Icelanders vote (again) on bailing out British & Dutch investors

Dionysus

Over on the BBC website this evening is this story about the Icelanders going to vote for a second time on a bailout of private British and Dutch investors who lost money in a private Icelandic bank. The people rejected the first attempt to force the population/state to take on those private debts. They are expected to reject this latest attempt.

So much for the sneering of some people back in late 2008 when "At least we're not as bad as Iceland" was one of the few comforts people had. This slow painful Irish march into default is much less preferable than the upfront Icelandic "go fúck yourselves" from the outset to their own government and the European countries who insisted that the state take on the losses of private businesses and investors. Their prime minister resigned and in 2010 the Icelandic parliament voted to proceed with criminal proceedings against him for negligence. Is there any chance Bertie Ahern would be similarly charged with negligence? Also in contrast to Iceland, the Irish people haven't kicked up sufficient fuss to ensure we have a referendum on our own bailing out of private foreign investors.

The contrast between how the Irish political elite and their apathetic Irish population have handled this and the way the more courageous and principled Icelanders have handled it is getting depressingly clearer all the time.

---

Icelanders are voting in a referendum on the latest plan to repay the UK and Netherlands for costs incurred when its banking system collapsed.

The country overwhelmingly rejected a previous repayment plan, which was put to a referendum last March.

The new deal offers less onerous repayment terms, but opinion polls suggest it will again be rejected.

Iceland's Landsbanki bank collapsed in 2008, and British and Dutch investors lost some 4bn euros (£3.5bn; $5.8bn).

The bank had offered savings accounts in the UK and Netherlands under the name Icesave.

The British and Dutch governments had to reimburse 400,000 citizens who lost savings - and Iceland must now decide how to repay that money.

Under the terms of the latest deal, Iceland would pay the money back with 3.3% interest between 2016 and 2046.

Under the previous proposals, the money was to be paid back with 5.5% interest between 2016 and 2024.

The actual cost to the state is expected to be much less than the 4bn euros owed, as the government says most of the repayment will come from selling the assets of Landsbanki.

The government has said it does not expect the cost to exceed 50bn crowns (£168m).

Analysts say the issue is vital to Iceland's prospects for recovery because it would allow the country to return to the financial markets to fund itself.

Solving the dispute is also seen as key to Iceland's chances of joining the EU.

Iceland's three main banks collapsed within days of each other in October 2008.

The government compensated Icelandic savers, but overseas customers faced losing all of their money.

The issue sparked a diplomatic row between Iceland and the UK, and created uncertainty over Iceland's economic recovery.

Source: Iceland votes on Icesave-Landsbanki repayment

KINGVictor

I have great respect for a country that consults its citizens for any major decision rather than shove it down their throat...

The problem however, is asking a second time. They must have learnt a thing or two from the EU I'd say..

squod

No voters are ahead so far. It's only 5 billion.

Fremen

squod wrote: »

No voters are ahead so far. It's only 5 billion.

That's in a country with a population a tenth the size of Ireland's. They're under roughly the same debt mountain that we are.

burrentech

Three cheers for the citizens of Iceland.

If the Irish banks are nationalised who are the bond holders, and why do they need to be protected? There is definitely something fishy here, and a lot of people are going to a lot of trouble to protect the bond holders identities. If its so important that these people are repaid we should at least know who we are in debt to.

Meh... Was all for it until I read the cost was only going to be £168m. Fairly small amount for any country to pay back over 30 years compared to the reputation gained from not paying it.

I admire what they're doing but it's for way too little money.

Cookie_Monster

KINGVictor wrote: »

The problem however, is asking a second time. They must have learnt a thing or two from the EU I'd say..

But it's a different vote this time, for a different payment plan.

Still fair play to them, The UK and Holland took a risk and got burned, the Icelanders are right to tell them to fuck off

http://www.bbc.co.uk/news/world-europe-13022524

It's been voted against. £168m really is a laughable amount of money to sell your nation's credit rating for.

Sarn

This case is different to the Irish one, in that it is regular depositors from other countries that are being left high and dry. As far as I am aware, the bondholders don't come into it. They deliberately discriminated against non-Icelandic depositors. It would be the same if, for example, Rabobank went bust and only Dutch depositors were looked after and Irish depositors were exempted from the pre-existing guarantee.

However, it does show that the people don't always have to take everything that the government dumps on them.

omahaid

Can anyone explain to me the downside of what the Icelanders voted for? Is there any reason for us not to follow their lead?

120_Minutes

omahaid wrote: »

Can anyone explain to me the downside of what the Icelanders voted for? Is there any reason for us not to follow their lead?

I'm guessing a negative effect on their credit rating, which would be bad if we went down the same route, as it attracts many multinationals here.


That wouldn't really effect them as we all know only mums go to Iceland!

m@cc@

omahaid wrote: »

Can anyone explain to me the downside of what the Icelanders voted for?

Their credit rating in tatters and any further foreign investment in their banking system unlikely in the future.

dsmythy

So I wonder who will be better off in 5 years time? It's tight as to who wins, Iceland or Ireland.

burrentech

m@cc@ wrote: »

Their credit rating in tatters and any further foreign investment in their banking system unlikely in the future.

Politicians and bankers have short memories. If Ireland burns the bond holders now, in 5 years if the Irish economy is performing well, you can be sure the international money will come flooding in. They will want a slice of the action.

The whole EU/IMF bailout scam is being driven by the Germans and the French who what their investors protected at the expense of the Greek, Irish, and now Portuguese populations.

ART6

burrentech wrote: »

Politicians and bankers have short memories. If Ireland burns the bond holders now, in 5 years if the Irish economy is performing well, you can be sure the international money will come flooding in. They will want a slice of the action.

The whole EU/IMF bailout scam is being driven by the Germans and the French who what their investors protected at the expense of the Greek, Irish, and now Portuguese populations.

Agreed. A further interesting thought is that Germany and France are, apparently, borrowing money in the markets at 3% and then lending it to us at 5% so that we can pay it all back to them the extinguish the loan debt and leave them with a healthy profit. I could do with a business like that, but isn't it called "Loan sharking?"

If it wasn't for their bondholders we wouldn't need a bail out in the first place.

rossie1977

m@cc@ wrote: »

Their credit rating in tatters and any further foreign investment in their banking system unlikely in the future.

yeah like banks stopped lending to donald trump when he has been declared bankrupt four times already

120_Minutes

120_Minutes wrote: »

I'm guessing a negative effect on their credit rating, which would be bad if we went down the same route, as it attracts many multinationals here.

karlth

m@cc@ wrote: »

Their credit rating in tatters and any further foreign investment in their banking system unlikely in the future.

All the major banks in Iceland apart from one are largely owned by foreigners. Just yesterday 4 major investors from Canada, UK and the US bought 25% in the fourth largest bank.

Fratton Fred

omahaid wrote: »

Can anyone explain to me the downside of what the Icelanders voted for? Is there any reason for us not to follow their lead?

The downside is that the British and Dutch governments will recover the money through the courts rather than through negotiation.

It is not a question of IF the money will be paid, it is how and when. That is why the Icelandic PM described it as the worst possible result, because a court will not be so lenient.

strobe

Fratton Fred wrote: »

The downside is that the British and Dutch governments will recover the money through the courts rather than through negotiation.

It is not a question of IF the money will be paid, it is how and when. That is why the Icelandic PM described it as the worst possible result, because a court will not be so lenient.

What happens if the court (which court?) says "ok, seriously now lads, pay them back" and they still don't? Are they not just in the exact same situation?

Ghost Estate

If only we got the chance to do this here...