With Its Economy On The Mend, Iceland Stuffs Bankers For Second Time

Tyler Durden's picture

In a shining example of how it can be done, Iceland, for the second time in as many years, by popular vote refused to provide up to $5 billion to Britain and Netherlands banks. The just completed referendum once again rejected a $5 billion Icesave debt deal, pushed on Iceland by its European banking brethren. "The debt was incurred when Britain and the
Netherlands compensated their nationals who lost savings in online
"Icesave" accounts owned by Landsbanki, one of three Icelandic banks
that collapsed in late 2008."
And while Iceland PM Johanna Sigurdardottir did a brief Mutual Assured Destruction tour claiming "economic and political chaos could follow" we can't help but think we are witnessing the early stages of Europe's most flourishing economy over the next decade, while all other countries in Europe fail one after another due to their inability, unwillingness and cowardice to force bankers to experience, gasp, losses for fear of "reprisals." As for the "isolation" that Iceland is threatened with experiencing should it give banksters the finger, we are certain it is just a matter of a few months before some enterprising hedge funds, scrambling for yield career risk offsets, decide to take on the role of the IMF or of repeatedly insolvent Dexia, and lend directly to Iceland.

From the Sunday Morning Herald:

Icelanders have rejected a depositor claims agreement with Britain and Netherlands for a second time in as many years as voters signalled they did not want tax funds to cover foreign losses by a private bank.

Initial results showed 59.1 per cent of voters said ''no'' to the so-called Icesave agreement, while 40.9 per cent said ''yes'', based on figures published by a regional electorate commission, with about 90 per cent of votes counted.

''This matter will now be settled in the European Free Trade Association's court,'' Prime Minister Johanna Sigurdardottir said.
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The government had hoped Icesave would restore investor relations and end the isolation that has stalled Iceland's resurrection from its banking collapse.

M.A.D. - the geyser tour:

 "The worst option was chosen. The vote has split the nation in two," Prime Minister Johanna Sigurdardottir told state television, saying it was fairly clear the "no" side had won.

State television said almost 60 percent of voters had rejected the agreement, based on results from five out of six voting districts, including capital Reykjavik. Many voters were against taxpayers footing the bill for irresponsible bankers.

Just over 169,000 votes had been counted out of the 230,000 eligible voters.

The prime minister, who had predicted a no vote would cause economic uncertainty for at least a year or two, did not say whether the government planned to resign.

"We must do all we can to prevent political and economic chaos as a result of this outcome," she said.

That's the fear mongering... And here are the facts in two easy charts.

Ever since Iceland decided to stop pandering to banker interests, and transfer its country's wealth to banks from Europe and Holland, its economy has in fact been on a constant upward trajectory.

Icelanders are angry:

Icelandic lawmakers in February backed a repayment plan agreed with creditors, but the president refused to sign the bill, triggering the vote. In March 2010, Iceland rejected an earlier Icesave repayment blueprint in a referendum.

"I know this will probably hurt us internationally, but it is worth taking a stance," Thorgerdun Asgeirsdottir, a 28-year-old barista, said after casting a "no" vote.

Svanhvit Ingibergs, 33, who works at a rest home, said: "I had no part in causing those debts, and I don't want our children to risk having to pay them. It would be better to settle this in a court."

Iceland is still pulling itself out of the recession which hit it after its bank crash, and policymakers and economists have said solving the Icesave issue would help the country get back into international financial markets.

Getting such funding is also part of a plan to end the controls on capital flows it imposed in 2008 to stabilise a tumbling currency.

The controls have left an estimated equivalent to a quarter of Iceland's gross domestic product in the hands of foreign investors, many of whom are expected to want to pull out. Ratings agencies follow the vote closely. Moody's has said it may lower its credit rating on Iceland in case of a 'no'.

And so a nation of 320,000 once again takes the baton of bankster liberation, while a country of 320 million continues to refuse to care, even as with each passing month another $150 billion in debt is added to the public debt total.