Iceland voters reject bank repayment

It appears that Iceland's citizens have found the courage to say "No" that its politicians couldn't find.

Iceland’s voters expressed their outrage on Saturday against bankers, the government and what they saw as foreign bullying, overwhelmingly rejecting a plan to pay $5.3 billion to Britain and the Netherlands to reimburse customers of a failed Icelandic bank, Sarah Lyall reported in The New York Times.
With about 98 percent of the votes counted Sunday, roughly 93 percent of voters said no to the plan, in the first public referendum ever held on any subject in Iceland. Less than 2 percent voted yes, and the rest of the votes were invalid.
But the referendum was more symbolic than substantive, and the Icelandic government hastened to make clear that Iceland would still pay back the money, albeit on different terms from the ones rejected.

Icelanders Revolt over paying foreigners while they foot the bill

The Iceland Parliament passed legislation to pay back the U.K. and the Netherlands money lost in the Icesave high interest deposits.

Icelanders think differently. Not surprising since they will foot the bill for $5 billion dollars. For some background, see Iceland Freezes Over on some details of their economic implosion.

Earlier this week parliament approved the amended bill to reimburse Britain and the Netherlands for the amount, which was lost by savers in both countries in 2008 who deposited funds in high-interest "Icesave" online savings accounts.

But the president has yet to sign the bill into law and 56,089 people, who represent 23 percent of the island nation's electorate, have signed the petition, the organizers said.

Iceland Freezes Over Economically

Shivers and shrivels, the IMF is saying Iceland will have -8% GDP, +1.7% CPI this year. Note, their stock market has imploded.

A year after the banking crisis brought Iceland to the brink of bankruptcy, the island nation is mired in the deepest recession among advanced economies. The stock market has lost 97 percent of its value, and more than 780 companies have buckled under the weight of foreign currency loans as the krona plunged. Consumers refuse to borrow at Europe’s highest interest rates, and international banks reject requests for new financing.

Now here is what is interesting. Look at Iceland's disaster, yet their unemployment rate is 8.6%, which is less than the U.S.. Only Spain has a 18.2% unemployment rate.

Iceland Kicks Out the Conservatives

Iceland kicked out those free market, rhetoric loving conservatives which brought the country to it's knees in a new election:

With about a third of the final vote counted late Saturday, it seemed that the country’s leftist caretaking government would be formally voted into power, with the Social Democrats projected to gain 22 seats and their partners, the Left-Greens, appearing to gain 13 seats in the 63-seat Parliament. The conservative Independent Party, ousted after a wave of demonstrations in January, was projected to gain just 14 seats with less than 23 percent of the vote, down considerably from its total in 2007. Final results are to be announced on Sunday.

It appears those responsible for creating Iceland's financial disaster are called The New Vikings. Well, well, rape and pillage they did and Iceland is paying the price.

UK May Sue Iceland

UK May Sue Iceland.

This whole story is just bizarre. Iceland nationalized the banks but now the UK wants their money that is in them.

Iceland debts are 12 times their total GDP. They Nationalized the banks because they are trying to stop bank runs.

It seems Iceland had high inflation as well as interest rates and all of Europe decided to go banking there as a result.

It's not quite clear how Iceland managed to end up with a host of bad debt but we certainly know the bad asset ponzi scheme was shuffled around the globe. I doubt the fishing shacks of Iceland were subprime.

RGE Monitor gives us the details on how such a situation arose: