Mar

10

Iceland shows the way

March 10, 2010 | 5 Comments | Mark Crosby

For those interested in following Iceland’s battles with the UK and the Netherlands the following two pieces are very good. Firstly, Martin Wolf, on why the Icelanders should not have to pay the UK and Netherlands so that those governments can repay their citizens depositors in Icelandic banks. Most Icelanders (what is the correct terminology) were irate at being lumped with a debt equivalent to 45% of last years GDP to bail out private banks and their depositors – and so the President gave them a referendum on whether they should pay. Unsurprisingly, 93% of voters thought they shouldn’t pay – see the Business Week piece on the referendum for more detail on that! With Iceland’s voters opting not to bail out “greedy bankers” one wonders how long before the Greek government comes up with a similarly cunning plan.


Comments

5 Responses to “Iceland shows the way”

  1. MikeM on March 11th, 2010 11:24 am

    It could be easier for Greece in one way in that its creditors are probably not other governments and it could whip up a popular frenzy about the “evil gnomes of Zurich” or some such trying to hold the country to ransom.
    On the other hand Greece is a member of the EU and Iceland isn’t. The EU has a strong interest in ensuring that Greece does not default and has already brought pressure to bear for Greece to sort out its domestic deficit.
     

  2. Dave on March 11th, 2010 12:10 pm

    Greece is a bit different, isn’t it?  It involves public debt rather than private debt.

  3. DP on March 11th, 2010 3:19 pm

    It’s an unfortunate situation now but it is hard to be too sympathetic as the Icelandic itizenry went on a magnificent debt binge financed by those ‘greedy bankers’ propped up with overseas cash. Then again maybe caveat emptor applies in the case of those Dutch and UK savers chasing the high interest rates on offer. (Anybody remember Pyramid Building Society going bust during the 90-91 recession. Nobody thought to ask why the interest rates were so much higher.)

    On the other hand, Greece has been living the good life subsidized by German taxpayers and fraudilent Greek bureaucrats. Nobody wanted to ask tough questions there either.

    It may be harsh to say, but  victimization is a cop-out in all cases. 

  4. Mark Crosby on March 12th, 2010 10:12 am

    Greece is different and it is public debt – mostly owed to  other European banks – mostly French and I doubt that German taxpayers will ever owe a cent. The point is that Greece could default, and a unique way of doing that might be to have a referendum on whether the citizens want to do that (don’t expect that to happen).

  5. dee on March 17th, 2010 11:47 am

    Last time I checked, the large part of the public opinion in Greece was supporting the measures taken by Papandreou. No referendum needed, I’m pretty sure that everyone by now has realized the role the syndicalists played in expropriating public money. Thank God this guy knows exactly what he’s doing, and he uses the crisis as an opportunity to introduce deep reforms in Greece.