Iceland's citizens to stiffen government's spine and stand up to bullies

Sync · #11 (**permalink**) 5th March 2010

Quote:

Originally Posted by He3

Still focussing resolutely on the differences in the details? As I said, it is a point of view.

History shows that the world doesn't always work like that though.

The Revolutions of 1848

You're right, it's a point of view. I choose to look at the details and try to understand the facts, you seem to be choosing to either grossly over simplify the situation, or as you showed in your "it's not their debt" line, not bother to familiarise yourself with what happened in Iceland. 2 differing ways of approaching things.

ibis · #12 (**permalink**) 5th March 2010

Quote:

Originally Posted by Sync

Again, fundamental misunderstanding of what happened in Iceland. To stick with your bucket line I'll simplify it.

My friend in Iceland deposit 100 Krona into Icesave savings accounts. I, in UK, deposit 100 krona into Icesave savings accounts.

Now my reason for being happy to do so is that there's a bucket maintained by the Icelandic govt part of our money is dropped into, just in case anything happens the bank.

The economy of the world changes. Now in 2007 my UK govt says "well gosh, we're not sure that bucket's big enough. Maybe you should withdraw your money" Now the Icelandic govt hit the roof over this. They threaten to sue my govt, tell the entire world that of course the bucket is ok, that the UK are trying to undermine their sovreignty and of course my money is still guaranteed to be safe.

Icesave then falls over, and the government tell me that not only is there not enough in the bucket, but there's a great big hole in the bottom. The Icelandics pay my Icelandic friend his 100 krona, offer me 10 (because I'm only British) and tell me to get stuffed.

Now those are not other people's debts. This is not the bank's fault or problem. That is Iceland's debt. They offered the guarentee. They maintained the bucket. They owe me my money. What Icesave did is irrelevant. They could have set fire to my money for all I care. It's irrelevant to me as an investor who only went there because of the bloody bucket that their govt was meant to be maintaining.

Goodness - you mean that you would have gone for an Icesave account because it was backed by the government of Iceland, who said that they would honour any debts. And that you might feel now that you'd been...well...conned, because the Icelandic government isn't going to honour those debts, either with or without the backing of the Icelandic people?

Well, perhaps that woud be applicable in some ways to Ireland's situation, if we had, say, failed to exercise adequate (or even minimal) oversight over our government and banks, and were now annoyed that we might be landed with the debts that they had run up in the absence of such oversight.

Still, never mind, I'm sure that someone will be along to explain how it isn't our fault that we failed to exercise even minimal oversight, and that not only would we be justified in rejecting any responsibility, but that we would be correct to do so. After all, an irresponsible citizenry is the bedrock of democracy, right?

Sync · #13 (**permalink**) 5th March 2010

Quote:

Originally Posted by ibis

Well, perhaps that woud be applicable in some ways to Ireland's situation, if we had, say, failed to exercise adequate (or even minimal) oversight over our government and banks, and were now annoyed that we might be landed with the debts that they had run up in the absence of such oversight.

Still, never mind, I'm sure that someone will be along to explain how it isn't our fault that we failed to exercise even minimal oversight, and that not only would we be justified in rejecting any responsibility, but that we would be correct to do so. After all, an irresponsible citizenry is the bedrock of democracy, right?

Again, the difference being, we could have not gone with NAMA. We could have not bailed out the banks. Those are choices our elected govt made. The dail could have voted to let the banks fail, or set up a Bad bank, or whatever. If any Irish Govt had decided "We're not going to honour our investment guarentee to non-Irish", THEN you'd have a valid comparison. What we choose to do about the banks outside our debts isn't relevant to the Iceland comparison.

Iceland allowed Icesave to fail. They could have tried to save it. It's immaterial though to the debt they guarenteed.

The country of Iceland don't have that choice on this issue. They owe the money. Complaining about it, voting any way they want in parliament or referendum won't change the fact that they owe this money. They can default or they can pay an agreed price. They can't just refuse to pay, blame the last guys in power and then act shocked and hurt when no one will invest and they get shot down for EU membership. Business doesn't work that way.

Honestly, I know this isn't easy to understand without some sort of financial training, but if you don't even try to avoid the laziest assumptions on the matter, you're no better than the idiots who were laughing at the "1 letter and 6 months" joke a while ago.

hmmm · #14 (**permalink**) 5th March 2010

Quote:

Originally Posted by ibis

Still, never mind, I'm sure that someone will be along to explain how it isn't our fault that we failed to exercise even minimal oversight, and that not only would we be justified in rejecting any responsibility, but that we would be correct to do so. After all, an irresponsible citizenry is the bedrock of democracy, right?

Very good. The Icelandic people were happy to accept the well paid banking jobs, the lower taxes and the flow of money into public spending paid for out of those financial institutions guaranteed and regulated by the state. Now that the state has been shown to have failed to adequately regulate, the populace want to throw their hands up in the air and say "nothing to do with us, tough, we didn't cause this.".

He3 · #15 (**permalink**) 5th March 2010

We must hope to avoid ending up in the state Alexis de Tocqueville described where"society was cut in two: those who had nothing united in common envy, and those who had anything united in common terror."

The best modern equivalent this government and its supporters might hope is for those who have nothing uniting in the queues for emigrant planes and those who have something clinging to Fianna Fáil.

He3 · #16 (**permalink**) 5th March 2010

Quote:

Originally Posted by Irish Times

According to one estimate, the amount of money due under the referendum package is the equivalent of €100 a month for eight years for each of the country’s 317,000 inhabitants.

Maybe someone with 'financial training' could hazard a guess at the range of possible cost falling on Irish citizens from the September 2008 guarantee and the policy constraints that flowed from that.

Let's kick off with what has gone already - the €10 billion to Anglo, and the €7 billion to AIB/BoI. Is that about €4250 per head in a population of four million?

Quote:

Originally Posted by Sync

...

Honestly, I know this isn't easy to understand without some sort of financial training, .....

How much financial training did it take to get us to where we are?

ibis · #17 (**permalink**) 5th March 2010

Quote:

Originally Posted by hmmm

Very good. The Icelandic people were happy to accept the well paid banking jobs, the lower taxes and the flow of money into public spending paid for out of those financial institutions guaranteed and regulated by the state. Now that the state has been shown to have failed to adequately regulate, the populace want to throw their hands up in the air and say "nothing to do with us, tough, we didn't cause this.".

That's the thing, from my perspective - there's a general wish to deny that we had anything to do with banks or their regulation, and so we cannot be held in any sense responsible.

At the same time (and often from the same people) there's an almighty amount of rhetoric about "holding the government to account". We cannot have one without the other. Either our government is accountable to us - and we are therefore responsible for our government - or it is not, and we are not.

The Irish electorate has been asleep at the wheel for years. If the government car has gone off the road, there is nobody to blame but ourselves, and we have to accept that we are the negligent party. That means sucking up the debts accumulated while we were asleep. The same goes for the Icelanders - they can, if they like, agree to repudiate their debts to each other, but they cannot repudiate the debts they owe to foreigners who invested in Icelandic banks. If they feel those debts were accumulated without their knowledge, then they too have been negligent.

It is nobody's responsibility to keep democratic governments in check but the people to whom they are accountable.* If it hasn't been done, it is obvious who is negligent.

*of course, in our case, we also have the EU, where the democratic governments of the EU have taken on accountability for each other - lucky, really, since they seem to do a better job of keeping Ireland's government on the rails than we do.

He3 · #18 (**permalink**) 5th March 2010

Quote:

Originally Posted by ibis

That's the thing, from my perspective - there's a general wish to deny that we had anything to do with banks or their regulation, and so we cannot be held in any sense responsible.

At the same time (and often from the same people) there's an almighty amount of rhetoric about "holding the government to account". We cannot have one without the other. Either our government is accountable to us - and we are therefore responsible for our government - or it is not, and we are not.

The Irish electorate has been asleep at the wheel for years. If the government car has gone off the road, there is nobody to blame but ourselves, and we have to accept that we are the negligent party. That means sucking up the debts accumulated while we were asleep. The same goes for the Icelanders - they can, if they like, agree to repudiate their debts to each other, but they cannot repudiate the debts they owe to foreigners who invested in Icelandic banks. If they feel those debts were accumulated without their knowledge, then they too have been negligent.

It is nobody's responsibility to keep democratic governments in check but the people to whom they are accountable.* If it hasn't been done, it is obvious who is negligent.

*of course, in our case, we also have the EU, where the democratic governments of the EU have taken on accountability for each other - lucky, really, since they seem to do a better job of keeping Ireland's government on the rails than we do.

Government is paid and resourced handsomely to govern.

Failure of governance may reflect badly on the section of the electorate who had faith in the ability of those they elected, but it remains government's failure.

I appreciate why a supporter of the present government may not want to admit that.

Now back to the question of comparing Iceland and Ireland in money terms -

Quote:

Originally Posted by Irish Times

According to one estimate, the amount of money due under the referendum package is the equivalent of €100 a month for eight years for each of the country’s 317,000 inhabitants.

Maybe someone could hazard a guess at the range of possible cost falling on Irish citizens from the September 2008 guarantee and the policy constraints that flowed from that?

This looks like what has gone down the drain already - the €10 billion to Anglo, and the €7 billion to AIB/BoI. I think that is about €4250 per head in a population of four million.

What more?

Libero · #19 (**permalink**) 5th March 2010

Quote:

Originally Posted by Sync

They're 2 utterly different situations if you've got an eye for the details. If you want to take the tack of "Well both situations have the words "banks" in them, and sure we're both on islands. They must be directly linked!" then I'll let you guys get on with it.

When you're finished with the P.ie crowed, try telling that to this fella. Him and his supporters frequently make reference to Iceland, usually in the context of why they like shovelling money to broken Irish banks...

Quote:

Originally Posted by Minister for Finance, Brian Lenihan TD

“When Iceland nationalised her banks, funding collapsed and the economy collapsed with it.”

The Irish Economy Blog Archive B&F Interview with Brian Lenihan

Quote:

Originally Posted by Sync

The Icelandics pay my Icelandic friend his 100 krona, offer me 10 (because I'm only British) and tell me to get stuffed.

Not true. If you were British, or Dutch, Irish or Martian, and had deposited in Icesave in Iceland, you were covered. It was only the foreign subsidiaries that were set up to be burned, and that included depositors of Icelandic nationality.

So you really shouldn't represent this as simple discrimination against non-Icelanders. The Icelandic state was acting to protect any semblance of a future banking system by protecting domestic depositor confidence; foreign subsidiaries are not a part of that imperative.

Quote:

Originally Posted by Sync

Honestly, I know this isn't easy to understand without some sort of financial training, but if you don't even try to avoid the laziest assumptions on the matter, you're no better than the idiots who were laughing at the "1 letter and 6 months" joke a while ago.

Fighting words, from a poster who could - but doesn't - point to where in Directive 94/19/EC the Icelandic state is obliged to compensate all Icesave depositors in full.
A lazy assumption of your own, perhaps, leading to your claim "The country of Iceland don't have that choice on this issue. They owe the money. Complaining about it, voting any way they want in parliament or referendum won't change the fact that they owe this money."

If the Directive isn't your source of liability for the Icelandic state (hint: it can't be, not for unlimited amounts), then what is? The government agreement with the UK and Netherlands? That agreement was always subject to a possible referendum, as is happening now.

You can fall back on realpolitik and the threats from the UK and Netherlands to screw Iceland at the EU and IMF, but you still haven't shown a legal obligation from Iceland to the complaining creditors.

joel · #20 (**permalink**) 5th March 2010

Quote:

Originally Posted by Sync

Again, fundamental misunderstanding of what happened in Iceland. To stick with your bucket line I'll simplify it.

My friend in Iceland deposit 100 Krona into Icesave savings accounts. I, in UK, deposit 100 krona into Icesave savings accounts.

Now my reason for being happy to do so is that there's a bucket maintained by the Icelandic govt part of our money is dropped into, just in case anything happens the bank.

The economy of the world changes. Now in 2007 my UK govt says "well gosh, we're not sure that bucket's big enough. Maybe you should withdraw your money" Now the Icelandic govt hit the roof over this. They threaten to sue my govt, tell the entire world that of course the bucket is ok, that the UK are trying to undermine their sovreignty and of course my money is still guaranteed to be safe.

Icesave then falls over, and the government tell me that not only is there not enough in the bucket, but there's a great big hole in the bottom. The Icelandics pay my Icelandic friend his 100 krona, offer me 10 (because I'm only British) and tell me to get stuffed.

Now those are not other people's debts. This is not the bank's fault or problem. That is Iceland's debt. They offered the guarentee. They maintained the bucket. They owe me my money. What Icesave did is irrelevant. They could have set fire to my money for all I care. It's irrelevant to me as an investor who only went there because of the bloody bucket that their govt was meant to be maintaining.

Only up to a certain figure, surely, as Ireland does. But Britain wants the whole lot back! not Iceland's problem.

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