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Iceland Votes to Not Pay Debt

Iceland is full of welshers. 

Iceland’s voters overwhelmingly rejected a deal to pay billions of dollars it owes to the United Kingdom and the Netherlands, the Foreign Ministry said Sunday.

With around 90 percent of votes counted, just over 93 percent said no and just under 2 percent said yes. Not enough votes remain to be counted to change the result. Some 62.5 percent of Iceland’s roughly 200,000 register voters cast ballots, the ministry said.

The referendum was on a law about repaying the Netherlands and UK, which helped savers in their own countries who lost money in a failed Icelandic Internet bank.

The British and Dutch governments came up with more than $5 billion for bailing out people who lost money in Icesave—an online retail bank branch of Landsbanki. That Icelandic bank failed in October 2008, along with two other banks in the country.

Under a European Union directive, Iceland now owes compensation to Britain and the Netherlands. The Icelandic government has said it will honor its international obligations.

Iceland’s parliament passed a bill authorizing a state guarantee for repayment of the funds, but President Olafur Ragnar Grimsson declined to sign it in January. He cited public disapproval, and in particular, an Internet petition signed by up to one-quarter of the electorate, as a reason for not signing the bill. He said there needed to be a national consensus in addressing the issue.

That prompted Saturday’s national referendum on the law.

Posted by Owen at 1205 hrs
Foreign Affairs

1. Yah, well, the repo man is suiting up.

   Posted by dad29 on March 07, 2010 at 1253 hrs
   
   
   

2. These were private banks at the time.  Why should 40% of the Icelandic GNP be used to bail them out?

   Posted by .(JavaScript must be enabled to view this email address) on March 07, 2010 at 1336 hrs
   
   
   

3. Obviously, I’m not an expert in European banking and contract laws/regulations.  But if Iceland isn’t part of the EU yet, why would they be beholden to EU rules?  It sucks for the people that had money in those banks, but isn’t part of this the price for playing? 

   Not to mention that if they are having to borrow $2.1B from the IMF, Iceland arguably doesn’t have the over $5B that the Netherlands and UK are asking for.

   Posted by .(JavaScript must be enabled to view this email address) on March 07, 2010 at 1336 hrs
   
   
   

4. I blame Scott Walker

   Posted by .(JavaScript must be enabled to view this email address) on March 07, 2010 at 1452 hrs
   
   
   

5. Hummm, and what will the U.S. do when the Chinese, and Japanese come to collect on their notes? Think they’ll send in their “enforcers” to break a few knees? Or maybe they’ll do like we always do with our African debt and just write it off.

   Posted by .(JavaScript must be enabled to view this email address) on March 07, 2010 at 1802 hrs
   
   
   

6. Completely unrelated, but very strange:  I noticed a stray dot next to the top rectangle of each page of this blog (the rectangle contains the adjacent blog posts / or the date on the front page).  I clicked on it and was directed to “sewdivas.com”

   Try it.

   W-T-F!

   Posted by .(JavaScript must be enabled to view this email address) on March 07, 2010 at 1938 hrs
   
   
   

7. It’s on mine, too, but not Owen’s.

   Posted by .(JavaScript must be enabled to view this email address) on March 07, 2010 at 2031 hrs
   
   
   

8. Sorry.  Remnant of cut and paste gone wrong while doing some webpage design.

   Posted by Jed on March 07, 2010 at 2036 hrs
   
   
   

9. “Boots, Sabers and Sew Divas” has a nice ring to it.

   

   Posted by .(JavaScript must be enabled to view this email address) on March 07, 2010 at 2132 hrs
   
   
   

10. How about “Pins and Needles”?

    Posted by .(JavaScript must be enabled to view this email address) on March 07, 2010 at 2153 hrs
    
    
    

11. Hummm, and what will the U.S. do when the Chinese, and Japanese come to collect on their notes?

    That’s an easy question to answer!

    The US debt is payable in US dollars. We’ll just print pretty pictures on fresh new paper and call it even: we ship them paper in return for their fancy plasma TVs. It’s just being sharp, business-wise.

    Iceland’s banks weren’t quite so smart, getting entangled in a business dealing denoted in a foreign currency.

    Posted by .(JavaScript must be enabled to view this email address) on March 08, 2010 at 1223 hrs
    
    
    

12. We weren’t so smart either, having indexed most of our federal spending to various inflationary measures; measures certain to rise should we start to print pretty pictures on paper.    We can inflate our way out of our current debt.  We cannot inflate our way out of our future liabilities.

    Posted by .(JavaScript must be enabled to view this email address) on March 08, 2010 at 1409 hrs
    
    
    

13. Why should Iceland’s taxpayers pay for failed private banks?

    Posted by .(JavaScript must be enabled to view this email address) on March 08, 2010 at 1837 hrs
    
    
    

14. Why should Iceland’s taxpayers pay for failed private banks?

    There’s no good reason to do so.  That’s why they voted “no.”

    The Brits and Dutch can now collect from the stockholder(s) of the bank, or from the loan portfolio.

    Posted by dad29 on March 08, 2010 at 2115 hrs
    
    
    

15. If the Iceland government wasn’t guaranteeing these banks (ala the FDIC) then I don’t see why they should have to pay back the UK.  Now if the UK really wants their cash, they could always sieze the country.  I mean there are no rules in love and war right?  And seeing as how I hate these sparsely populated tax havens and their banks it wouldn’t bother me any if the Royal Navy blockaded Reykjavik and extorted the money or forcibly annexed the entire country.

    Posted by .(JavaScript must be enabled to view this email address) on March 08, 2010 at 2340 hrs
    
    
    

16. Oh, and dad49, the entire purpose of a corporation is to limit the liability of the stockholders.  So all the UK can take to settle the debt is the bank’s assets.  They can’t get anything from the stockholders.  As the bank’s shares are worthless, the stockholders have lost their entire investment, but they can’t lose anything more than that.

    Posted by .(JavaScript must be enabled to view this email address) on March 08, 2010 at 2348 hrs
    
    
    

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