The result of Iceland’s so-called Icesave referendum has no effect on the creditworthiness of the nation, at least not directly. This is the conclusion of the ratings agency Standard and Poor’s, which published its report yesterday.
The fact that the ‘no’ vote was so widely predicted means the outcome of the vote has had no effect on Iceland’s creditworthiness. Standard and Poor’s also makes special note in its report that the referendum rejected a proposed repayment plan from December; it did not reject repayment of Icesave deposits to the Netherlands and the UK altogether.
The report says Iceland’s sovereign credit rating will be revisited once it has become clear whether or not the referendum has had an effect on Iceland’s international IMF-led reconstruction package. The IMF’s latest review is due soon. There is still a lot of uncertainty surrounding Iceland’s rescue package while the Icesave issue goes unresolved.
Standard and Poor’s has already taken into account the fact that the Icesave issue could potentially remain unresolved for a long time due to upcoming elections in both the Netherlands and the UK; but believes, on the other hand, that the Icelandic government will not fall due to Icesave, RUV reports.
There is still a lot of uncertainty surrounding Iceland’s rescue package while the Icesave issue goes unresolved.
Is there?
After the referendum, Finland says not until Icesave resolved:
http://www.icelandreview.com/icelandreview/daily_news/?cat_id=16539&ew_0_a_id=358978
Ditto Sweden:
http://www.swedishwire.com/politics/3219-swedish-iceland-loan-conditioned-on-bank-deal
Before the referendum, all of the Nordics said that they wouldn’t be lending to Iceland without Icesave being resolved. The IMF has made its loan conditional on the Nordics’ ones. Therefore, no uncertainty.
Congratulations to the people of Iceland – your referendum result is a wake up call to all other democracies
I would suggest Iceland is the tip of an Iceberg which will grow steadily as ordinary people of other nations begin to realise that they too are not responsible for the debts of their privately owned banks. This is not ‘sovereign debt’ as incurred by importing more than you export – this is the dividend of capitalism without rules – literally allowing banks to create and manage the National Currency.
The Bank of England, the Federal Reserve and the European Central Bank are charged with the responsibility of managing our Constitutional Money. These Central Banks enjoy trustee status but have become corrupted and unaccountable because the banking fraternity have persuaded our politicians that only bankers know about money. Thus has the entire responsibility for our money systems passed to private banking corporations. The phrase ‘foxes and henhouses’ comes to mind.
For this scandalous derogation of duty we have paid an increasing price for years, and now the cost is unsupportable – reflected in National Debts of astronomical proportions and never remotely repayable – nor should they be. These debts are synthetic money – generated by bank credit which bears no relationship to real money – the kind of money which we earn when we work and (try) to save for a future pension – watch how it should works by typing Reformabank into You Tube or if you’d like more detail go direct to the full version at
www.scottishmonetaryreform.org.uk/2010%20film%20springflash/index.html
This reform has to start somewhere – perhaps Iceland is the ideal hatchery?
Ron Morrison,
Helensburgh,
Scotland.
@ Ron Morrison
Lest you not be aware, Landsbanki was a nationalised bank until it was privatised a few years ago without adequate regulatory controls being put in place by a government freely and democratically elected by the Icelandic population. Mr. Grimsson had the opportunity to veto that privatisation bill, but failed to do so, he later became close friends with several of the personalities involved in Landsbanki, and then somewhat hypocritically, after several years earlier announcing to the whole of the World how great the lack of regulations and Icelandic risk taking was, changed the colour of his coat and vetoed the Icesave Bill. The Icelandic population had a say in this debacle from the very beginning and contributed to it. They even beneffited as their asset values increased astronomically, albeit irrationally. Your reference to private banks in the Icelandic sense is therefore somewhat misleading.
As for your reform movement, we welcome the day when Brown and Darling are repatriated to Scotland. No doubt they will do a good job reforming monetary affairs in Scotland.
Maybe the next step is to ask the IMF to leave.
What needs be done next is wait with patience for the reports of the investigators looking into the Icelandic banks’, the central bank’s and the bankers’, and the regulators’, Icelandic, British and Dutch all three, activities prior to and during the crisis, to learn which did and which did not do what that contributed to the collapse situation, or make it worse. At this point the general appearance is that the Icelandic bankers’ banking activities were normal and proper banking activities, that their banks were seriously extended, but not over-extended in the pre-Lehman collapse banking environment. There appear to have been some persons who were either foolishly or intentionally attempting to undermine confidence, which is something banking depends on, and that they may have succeeded at least to some extent in making Iceland’s central bankers nervous. This suggestion is to suggest some reason other than conspiracy or rank stupidity for the central banks failing to offer even verbal support to Glitnir, which precipitated the domino collapse of all of Iceland’s financial sector, through destroying foreign confidence in all Icelandic banking institutions. It was that destruction of confidence that provided Darling-Brown and the British FISA rationale to throw IceSave and KSF into receivership, and to grab their assets, to keep to themselves and give to the Dutch, respectively. Continuing to suggest rational reasons, instead of accuse vicious motives and stupidity, in Britain they were dealing with the Northern Rock implosion, in which SPVs,(Special Purpose Vehicles), which are entities set up to purchase and own assets, to remove them from the books of the selling entity (to dodge around rules of law and to empty the selling entity so it may be bankrupted with no assets, all having been shifted away before [see the evidence provided by Carmel Butler in regard to SPVs in the report at http://www.publications.parliament.uk/pa/cm200809/cmselect/cmtreasy/144/144ii.pdf , beginning on page 517 of the report, page 522 of the pdf, for a clear, but somewhat technical explanation of SPVs and their use in the Northern Rock situation]). It is the kind of bakning activities explained in that Memorandum that Eva Joly and her group are looking for evidence of Icelandic bankers having engaged in. It appears the Darling and Brown might have thought the Icelandic bankers doing what Northern Rock had done, to leave regulators an empty sack, as Northern Rock had done. To prevent that kind of activity would have been the only reasonable excuse for the infamous Brown grab of all Icelandic bank assets in Britain.
The continued performance of IceSave in receivership appears to indicate the Icelandic bankers had not removed assets and so were not doing what they were suspected to be. They have, however, been treated by Icelanders, both on the streets and in the government, as well as by the British and the Dutch, as if they had been. Icelanders’ own suspicion and animosity contributed significantly to the wrecking of Iceland’s privately owned banking and financial sector and to its native private business sector, with,of course, all of the Icelandic economy that depended on those, together with the goodwill and support of foreign nations sensitive to such wrecking for having their own private enterprise sectors that they depend on for their prosperities (Norway, Sweden, Finland).
Iceland’s government’s Soviet Union style taking over and destroying of Iceland’s private enterprise sector in response to the crisis has made Iceland untrustworthy in the eyes of those nations and the private investors they depend on, many of whom were invested in Icelandic enterprises, too, and lost investment. To attract hose investors, and nations, to regain their willingness to invest again, Iceland needs to regain the confidence it lost by over-reacting and blaming and destroying, by, for example, giving what Icelanders had built in Britain away, out of Icelanders’ ownerships to British and other owners. What it appears to be going to do with Hagar, for example, taking it from Icelandic ownership to put up in a market where it will be non-Icelanders who will have the money to purchase.
That Iceland’s banks had been government owned before they were sold to private owners is not relevant in the present situation. They were private enterprise when they were toppled with help of non-support from the central bank, which helped deliver their functional elements back to state ownership. The appearance was/is of selling then manipulating failure to get back, to sell again? The second time it will be harder to find buyers, and they will probably be foreigners.
For their pleasure in venting their angers Icelanders are giving away the assets of Iceland. This is why Icelanders need to step back and calm themselves, then look for, and look at, the real evidences, to discover who really is to blame, if any are, and where no one was, but foolishness in frenzy led to destroying and making bad situations worse, to begin to put that behind, start thinking and begin building again.
Axel “Maybe the next step is to ask the IMF to leave.”
How arrogant, you really want iceland to become a sort of isolated nation sort of north Korea thing… IMF does not need to be asked to leave, because in the first place, it was you icelanders who called for the help from IMF. ( and other countries)
It is very clear, by now, that due to the incompetent management of foreign matters, Iceland is only loosing and loosing credibility, in all its possible dimensions. TO BE PROUD DOES NOT MEAN TO BE STUPID.
GREED MADE OF ICELAND A RUINED COUNTRY WITH HUGE DEBTS, BUT IGNORANCE AND ARROGANCE IS MAKING IT ONLY WORSE…
THIS IS ACTUALLY SOMETHING HAPPENING TO IMMATURE SOCIETIES, RULED BY INCOMPETENT AND GREEDY POLITICIANS. AND WHAT IS WORSE, WHERE PEOPLE BLINDLY BELIEVE DEMOCRACY IS PUTTING A PAPER IN A BOX.
ICELAND IS A COUNTRY RULED BY A POLITICAL CLASS OF FAMILIES AND FRIENDS WHO HAVE, ARE AND WILL ALWAYS LOOK FOR PERSONAL PROFIT. THIS COUNTRY SEEMS TO BE RULED BY FAMILY CLANS. AND POPULATED BY PEOPLE WHO REALLY SEEM TO BE SLEEPING.
THE MAJORITY OF ICELANDERS BELIEVE IN THIS FAKE DEMOCRATIC SYSTEM THEY HAVE. DURING THE LAST YEAR IT HAS BEEN CLEARLY SHOWN TO THE ENTIRE WORLD THAT ICELANDIC POLITICS AND ECONOMICS MOVE IN THE DOMAINS OF CORRUPTION, MAFIA, ILEGAL PROCEDURES, SECRETISM AND LIES…
ICELAND HAS MADE PUBLICITY OF BEING A MODERN COUNTRY, WITH A MODERN SOCIETY, BUT AFTER LIVING HERE FOR SOME YEARS, ANYONE COULD JUST SAY THAT THIS IS STILL VERY MUCH A MIDDLE AGE MINDED SOCIETY… YOU CAN SEE THAT IN MANY LEVELS.
IT IS SO STRANGE THEY DRIVE CARS… MAYBE AXEL IS RIGHT, THE IMF SHOULD FINALLY FORGET ABOUT ICELAND, THE COUNTRY SHOULD BE ISOLATED, AND EVERYONE SHOULD RIDE ON THE BACK OF HORSES… THAT WOULD SUIT VERY WELL ICELANDERS MENTALITY…
“ICELAND IS A COUNTRY RULED BY A POLITICAL CLASS OF FAMILIES AND FRIENDS WHO HAVE, ARE AND WILL ALWAYS LOOK FOR PERSONAL PROFIT. THIS COUNTRY SEEMS TO BE RULED BY FAMILY CLANS. AND POPULATED BY PEOPLE WHO REALLY SEEM TO BE SLEEPING.”
Which country doesn’t?
Which country doesn’t?
I may be being naive, but I don’t believe that the following would be expected to be the norm in the UK:
“I received some “healthy advice” from an IP old-timer recently. I should not write about or criticize the party. Nothing good would come from that. They would just wait for the perfect opportunity to knock me down later, during a job interview, when I needed a bank-loan, when I needed building permits.
He offered this advice with my best interests at heart. At the age of 70 he had obviously seen how people prosper or wither in a society run by the IP.”
http://www.economicdisasterarea.com/index.php/features/for-iceland-to-get-back-on-its-feet-important-reform-is-needed-within-independence-party/
Perhaps to be expected in the upper echelons of political/corporate power, but not down at blogger-wants-a-mortgage level.
There is uncertainty with regards to the IMF. Obviously, it would have been cleaner to have icesave resolved and member nations tried to push for the resolution. However, IMF is hopefullly not looking to destabalize countries or cause the failure of a countries financiall system. Wish England would have been more thoughtful prior to causing as much financial failure internally and as it has in Iceland. The gestures of resolving the icesave issue should, if anything, be positive for Iceland as the terms of its debt repayments will be more manageable. Taking $40,000 per family debt on without properly negotiating terms and conditions would have only made Iceland less attractive to foreign investors and foreign governments. International banking for Iceland will never again be a lucrative option. A bad deal can leave Iceland as a third world country. Iceland has to make sure that it can move forward, build and be a prosperous nation. Becoming debt slaves to expedite an IMF loan would not have been wise. Good luck in resolving your issues and coming out a strong and prosperous nation.
http://www.economicdisasterarea.com/index.php/features/for-iceland-to-get-back-on-its-feet-important-reform-is-needed-within-independence-party/
” It is time for them to build from the ground what many Independence Party members think their party is about, a democratic party favorable to independent business owners and individual rights, and weed out the frentic big government, oligarcich Friedmanites (yes, the irony but that is what the party had become). ”
” The old ghosts could be pushed out to the fringes where they belong with the Progressive Party. At a time when Iceland is divided because of those interest groups, a reformed Independence Party migh just hold the keys to a successful reconstruction. The moderates need to step out and claim their place, if they don’t they risk unsettling their country even more. ”
This ideal will not come from Thorstein Pálsson and those others.
Why there is this idea in some of the circles that Davið and Geir led Independence Party is some way xeno phobic protectionist little Icelanders..
– I do not know. From 1991 until 2008 the old system of control by political appointees with monopolies was dismantled — the old system embodied by Prime Minister Steingrímur Hermannsson+ of Progressive Party.
( Although I share Steingrímur’s dislike of that other other system by political appointees with monopolies — the European commission — and so EU political super state — that is not to say that I do appreciate the ” old system ” that he did embody during hes years as Prime Minister before Davið. )
Davið and Geir do represent the open world facing trade with people in other countries. Free trade agreements with all countries that people do want it.
This is not what the pro-EU member state like Social Democrats are all about. Instead they want to restrict our trade possibilities to what the EU commission does decide as controllers of all trade with all countries out side the EU customs union.
The Social Democrats are the ones that want to restrict, not the Indpendence Party. The independence Party under Davið did open up the world through joining EFTA and also in the other ways.
+http://www.icenews.is/index.php/2010/02/02/bidding-farewell-to-former-icelandic-pm/
“I received some “healthy advice” from an IP old-timer recently. I should not write about or criticize the party. Nothing good would come from that. They would just wait for the perfect opportunity to knock me down later, during a job interview, when I needed a bank-loan, when I needed building permits. ”
This represents the ” old system ” of Iceland. Would hope that some Icelander remember what it was like to live before Davið dismantled the levers of the power of special rights and prvileges step by step since 1991.
Only reason I can imagine would be worried of this is if you blogger like Dadi is writing this unfair distorting without too much facts in it.
Then you is doing your reputation harm.
I fear more that we are returning to ” old system ” with Social Democrats in power ( helped by the traitor to his supporters Steingrímur J. ) — except now we have worst of both worlds — intolerent power centralizing state monopoly liking left wingers that want to remove the power of our parliment over making our laws — to get their ideas implemented from above by the EU.
Ideas that are not the ideas of the people of Iceland but the ideas of these state power ” I know best ” refugees from 1978 Steingrímur J. and most of all Jóhanna Sigurðardóttir.
>I may be being naive, but I don’t believe that the following would be expected to be the norm in the UK:
If Brown does get him self back in with a narrow majority you can begin to see this happening UK as well. The new system that Blair and Brown have been making in the UK is like the ” old system ” in Iceland.
Soon dissent will not be tolerated. Already polictical correctness prosecutions are rising — it is naive to think that an administration that does encourage people like Damian McBride to make the culture — of course they will attack they ” enemies ” with all that they can.
http://www.seangabb.co.uk/flcomm/flc187.htm
Talking of crazies currently in govenrment seats — they seconder ideas from Norway are just offensive.
Take the law pass that was over shadow by IceSave referendum :
Companies listed on stock exchange must maintain an even number of men and women on their boards of directors.
Companies with 25 or more employees are obliged to make public how many men and women are employed, and how many of them are in positions of management.
Just the most offensive law I could expect this year. What complete and utter woman offending nonsense this law is.
“I should not write about or criticize the party. Nothing good would come from that.”
Ominous, that seems to imply that even SPEAKING ill of the Party is verboten.
Maybe the post war closeness to the soviet union implied by this article has something to do with it.
http://www.grapevine.is/Features/ReadArticle/Iceland-And-Its-Founding-Myths
Fisy says:
“If Brown does get him self back in with a narrow majority you can begin to see this happening UK as well. ”
“Talking of crazies currently in govenrment seats — they seconder ideas from Norway are just offensive.”
Fisy, you are proving Mike right with his observations about Icelanders. Accusing other countries of being worse is *not* a defence, and there is no way and UK and Norway have anything like the corrupt political system that is being described for Iceland.
EASY on my post :“ICELAND IS A COUNTRY RULED BY A POLITICAL CLASS OF FAMILIES AND FRIENDS WHO HAVE, ARE AND WILL ALWAYS LOOK FOR PERSONAL PROFIT. THIS COUNTRY SEEMS TO BE RULED BY FAMILY CLANS. AND POPULATED BY PEOPLE WHO REALLY SEEM TO BE SLEEPING.”
Which country doesn’t?”
TOTALLY TRUE, but there is a line where a country turns into a banana republic… and Iceland has crossed that line by many many miles… now Iceland is in the line of countries like Argentina… Corruption, HUGE debt, ruined economy, fake democracy…
Now icelanders are begging cap in hand, hoping for the IMF and other countries to throw some coins…
WE ARE THE RICHEST COUNTRY IN THE WORLD ! ,, HAHAHAHA :D)))
An international famous FREAKS SHOW CIRCUS just closed down and dissolved the other day… They thought they would never be able to compete with icelandic politicians… hahahaha :)))))
Peter,
This is a very interesting article you are linking too, well-written as well. Especially the following part, observing the general difference of opinion in icelandic politics and the fact that the country is ruled by a small elite:
”
In a sense this is a battle between those who prefer openness and those who are content with isolation—a theme in the real, not the sanitized, history of Iceland. Much of the ruling class and the opinion makers are home grown, they come from the same schools and the same law department, famous for its lack of intellectual curiosity. In their hearts they consider themselves to be the owners of Iceland, much as the farmer chiefs of the dark ages. They fear that joining the EU would undermine their power.”
I am curious how icelanders think about this characterization.
SIR NEURO SAID : “WE ARE THE RICHEST COUNTRY IN THE WORLD ! ,, HAHAHAHA :D)))”
It would be nice that you stop laughing at the misfortunes of others and begin to think about the economic conditions of your own country, which is not really healthy.
Regards.
Peter – London/Krakow
“Fisy, you are proving Mike right with his observations about Icelanders. Accusing other countries of being worse is *not* a defence, and there is no way and UK and Norway have anything like the corrupt political system that is being described for Iceland.”
An anecdote is not proof, neither Mike’s anecdotes nor Fisy’s opinion is proof of anything
Maybe in your mind that constitutes proof? To me it constitutes stereotyping.
In Mike’s case his stereotyping lacks even a morsel of objectivity as it peppered with the trademarks of a xenophobe.
Do you have any links to independent political corruption research to support your opinions on the relative proof of corruption levels re Iceland?
1.SPAIN: 9TH STRONGEST ECONOMY IN THE WORLD
ICELAND: WAITING FOR A LOAN FROM THE IMF.
2.SPAIN:UNEMPLOYMENT PENSION 1200 A MONTH ( 220.000 ISK)
ICELAND: 140.000 ISK A MONTH
3.SPAIN: STUDENTS CAN GET UNEMPLOYMENT PENSION AND! 7000 EUROS GRANTSTHEY DONT HAVE TO PAY BACK.
ICELAND: STUDENTS HAVE TO CHOOSE STUDYING WITH A LOAN THEY WILL HAVE TO PAY, OR STOPP STUDYING AND LIVE ON THE UNEMPLOYMENT MONEY.
4. SPAIN: PRICES HAVE INCREASED 1.8 %
ICELAND: PRICES HAVE INCREASED 45%
5. SPAIN: FOREIGN DEBT, LESS THAN 16% OF NATIONAL PRODUCT.
ICELAND: FOREIGN DEBT, NINE TIMES ITS NATIONAL PRODUCT.
6. SPAIN, CURRENCY: THE EURO
ICELAND: THE ICELANDIC KRONA ( NO COMENTS)
7. SPAIN: DIVERSIFIED ECONOMY. NEW TECHNOLOGIES, TOURISM, AGRICULTURE, FISHING, AUTOMOBILE, SPACE INDUSTRY, ETC…
ICELAND: DEPENDING ON EARLY CHAIN PRODUCTS, LOW PROCESSED FISH AND ALUMINIUM.
8. SPAIN: AVERAGE DEBT PER PERSON OVER 18 YEARS: 200.000 ISK
ICELAND: AVERAGE DEBT PER PERSON OVER 18 YEARS: 7 MILLION ISK.
AND THIS LIST COULD GO ON, AND ON, AND ON, AND ON…
“Do you have any links to independent political corruption research to support your opinions on the relative proof of corruption levels re Iceland?”
I simply read your newspapers and read various blogs. I’m sure you can find wonderful reports about the state of Iceland but it obvious its all bull. Iceland is a utterly dysfunctional political society, so much so that they can invent any facts they like to make the country look better. I think North Korea is the closest equivalent, the population there really believe they live in a utopia as well.
@ SIR NEURO :
9. Wow…Tú eres fuerte! Viva españa! You convinced me, i will move to spain!It is for sure paradise on earth! And you? What are you still doing in such a place like Iceland? Or wait a second, since you are a post graduated student ( even if some times ago you claimed to be a teacher),could it be that the iberian universities, so much better than the Icelandic ones, are too difficult for you?
With all respect to Spanish people, you major banks have been lying about they bad debts and lending more to to zombie property developers.
( Expect write downs of at least 40 % on the Spanish property loans this year as the accounting fiddling cant continue much longer into 2010. )
Iceland will be okay as long as we get rid of the politicains currently in government seats from power this year ( Social Democrats ) and replace with other coaliton.
Need decentralize of the political power in Iceland as whole, and just to get on with making things and service that people outside do want to buy.
It is not more simple than that.
To put things in perspective, Your family has a loan, and the debt cannot under the circumstances be paid… Someone takes the burden on their shoulders and pays the debt for you (unasked) and then tells you your debt has been paid full, no problem…. But now you have to pay back with “this much interest rate”? Wich would make the payment so much higher, and in the end no one asked anyone to pay this debt, but under some strange circumstances they did… Yes that would make any briton very very happy. To have their mortgage paid in very high rates because someone chose to pay their debt and then collect with (Regarding to the high amount of loan, versus their income) high interest rate without even asking.
We got proper fu**ed on this Icesave deal as well as you did, ´cause we didn´t have a clue what the hell was going on (the public). We had 3 major banks wich were operating in all of Europe with no problems, or as we thought.
But in the end we felt betrayed by our own businessmen and our own government.
Do we feel we don´t need to pay the debt of the Icesave?
I can´t speak for the my whole nation, but I feel we have to pay what we have to pay, it´s the honest thing to do of course. That´s what I feel we a obligated to do, maybe some disagree, but that´s what we must do in my oppinion, but at that insane interest rate? You must be, as you might say in Britain, bonkers!
That´s just rubbish!
@SIReuro
We hear the pigS snort