From an interview with interview with Ólafur Ragnar Grímsson, President of Iceland.

As everybody knows now, we did not pump public money into the failed banks. We treated them like private companies that went bankrupt, and we let them fail. Some people say we did it because we didn’t have any other option, there is clearly something in that argument, but it does not change the fact that it turned out to be a wise move or whatever reason. Whereas in many other countries, the prevailing orthodoxy is you pump public money into banks and you make taxpayers responsible for the banks in the long run, and somehow treat the banks as if they are holier institutions in the economy than manufacturing companies, commercial companies, IT companies, or whatever. And I have never really understood the argument: why a private bank or financial fund is somehow holier for the well being and future of the economy than the industrial sector, the IT sector, the creative sector, or the manufacturing sector.

Read more: http://www.businessinsider.com/olafur-r ... z1rxWjfHNO

An unbelievable story, the source of which appeared to be a single Spanish-language news broadcast, made the blogosphere rounds yesterday: Iceland is forgiving nearly all of its citizens’ mortgage debt!

According to the report, the government of Iceland “put politicians and bankers on the bench of the accused” in response to the public outcry after the near-collapse of Iceland’s banking system and an embarrassing bailout by the IMF in 2008. The context of the report implies that the cancellation of debt (and, presumably, the forced disposal or write-off of mortgage-based bank assets by the government) was done as a sort of punishment for the irresponsible fiscal policies of the banks. The report lauds the actions of the Iceland government as “a very different way from the one chosen by the rest of Europe to overcome the crisis.”

Hmmm … “different” for sure. And mostly untrue. Here’s a more accurate picture of Iceland’s debt restructuring program: “IMF Says Targeted Debt Reduction Policies Can Work”


In the case of Iceland the situation was more difficult, due in part to the much bigger proportion of the population that was affected, and to the wide presence of foreign currency mortgages.

The government and the newly constructed Icelandic banks developed a template to be used in case by case restructuring discussions between borrowers and lenders. The templates facilitated substantial debt write-downs designed to align secured debt with the supporting collateral (i.e bring the loan into line with the value of the house) and align debt service with the ability to repay.

The IMF found that such case by case negotiations safeguard property rights and reduce moral hazard, but they take time. As of January of this year, only 35% of the case by case restructuring applications had been processed. To speed things up, Iceland has introduced a debt forgiveness plan which writes down deeply underwater mortgages to 110% of the households’ pledgeable assets.

It noted that only when a comprehensive framework was put in place and a clear expiration date for relief measures announced that debt write-downs finally took off. As of January 2012, 15 to 20% of all Icelandic mortgages have been or are in the process of being written down.

…which sounds a lot more reasonable and realistic than the Spanish language report, which appears to be highly inaccurate. Even in a small nation like Iceland (320,000 citizens) the process of re-evaluating home values and restructuring mortgages to more closely match those values (along with the current financial situations of borrowers) is a slow and time consuming process. And of course it would be an utter disaster if banks were forced to simply erase a significant portion of their assets, regardless of how well-intentioned the reasons were. But it’s good that Iceland is making a serious attempt at helping honest borrowers keep their homes and pay back their mortgage loans.

It’s also reassuring to see that they’ve put the heads of both politicians and bankers on the chopping block, which is more than I can say for our own government.

Fuck you Mr Grimsson. Ireland is different...well not to Greece...or maybe Portugal.... or maybe any number of Asian and South American countries who suffered the same treatment at the hands of their own vampire elites during the 70s and 80s. The process is set out pretty clearly here... http://en.wikipedia.org/wiki/Confession ... ic_Hit_Man ....with the author firmly of the opinion that that is what is taking place in Ireland and Greece firstly at present, is perfectly in keeping with his own actions while in the employ of the corporate world during the 70s and 80s.

Booming Iceland makes second early loan repayment to IMF

Iceland, whose economy has recovered rapidly following the 2008 collapse of its banking sector, on Friday repaid $483.7 million in loans to the International Monetary Fund.

In London, Barclays rigged the interest rates on interbanks loans, while in Madrid, Bankia cooked the books in order go public. How can banks be held accountable? Iceland has appointed a team of investigators that seeks out fraud and sends the perpetrators to court. Excerpts.

there is more

Does punishment scare alleged white-collar criminals? That seems to be the case in Iceland
August 7th, 2012
Written by Sigrún Davíðsdóttir

The effect of punishment is a hotly debated topic in criminology. The fact that two Icelandic bankers were sentenced to 4 1/2 years in prison for breach of fiduciary duty in the so-called Byr case seems to have shaken others in a similar situation. In an interview with Ruv tonight, the head of the Office of the Special Prosecutor Olafur Hauksson said that the OSP clearly senses that the Byr sentence has had an effect.

“The judgment gives a clear indication how the courts are likely to view similar cases. Also, the judgment has in some ways clarified things for those we are questioning, which means that the testimonies are now more clear than earlier,” Hauksson said. Those questioned are more willing to tell the whole story than earlier, which means that witness statements are better.

....(cont'd)

IMF Says Bailouts Iceland-Style Hold Lessons for Crisis Nation
August 13, 2012
Omar R. Valdimarsson

Iceland holds some key lessons for nations trying to survive bailouts after the island’s approach to its rescue led to a “surprisingly” strong recovery, the International Monetary Fund’s mission chief to the country said.

Iceland’s commitment to its program, a decision to push losses on to bondholders instead of taxpayers and the safeguarding of a welfare system that shielded the unemployed from penury helped propel the nation from collapse toward recovery, according to the Washington-based fund.

“Iceland has made significant achievements since the crisis,” Daria V. Zakharova, IMF mission chief to the island, said in an interview. “We have a very positive outlook on growth, especially for this year and next year because it appears to us that the growth is broad based.”

.....(cont'd)

Iceland Was Right, We Were Wrong: The IMF
Wednesday, 15 August 2012 11:50
Written by Jeff Nielson

For approximately three years; our governments, the banking cabal, and the Corporate Media have assured us that they knew the appropriate approach for fixing the economies that they had previously crippled with their own mismanagement. We were told that the key was to stomp on the Little People with “austerity” in order to continue making full interest payments to the Bond Parasites – at any/all costs.

Following three years of this continuous, uninterrupted failure; Greece has already defaulted on 75% of its debts, and its economy is totally destroyed. The UK, Spain, and Italy are all plummeting downward in suicide-spirals, where the more austerity these sadistic governments inflict upon their own people the worse their debt/deficit problems get. Ireland and Portugal are nearly in the same position.

Now in what may be the greatest economic “mea culpa” in history, we have the media admitting that this government/banking/propaganda-machine Troika has been wrong all along. They have been forced to acknowledge that Iceland’s approach to economic triage was the correct approach right from the beginning.

.....(cont'd)

To be fair to the IMF, the indications we have is that they pushed for bondholder losses. Their mistake was to agree to join the troika without insisting on this.

Interesting, was it Morgan Kelly who revealed this in an IT article or do you have any links that spring to mind? This coudl be a thread all of its own to be honest.