The horizon is not so far as we can see, but as far as we can imagine

Nice country you have there, be a shame if anything happened to it

is the title of an email a friend sent to me about the threats made by Britain and the Netherlands to Iceland, when Iceland’s President refused to ratify a bill which would have required Iceland to pay 5.5 billion US to the Netherlands and Britain.  When Iceland’s banks failed, Britain and the Netherlands made up the deposits, and now they want Iceland to pay.  If Iceland doesn’t, they have threatened to spike both its entry to the European Union and its 10 billion dollar aid package from the IMF.

The President’s decision means there must be a referendum to determine the fate of the bill.  A lot of folks are decrying this and insisting that Iceland should pay, but the background and the consequences aren’t that simple.

First, by European law, only the first 20K of each account is covered.  Iceland already passed a bill in which they agreed to pay that back, and that bill was not vetoed.  England and the Netherlands insisted that they cover all of the money, not just the amount legally required.

Second, Iceland is a small country,with a population of 316,960.  That isn’t even as large as most Canadian suburbs.  The cost per citizen, including children, people out of work, and seniors, would be $17,352.  Given Iceland is in complete economic collapse, that is a massive burden they simply can’t afford.

Third, the banks were essentially unregulated.  Britain, yes Britain, gave them licenses to operate despite the fact that other European nations lobbyed against it.  Given how lightly regulated British banks were, this means that Icelandic banks were being used by the City (London) to do things too dubious even for the City.  And given what the City was (and is) willing to do, that means they were black holes. You put your money in a country like Iceland where the banks are set up for those sort of unregulated operations, you take your bloody chances.  The old saying “you can’t cheat an honest man” applies.  The depositors wanted largely unregulated earnings.  In exchange they need to accept the risk that comes with it.

Fourth, a fifth of the population had signed a petition asking the President to block the law and force a referendum.  Responding to that is democracy.

Fifth: the corporations are limited liability corporations.  Are countries responsibility for all the debts of limited liability corporations in their country?  I don’t think so.

Britain and the Netherlands are extorting money with what amounts to threats to turn Iceland into a third world country where people may well starve to death.  They are doing so to bail out depositors who were greedy or stupid enough, or both, to be put money into banks set up precisely because they were doing stuff too risky even for London to do and which are limited liability companies.

After Gordon Brown used anti-terrorism laws to seize Icelandic assets, this is a further descent into thuggery and blackmail and those who say that Icelanders should pay it all off should think very carefully if they want their country to be forced to pay off all its private companies debts to foreigners.

For shame.


William James Welsh, 1929-2010


Bubbles In the Wind


  1. Ian Welsh

    Yes, they did everything the neo-libs said you should do, and now they’re paying the price. Still, there are limits to how much I enjoy kicking people when they’re down, especially small people.

  2. Formerly T-Bear

    Don’t forget Iceland won the “Cod” war; London has never forgotten or forgiven that. Iceland still has cod, British seas not so much. It is “Shock Doctrine” time.

  3. anonymous

    There goes any illusion I might have had that Europe was any more enlightened or human than the US. Fuck Britain, they never change. But the Netherlands really surprised me. And I would have hoped the Scandinavians would have stood up for their North Atlantic cousins.

  4. Celsius 233

    With what I’ve understood about their British directed banking system; I’d tell the lean holders to do very impolite things to themselves.

  5. Mad Hemingway

    Strangely, all the press last year about the new Icelandic Prime Minister was all positive.

  6. Jim

    Why would anyone think they would behave differently?

  7. On them and move on other wise they be like Amerika a broken country and poor citizens for ever or until pitch forks in the streets.

  8. Ian Welsh

    I don’t particularly blame the PM. She’s got two big thugs telling her “nice knees your country has. Be a shame if something happened to them, and you could never ever walk again.”

    Except they’re being more explicit. “Refuse to pay us back, and we’ll make sure your citizens starve.”

  9. Bobby the Lip

    Thuggery? From the British Empire (the remnant of it, anyway)? And that’s surprising why?
    As you know, there is more honor among thieves than among nation states. All of their Great Seals should say “Show me the money!” in Latin. Extortion is the rule, not the exception. Arguably, the raison d’etre for a country is to absolve politicians of personal responsibility for their crimes.
    We are a disgusting species. I hope evolution isn’t done with us.

  10. Bobby the Lip

    And about being surprised by the Netherlands: I believe they exploited a colony or two in their checquered past.

  11. Introducing “The Axis of Creeps” – Great Britain, The Netherlands, France, Germany, and Italy. I’m sure there are more but these stand out as exemplars of gangsta economics. Your description of the set up of Icelandic banks by Great Britain’s City of London and the use to which they were put comes to a logical conclusion when the perps turn on the victims and demand repayment for the failed long con. That’s like the old mob tactic of taking over a business, bleeding it dry, then leaving it for salvage. There is no lipstick to put on this pig. This is simply mob like behavior by states which justifying the label “gangster capitalism.”

    This EU in crowd’s objections to a vote by the citizens of Iceland prior to accepting the debt foreign planted LLCs fits with the general attitude of the EU – screw democracy. It’s an after thought to them, a nuisance.

    I dearly hope that the good people Iceland vote no on this referendum. That would send a message to the banker gangsters and rock their world, if but for a few days.

    Crony capitalism is dead. It just lacks the courtesy to fall over so we can make the call official.

  12. tjfxh

    China has already told the West that if they try to stick it with bogus deals they won’t pay up when they crash. Nobody is saying boo so far.

    As they say, “size matters.”

  13. anonymous

    “the Netherlands: I believe they exploited a colony or two in their checquered past.”

    Obviously. But it seems like as cool a place as any these days, and you would think that a few years under the heel of Nazi Germany might have taught them a thing or two about what’s wrong with the merciless looting and starving your smaller neighbors (and of course the Nazi’s did it with a thin veneer of legality too). Apparently they learned the wrong lesson.

  14. anonymous

    This story has been rankling me for two days. I think the Icelanders should have seized every Brit on the island when they were deemed a terrorist country and held them ransom until the Brits produced all the evidence and participants of the so called “terrorism” (basically every banker and trader who worked in London and the rest of Europe for those failed banks) and surrendered them to Icelandic justice. And I’ll spare you the details of what kind of justice I’d like to have seen for those worthless shits. From what I’ve heard, all the hot shot rich Icelanders took off when the turds hit the turbines.

  15. Synoia

    You’ve described reparations on the same scale as those assessed in the Treaty of Versailles against Germeny, at the end of WW I.

    Weimar republic time again?

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