Well, the they are not. There isn’t any sign that there will be any further discussion on Icesave. This talk of a mediator is another example of the Icelandic ‘politicians’ feeding crap to their electorate in order to avoid telling the truth.

As you say, further discussion with Iceland is pointless, the government doesn’t represent the people. The only person worth speaking to is the Icelandic President, as powerless as he is, he is the most powerful person in Iceland.

UK/NL should simply let Iceland stew for the 7 year grace period and then go after the debt plus interest as per the agreement(which has been agreed by the Althingi as I understand it).

It is getting obvious that the only result that Icelanders are willing to accept is one that favours them. So I see no reason for the UK or NL to start a new mediation which might lead to new compromises on their part, when it is clear that the Icelandic government cannot be trusted to be able to keep its word, because the Icelandic population is too obstinate to accept a deal.

>What people need to realize is when you take your money to the bank you are lending the bank money, its not keeping it for you,”

“Wrong.”

I was taken aback by Axels claim, so I had a look on Wiki at ‘Deposit Accounts’, and came across the below quote within the section headed ‘Legal Framework’.

>”The bank’s financial statement reflects the economic substance of the transaction — which is the bank has actually borrowed $100 from its depositor and has contractually obliged itself to repay the customer according to the terms of the demand deposit account agreement. To offset this deposit liability, the bank now owns the actual, physical funds deposited, and shows those funds as an asset of the bank.”

http://en.wikipedia.org/wiki/Deposit_account

Now I know Wiki if not a definitive source, but wording does seem to support Axel’s assertion??

But Axel is correct that you are lending bank money so it will lend it out again.

In case of Icelandic banks as is case of majority of banks they did make money from the spread ( the difference ) between short term interest rates ( they pay to depositors ) and long term interest rates ( that they do get from those they do loan on the money to ).

What can be created by government enforced deposit insurances is the disturbances of depositor behaviors ( the so called ” moral hazard “) that does from from the blind faith in the deposit insurance even when all the other factors should point to caution and to treat the deposit as an investment with the risks that come from that.

A valid question related to this is, when does an interest bearing instrument ( whatever it is ) stop being viewed as simple demand deposit and because of its interest premium become an investment ?

I would say that is above around 5% per year because that is rate of growth averaged over time that you can get just by buying passively in the stock market.

http://www.icenews.is/index.php/2010/01/07/bbc-newsnight-interview-with-the-icelandic-president/comment-page-1/#comment-109284

“What people need to realize is when you take your money to the bank you are lending the bank money, its not keeping it for you,”

Wrong.

http://eng.efnahagsraduneyti.is/laws-and-regulations//nr/2974

See Article 3, and I quote it for you Axel:

“Article 3 Activities subject to operating licences

The following activities shall be subject to operating licences pursuant to this Act:

1. Receipt of repayable funds from the public:

a. Deposits”

So the bank is acting in a safekeeping mode since the money is a receipt which is repayable. You are not lending, you are DEPOSITING. It’s what the word means! It is in fact one of the key definitions of a bank : a deposit-taking institution.

People who lend money receive a bond which states the terms and conditions under which the bond is made. (Here are some bonds on offer by a retail outlet in the UK:
http://www.nationwide.co.uk/investments/fixed-term-bonds/default.htm)

People who want to invest put their money into INVESTMENT funds. Again the clue is in the word.
(Here are some INVESTMENT opportunities for you with Schroders
http://www.schroders.com/ukinvestor/fund-range/investment-trusts)

Or is this getting too tricky?

You’ve obviously been in Iceland too long Axel.

The results of this would possibly benefit other nations as well who are in a similar position, like Ireland and the baltic states,
we could end up helping them out of the hole they are in, i wonder what kind of deals they have been making related to their debts,
the EU is starting to fall apart because of bankruptcys of states like Greece, Spain, the baltic states and UK, what if there is no
depositor guarantee on any accounts in Europe :)

What people need to realize is when you take your money to the bank you are lending the bank money, its not keeping it for you,
its also highly questionable if your money has any guarantee and the size of a bankruptcy or bank run will determine if you get anything back at all, lots of money can be printed and issued as debt(for you to pay)to rescue banks but there is a limit to that like everything else,
this means every cent deposited into a bank can be lost, and the very questionable guarantee is far from being 100% relyable.