by Bill Wilson
April 11, 2011
Bill Wilson is the President of
Americans for Limited
You can follow Bill on Twitter
Iceland is free. And it will remain so, so long
as her people wish to remain autonomous of the foreign domination of her
would-be masters - in this case,
On April 9, the fiercely independent people of island-nation defeated a
referendum that would have bailed out the UK and the Netherlands who had
covered the deposits of British and Dutch investors who had lost funds in
Icesave bank in 2008.
At the time of the bank’s failure, Iceland refused to cover the losses. But
the UK and Netherlands nonetheless have demanded that Iceland repay them for
the “loan” as a condition for admission into the European Union.
In response, the Icelandic people have told Europe to go pound sand.
final vote was 103,207 to 69,462, or 58.9
percent to 39.7 percent.
“Taxpayers should not be responsible for
paying the debts of a private institution,” said Sigriur Andersen, a
spokeswoman for the Advice group that opposed the bailout.
A similar referendum in 2009 on the issue,
although with harsher terms, found 93.2 percent of the Icelandic electorate
rejecting a proposal to guarantee the deposits of foreign investors who had
funds in the Icelandic bank.
The referendum was invoked when President
Olafur Ragnur Grimmson vetoed
legislation the Althingi, Iceland’s parliament, had passed to pay back the
British and Dutch.
Under the terms of the agreement,
Iceland would have had to pay £2.35 billion
to the UK, and €1.32 billion to the Netherlands by 2046 at a 3 percent
interest rate. Its rejection for the second time by Iceland is a testament
to its people, who feel they should bear no responsibility for the losses of
foreigners endured in the financial crisis.
That opposition to bailouts led to Iceland’s decision to allow the bank to
fail in 2008. Not that the taxpayers there could have afforded to.
by Bloomberg News, at the time the crisis
hit in 2008,
“the banks had debts equal to 10 times
Iceland’s $12 billion GDP.”
“These were private banks and we didn’t pump money into them in order to
keep them going; the state did not shoulder the responsibility of the
failed private banks,” Iceland President Olafur Grimsson told Bloomberg
The voters’ rejection came despite threats to
isolate Iceland from funding in international financial institutions.
Iceland’s national debt has already been
downgraded by credit rating agencies, and now those same agencies have
promised to do so once again as punishment for defying the will of
This is just the latest in the long drama since 2008 of global institutions
refusing to take losses in the financial crisis.
Threats of a global economic depression and
claims of being “too big to fail” have equated to a loaded gun to the heads
of representative governments in the U.S. and Europe. Iceland is of
particular interest because it did not bail out its banks like Ireland did,
or foreign ones like the U.S. did.
If that fervor catches on amongst taxpayers worldwide, as it has in Iceland
and with the tea party movement in America, the banks would have something
to fear; that is, the inability to draw from limitless amounts of funding
from gullible government officials and central banks.
It appears that the root cause is government
guarantees, whether explicit or implicit, on risk-taking by the banks.
Ultimately, such guarantees are not necessary to maintain full employment or
even prop up an economy with growth, they are simply designed to allow these
international institutions to over-leverage and increase their profit
margins in good times - and to avoid catastrophic losses in bad times.
The lesson here is instructive across the pond, but it is a chilling one.
If the U.S. - or any sovereign for that matter -
attempts to restructure their debts, or to force private investors to take a
haircut on their own foolish gambles, these international institutions have
promised the equivalent of economic war in response.
However, the alternative is for representative
governments to sacrifice their independence to a cadre of faceless
bankers who share no allegiance to any nation. It is the conflict that
has already defined the beginning of the 21st Century.
The question is whether free peoples will choose
to remain free, as Iceland has, or to submit.