Who cleans up the mess when ignorant, greedy bankers rack up massive debt then go broke? The people of Iceland made a strong statement Saturday. The sins of big bankers and government regulators shouldn't fall on the citizens. By a 93% to 2% margin, they voted down a proposal requiring them to cover bad debt incurred by one of the nation's oldest and largest banks. Covering the debt would have cost Iceland's 317,000 citizens around $17,000 each.
Iceland's national referendum was the first opportunity for the people of any nation to vote directly on who pays when the financial elite fail.
As citizens voted, Iceland's Prime Minister was dismissing the importance of the vote and promising to negotiate a payment scheme obligating citizen subsidies for bad debt created by Iceland's beyond-bad bankers.
Icelanders are struggling with a collapsed economy. Businesses are failing at a startling rate, unemployment is soaring, and the prospects for the future are simply not there. Yet the British and Dutch governments demand that their swindled citizens receive compensation from beleaguered Icelanders. Where were the British and Dutch central banks and politicians while their citizens were being fleeced? Aren't the rulers of these countries aware that the failed Icelandic bank was owned by wealth investors, not the citizens?
Iceland's size and the very dire circumstances offer a focused preview for citizens around the world. The banks make bad deal after bad deal. When they're about to fail, the government steps in with a taxpayer bailout. It doesn't matter which faction of the narrow political spectrum is in charge. The message is starkly clear -- when the banks fail, you pay. The solution is presented to citizens as a fait accompli, a mandatory submission to indefinite financial slavery for the benefit of the failed financial elite. The will of the people doesn't matter even when there's a direct vote.
The failed financial enterprises that control global commerce are opening their new show on the road in Iceland. Greek citizens are next in line for indentured servitude, thanks to their lying leaders and Wall Street's Goldman Sachs.
Citizens in the United States remain overwhelmingly opposed to bailouts for Wall Street and big banks. Like Iceland's Prime Minister, members of Congress and the president don't care. Big banks have now received at least $12 trillion in credit and cash from the US Treasury and Federal Reserve Bank. The 17 million citizens out of work, their families, and the eight million forced to work reduced hours are barely mentioned and get just a pittance compared to the ultra wealthy bankers.
How did the financial elite and their political minions do it in Iceland? The lesson is instructive.
Tiny Iceland's Bankers Fool British and Dutch Regulators
Iceland's second largest bank wanted some new customers. In 2006, the bank created the Icesave banking service . For the British market, Icesave pushed high fixed interest rates and easy access to online banking. The Netherlands sales pitch was based on banking transparency , seeing how the bank functioned online, with a 5% interest rate on deposits.
British regulators voiced no major problem with Icesave's policies until the bank collapsed in October 2008. The Netherlands central bank (just now in a liquidity crisis) gave its stamp of approval to Icesave even though there were substantial warning signs that the bank was in trouble.
By the time Icesave was insolvent, its 300,000 British depositors and over 100,000 in the Netherlands saw their money vanish. The finger pointing began. The Dutch central bank claimed Iceland's regulators lied to them. British regulators were shocked at the disarray of Iceland's banking system.
Dutch and British regulators failed to mention that they'd outsourced regulation for their citizens to tiny Iceland's central bank. These financially savvy nations couldn't be bothered with their own people until the Icesave scheme did its damage.