The government of Iceland has forgiven the mortgage debt for much of its population. This nation chose a very different way of stopping the crisis from the rest of European countries. It decided to hear the requests of the population and to put politicians and bankers on the bench of the accused three years after their financial excesses would sank one of the most prosperous economies in 2008.
Reader Comments
The very common life of working and middle class is far away from international economical and political affairs. The main focus of people is on the local politics. Anything unusual, not fitting into mainstream is banned for their eyes and ears to keep them calm - usual sheeple politics. Yes, it is in Europe too. Politicians are terrified by possibility that people start thinking in unusual ways. They´re not supposed to think.
This is a lie
I am Icelandic and this is bullshit. Please check your sources before posting such crap.
I am Icelandic and this is bullshit. Please check your sources before posting such crap.
RE: This is a lie
Can you please point to some relevant information about what is going on in iceland if you don't mind?
The heading of this article I think shows a flawed premise, mortgage debt can't just be forgiven, without some kind of catch. Economics 101.
I think the image of icelandic economic recovery from outside is romanticized and doesn't reflect reality.
Can you please point to some relevant information about what is going on in iceland if you don't mind?
The heading of this article I think shows a flawed premise, mortgage debt can't just be forgiven, without some kind of catch. Economics 101.
I think the image of icelandic economic recovery from outside is romanticized and doesn't reflect reality.
So far the information I can find comes from non-icelandic sources, but this one and the one below looks at some of the myths being spread about iceland. (In one of the authors own words, there is some myth-making going on here)
Iceland: successful recovery and the non-bail-out banking myth
[Link]
"In this heroic story that’s going around in the world, Iceland didn’t let the debt of private banks migrate from the private to the public sector. I wish this was true but it isn’t. Not quite.
In the Emergency Act, passed on Oct 6, 2008, there was a provision for helping the Icelandic building societies (similar to the German ‘Sparkassen’). This was later done. Also, the Government helped two banks, VBS and Saga Capital.
[...]Together with support to Saga Capital, the Icelandic Government helped these two banks with almost 3% of GDP 2009.
In the Icelandic IMF programme, ISK25bn (€15.5m) was set aside to fix the building societies. Out of ten remaining societies, five have been saved by the state. If the cost of saving these banks and a few others are all added it, the amount is over ISK70bn (€43.6m). By adding the cost of saving Sjova, an insurance company, and ILS, the state mortgage company, this bail-out sum rises to ISK118bn (€73.6m) – and that amounts to 7,7% of GDP, not a trivial sum.
[...]
The worst thing is that there doesn’t seem to be any policy in all this bail-out activity. Saving VBS was clear and pure madness and amounted to throwing ISK26bn into the North Atlantic. There might very well be some good reasons to save some of the building societies but there just doesn’t seem to be any clear policy. The Government hasn’t made it clear if all the remaining 10 societies, out of which the state now is a stakeholder in 5, should be run as now, should be merged into one or into a few larger ones.
All in all, Iceland has some ISK200bn (€124.7m)at risk in the banking system, ca 14% of GDP. So here is the correct version of bank bail-outs in Iceland: the Icelandic Government at the time couldn’t save the three largest banks – but a lot of the undergrowth in the financial system has been saved. And it’s not clear why or what the policy is."
An Alternative View Of 'Iceland's Recovery'
[Link]
"[..]
The Movement asserted “the conference itself is at the core of a massive public relations effort by the government of Iceland and is part of a setup in order to convey to the world the achievements of the Icelandic government.” In addition, it is described how the participants in the conference are embarking on “vast program of misleading information, half-truths and deception about the health of Iceland’s financial sector.”
The Movement then details how the Government’s policies to combat the housing crisis have not worked. “One of (the policies) is a write-down of mortgages to 110% of the estimated value of the home. Because of underlying inflation and the consumer price -indexing of mortgages, says Movement MP and economist Thor Saari, these mortgages very quickly increased again to 120% and then to 130% of the estimated home value, requiring repeated attempts to reach the 110% level. The conference addressed this claim, offering up a suggested 70% figure instead of 110%. They then discussed the solvency of households.
On monetary policy, the financial sector and the currency, The Movement suggested that the dynamics around making “this facade of economic recovery as the economy is basically being rebuilt on the same hollow ground and with the same rotten wood that led to the crash”. They also included that “the architect of the previous monetary policy that worked so disastrously is now the Governor of the Central Bank and is advocating a return to the old policy with a slight twist of some bells and whistles that look dubious at the best. His assistant, the Deputy Governor was the Central Bank’s chief economist in the years prior to and during the Crash, never uttering a word publicly about the disastrous policy or upcoming problems. Most of the same staff as before is still at the CB, which by the way became insolvent during the crash.”
"
All in all it appears the picture isn't as rosy and as romantic as some writers are putting it.
Iceland: successful recovery and the non-bail-out banking myth
[Link]
"In this heroic story that’s going around in the world, Iceland didn’t let the debt of private banks migrate from the private to the public sector. I wish this was true but it isn’t. Not quite.
In the Emergency Act, passed on Oct 6, 2008, there was a provision for helping the Icelandic building societies (similar to the German ‘Sparkassen’). This was later done. Also, the Government helped two banks, VBS and Saga Capital.
[...]Together with support to Saga Capital, the Icelandic Government helped these two banks with almost 3% of GDP 2009.
In the Icelandic IMF programme, ISK25bn (€15.5m) was set aside to fix the building societies. Out of ten remaining societies, five have been saved by the state. If the cost of saving these banks and a few others are all added it, the amount is over ISK70bn (€43.6m). By adding the cost of saving Sjova, an insurance company, and ILS, the state mortgage company, this bail-out sum rises to ISK118bn (€73.6m) – and that amounts to 7,7% of GDP, not a trivial sum.
[...]
The worst thing is that there doesn’t seem to be any policy in all this bail-out activity. Saving VBS was clear and pure madness and amounted to throwing ISK26bn into the North Atlantic. There might very well be some good reasons to save some of the building societies but there just doesn’t seem to be any clear policy. The Government hasn’t made it clear if all the remaining 10 societies, out of which the state now is a stakeholder in 5, should be run as now, should be merged into one or into a few larger ones.
All in all, Iceland has some ISK200bn (€124.7m)at risk in the banking system, ca 14% of GDP. So here is the correct version of bank bail-outs in Iceland: the Icelandic Government at the time couldn’t save the three largest banks – but a lot of the undergrowth in the financial system has been saved. And it’s not clear why or what the policy is."
An Alternative View Of 'Iceland's Recovery'
[Link]
"[..]
The Movement asserted “the conference itself is at the core of a massive public relations effort by the government of Iceland and is part of a setup in order to convey to the world the achievements of the Icelandic government.” In addition, it is described how the participants in the conference are embarking on “vast program of misleading information, half-truths and deception about the health of Iceland’s financial sector.”
The Movement then details how the Government’s policies to combat the housing crisis have not worked. “One of (the policies) is a write-down of mortgages to 110% of the estimated value of the home. Because of underlying inflation and the consumer price -indexing of mortgages, says Movement MP and economist Thor Saari, these mortgages very quickly increased again to 120% and then to 130% of the estimated home value, requiring repeated attempts to reach the 110% level. The conference addressed this claim, offering up a suggested 70% figure instead of 110%. They then discussed the solvency of households.
On monetary policy, the financial sector and the currency, The Movement suggested that the dynamics around making “this facade of economic recovery as the economy is basically being rebuilt on the same hollow ground and with the same rotten wood that led to the crash”. They also included that “the architect of the previous monetary policy that worked so disastrously is now the Governor of the Central Bank and is advocating a return to the old policy with a slight twist of some bells and whistles that look dubious at the best. His assistant, the Deputy Governor was the Central Bank’s chief economist in the years prior to and during the Crash, never uttering a word publicly about the disastrous policy or upcoming problems. Most of the same staff as before is still at the CB, which by the way became insolvent during the crash.”
"
All in all it appears the picture isn't as rosy and as romantic as some writers are putting it.
Another Article: From one MSM of U.S. - Bloomberg
Icelandic Anger Brings Debt Forgiveness in Best Recovery Story
By Omar R. Valdimarsson - Feb 19, 2012 7:01 PM ET
"Icelanders who pelted parliament with rocks in 2009 demanding their leaders and bankers answer for the country’s economic and financial collapse are reaping the benefits of their anger.
Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association."
Linked here: [Link]
Icelandic Anger Brings Debt Forgiveness in Best Recovery Story
By Omar R. Valdimarsson - Feb 19, 2012 7:01 PM ET
"Icelanders who pelted parliament with rocks in 2009 demanding their leaders and bankers answer for the country’s economic and financial collapse are reaping the benefits of their anger.
Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association."
Linked here: [Link]
Too good to be true
But the refusal of Russia and then Brazil to agree to the terms of WB/IMF repayment terms which as all see are solely designed to crust the economy of the recipient country are the standard-bearers of nationhood. Remember that Scotland lost its independence over debt trying to build the Panama Canal -- Wiki: [Link]
But the refusal of Russia and then Brazil to agree to the terms of WB/IMF repayment terms which as all see are solely designed to crust the economy of the recipient country are the standard-bearers of nationhood. Remember that Scotland lost its independence over debt trying to build the Panama Canal -- Wiki: [Link]
In Europe, there is wide unwritten embargo for any information about the Iceland. The mainstream media stick together in deep silence about all of these things happening in the Iceland, it is timed bomb, especially for countries like Greece or Spain, in no time in every country. The Iceland "goes wild" in society rationality, they´re small enough to change things, so they do.