The Other McCain

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Icelanders, For Some Reason, Not Interested In Getting Bent Over

Posted on | April 10, 2011 | 12 Comments

by Smitty

Icelandic banks like Icesave were wrecked in the 2008 economic fracas. The Dutch and the Brits had dropped $5 billion into Icesave, which also died. So the British and Dutch governments bailed out their citizens, and then tried to get the government of Iceland to cut a deal with the governments to repay them.
And now, for a stunning second time:

Voters in Iceland have rejected a government-approved deal to repay Britain and the Netherlands $5 billion for their citizens’ deposits in the failed online bank Icesave, referendum results showed Sunday.

The result complicates Iceland’s recovery from its 2008 economic collapse.

With about 90 percent of the votes counted, the “no” side had 59.1 percent of the votes and the “yes” side 40.9 percent.

It’s as if people somehow resent having their ruling class overlords tell them to accept a haircut. Bankers have run amok, hurting individual citizens, and now we have governments playing musical chairs as they try to find a group of slow-moving citizens to target with the pain.
One thing the British could do is use the HMS Ark Royal, which has been decommissioned but apparently not yet sold, to put pressure on Iceland. Just give it enough maintenance and fuel to be seaworthy, and start having it buzz Icelandic fishing fleets at speed, until the Icelanders relent and pay up the money. Make it the most polite form of extortion ever. “Sorry, but we fear we must pester you until you pony up.”
Seriously, I would like to know why countries can’t support more and smaller banks and spread risk across more institutions. In the US case, across the other 49 states beside North Dakota that lack a state bank. Then, when the fertilizer hits the air circulator, which it will, the state can manage the problem at a lower level. A bad bank can be let die. Sell the thing off. Purge the banker pool of fools. Don’t just let everything fail upward, or internationally. Make the bankers take the haircut, and quit throwing innocent taxpayers under the bus.
The game of musical risk chairs will be helped by stopping the music sooner, rather than later.

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