    Pride has a price, pride partly put you were you are now: can you afford again pride when much more important and intelligent priorities press?

    Dora you should lead the political discussion in Iceland! 😉

  • alda April 9, 2009, 9:36 pm

    Lino – apparently Argentina was blacklisted for 2-3 years, not more.

    Raw fish is a lot more valuable than you make it out to be. And we have two other very precious natural resources: cheap, clean energy and plenty of fresh water. The former is highly coveted already; the latter will be in years to come. I’m not familiar with Argentina’s assets, but I suspect those are quite as hard as Argentina’s.

    As for losing credibility — Perkins and Hudson’s argument is that it wouldn’t matter either way — if we attempt to pay those debts we’ll be so poor that nobody would lend us anything anyway.

    According to them, the choice we have is default now, while we still have our natural resources, or default later, when everything has been sold in a feeble attempt to pay our debts and we are left with nothing.

  • Mike Richards April 9, 2009, 9:54 pm

    Hæ Alda,

    If Iceland were to default I can’t imagine the EU and US would simply turn a blind eye. They could seize Icelandic assets held abroad and impose punitive tariffs on Icelandic products.

    There’s an old expression ‘caught between a rock and a hard place’ (I’m sure there’s an Icelandic equivalent) and that’s where Iceland now finds itself. Sadly I don’t see any foreign country helping out, even though the total amount of Iceland’s debts is a tiny fraction of what has been thrown into staunching the bloodbath of the Scottish banking industry. At the moment Iceland is seen as being too rich for help and there are plenty of British politicians who are going to use Iceland as a punchbag for a while yet, so I’m sorry, no one will be coming to your rescue.

    Though if Iceland were to renege on its debts, I think a lot of us will secretly wish you well.

    Mike.

  • Steve UK April 10, 2009, 4:07 pm

    I went to check the Letters on IR, and what did I see? A letter from Michael Hudson:
    http://icelandreview.com/letters/?ew_news_onlyarea=content1&ew_news_onlyposition=9&cat_id=59014&ew_9_a_id=322585

    Not that it clarifies anything really, as AFAIK no one has seriously suggested that Iceland use the IMF loan (or indeed the rest of the loans contingent on that IMF loan) to pay the debts of the banks.

  • colin buchanan April 11, 2009, 8:57 am

    What strikes me about most of the above responses is that they view Iceland in isolation, as if it alone was in this predicament. The opposite is the case: Iceland’s situation epitomises the plight of all of us, in the face of naked financial power and the drive to create a global oligarchy. The situation then is dynamic and Iceland’s actions have to be taken in the context of the ripples which they create in the wider world. Certainly Iceland would face a hostile reaction from certain quarters in the event of a default, but, in my view, this would be outwayed by the support it would receive. Destiny has put Iceland in the front line against the malign forces which threaten us all. So far her people have responded commendably to this challenge and I believe they will continue to do so. I’d like to see the street protests reignite with the focus not so much on who is in power but on the programme to be followed, at the core of which is the rejection of IMF mediation. Its this programme that has to be clarified and fought for now, in and out of parliament, with the knowledge that all the elements of worth in Icelandic society will rally round it.
    I outlined some of my thoughts on this in my article “The European Revolution Begins”:
    http://inthesenewtimes.com/2009/02/05/the-european-revolution-begins/

  • Easy April 11, 2009, 4:27 pm

    Well whatever option the outcome is the same, as for Dora´s question “Is our future here in Iceland one of poverty and stagnation? ” YES, wether we defoult now or later the answear is YES. So as right as Hudson and Perkins are the media( and Daddy Goberment) is just useing this to inflict fear to people, so we will accept UE easier, (by the way I´m not against EU) but just to let you know EU will do exactly the same as IMF, they are one and the same,(and USA and World Bank) so dont worry as a poster said it before our options are Rock or Harder Rock, the sooner we accept that YES our future here in Iceland is poverty, the better it will be for ourselves, so we can start beeing careful with our money, stop on dreaming about how rich we are, and start working hard and honestly to rebuilt this country and buy rebuilt I dont mean like many “to bring this country back to the powerfull and wealthy nation we are” NO that will never happen we were actually never that nation it was only a dream they fed to us, but we can work and make a living and be happy just like everybody elese in the world, but that will take TIME in the mean time YES poverty is the medicin.