News & Analysis
As Goes Iceland, so Goes the EU?
Iceland Pension Funds to Block $2 Billion Debt Relief Proposal ... Iceland's pension funds, which hold the bonds behind most of the country's mortgage debt, will try to block proposals to forgive as much as $2 billion in bad loans that the government says it is considering. A group that represents households demanding debt relief says lenders should write off up to 220 billion kronur ($1.99 billion) in mortgage loans to help the 39 percent of homeowners who are technically insolvent. The government this week said it may back the proposal as it responds to protests that drew bigger crowds than in the weeks before former Prime Minister Geir H. Haarde's administration was ousted in January 2009. "We don't support the ideas of the Interest Group of the Homes on general write-offs on loans," said Hrafn Magnusson, managing director of the Icelandic Pension Funds Association, which has assets of about $16 billion, in an interview yesterday. "The measure would mean that members will see their pensions cut." – Bloomberg
Dominant Social Theme: There are problems of course, but in a crisis, the West pulls through and so does feisty, little Iceland.
Free-Market Analysis: It is important to keep track of Iceland because the EU and European mainstream media itself continually fashion an Icelandic narrative that is much different than what is really going on. And when events do not correspond to the narrative, the result is ... silence. Sub dominant social theme: "Look, Iceland is just like every other troubled EU country. The people are really pulling together. They realize austerity is the only way out and they will simply have to buckle down for the next century or so, working 18 hours a day to pay their debts!"
In fact, as we can see from the above article excerpt, Iceland continues to be a riven society. Britain under Gordon Brown pretty much precipitated the crisis by freezing Icelandic banking assets (smashing Iceland's biggest banks) but Iceland's citizens are now supposed to clean up the mess – and bankrupt themselves while doing so. The point we want to make here is that while these trends are playing out all over Europe now (just as we long predicted) the mainstream media is only covering this exploding story grudgingly – and because it is so big it has no other choice.
Yes, until it was absolutely necessary, the social unrest was not reported. The problems were seen as inevitable and the solution was merely austerity and nothing else. Iceland was a template for this sort of approach. Despite the many blows to the Icelandic economy and the country's virtual bankruptcy, the Icelanders were to be portrayed as an indomitable people that would undergo hardship to deal with the economic crisis.
The EU media, in fact, let it be known in myriad articles that in their hour of need the stalwart Icelanders had realized that they must become full-fledged members of the EU and that it would be necessary to resolve the country's indebtedness in a way that made the larger banking community fairly whole. Even the deal with the International Monetary Fund was put in this perspective: All roads led to Brussels. Always. In every way.
And yet, we have disagreed, and offered a different narrative to those who stopped by to read the Bell. From our point of view, this "happy Icelandic" theme was an elite sub dominant promotion designed to reinforce the understanding that austerity was inevitable. One must suck it up. One must buckle down. And yet are the good people of Iceland really so resigned to this? Is this really what is going on there? Not exactly. Here is how Icelanders are actually handling the current situation as of the end of September, according to the UK Guardian (the only paper that seems to be covering Iceland with any honesty):
Iceland's politicians forced to flee from angry protesters ... Thousands take to the streets of Reykjavik as anger erupts over the impact of the financial crisis ... Riot police stand guard in front of the Icelandic parliament. Protesters took to the streets of Reykjavik today, forcing MPs to run away from the people they represent as renewed anger about the impact of the financial crisis erupted in Iceland. The violent protest came amid growing fury at austerity measures being imposed across Europe. Disruption in more than a dozen countries this week included a national strike in Spain and a cement truck driven into the Irish parliament's gates.
Witnesses said up to 2,000 people caused chaos at the state opening of the Icelandic parliament, with politicians forced to race to the back door of the building because of the large number of protesters at the front. Eggs were said to have hit the prime minister, Jóhanna Sigurðardóttir, other MPs and the wife of the Icelandic president, Ólafur Ragnar Grímsson. Árni Pall Árnason, the minister of economics affairs, who was caught up in the protests, said: "We have a difficult economic situation and this is something to be expected in a democratic country." Birgitta Jónsdóttir, one of three MPs to join the protesters, said: "There is a realisation that the IMF is going to wipe out our middle classes."
Of course that is what the IMF will do. That is what the IMF does – only not to Western countries until recently. But the financial crisis has given the IMF room to play in Europe. It is trying to do the same things to Greece, Ireland and Iceland that it did to Argentina. Only Argentinians had the sense to kick the IMF out. The PIGS have not shown the IMF the door and neither has Iceland. Of course in Iceland's case that is understandable as they are still trying to get rid of their own politicians. Perhaps the IMF is next in line.
This certainly doesn't get a whole lot of play, does it? When Iceland borrowed money from the IMF, the news was seemingly everywhere. When angry Icelandic citizens chase their own politicians out the back door, the news seems a good bit more ... subdued. When the socialist government of Iceland attempted to sign off on a deal that would have put every Icelandic household into debt for about a century, there was a good deal of publicity. But then the media lapsed into silence. And the silence has continued, in large part because Iceland's 300,000 residents are simply refusing to allow their government to sign off on wage slavery.
We don't think the Icelandic standoff is going to be resolved any time soon. We would be surprised if tensions didn't grow between Iceland's citizens and the inept government and the IMF, too. We notice the happy talk about joining the EU seems to have died down for the moment, and we are not surprised about that either. We saw an Internet video interview recently with a top EU economist (a German who actually wanted the eurozone broken up) and his point was that so long as Germany was willing to fund the EU, the construct would retain its regional integrity. Our point has always been that the tribalism that simmers beneath the European surface is far stronger than people may realize.
Germany's elites may currently wish to keep the EU together (though average Germans do not) but the real test will come as protests grow in the PIGS and continue in Iceland. It is one thing not to report on these protests in fullness; it is another thing to willfully misunderstand them. They are driven out of a profound sense that the Europe's expanding union was built on the backs of the middle class that will now receive the full brunt of austerity measures that should be more appropriately aimed at the elites and the banks themselves.
This is a much larger issue than the length of a work week or the size of one's pension. What has begun in Europe (see recent protests in France and Greece) is likely, increasingly, a full-scale class war. The tribes are stirring just as we suggested they would in many previous articles over the past two years. Unless Europe finds economic expansion fairly soon, the unrest, we imagine, will build.
The resolution to continue with the EU experiment continues to be continent wide (restricted mainly to legislators) and an inch deep. Scratch the surface and the EU is increasingly unpopular. How could it be otherwise? Iceland is a bellwether country in this regard. But its problems are increasingly replicated throughout the EU, certainly through the PIGS. Germany's elites may have the wherewithal to continue with the EU experiment, but this is a delicate consensus indeed.
Conclusion: Unless there is a significant economic turnaround, we wonder how happily all this will end. Debt eventually could be repudiated. Countries could fall out of the EU. The euro itself could be fractured. We have never predicted, fully, that all this will occur. But we have granted its possibility and we see no retract that perspective now. Here's a thought: "As goes Iceland so goes the EU ... "
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Posted by EKIM on 10/19/10 10:59 AM
I have to ask this "where in the USA do we have a similar group demanding that our Government write off similar loans here?" Why Don't we have these protests? Who represents us? We does it feel we are always the last to receive any help (and it is never really help right?)but the first to pay for any? IE bail out the banks and wall street. They are rioting in Paris over the new retirement age of 62, while we have to work here in the states until what 65 if your lucky?
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Posted by Charles on 10/19/10 05:10 AM
Well done Iceland's people. Don't just chase the politicians out of parliament " take it over, occupy it. Meanwhile, Americans have Tea Parties.
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Posted by Brendan T on 10/18/10 04:27 PM
Thank you Daily-Bell & fine contributors for waking me from my deep slumber. What a charade ..Could you do an analysis of Ireland & maybe a diagnosis as to what else it may take to spark real opposition & non-compliance. Pretty much everything done @ this stage;are people still embarrassed to take to streets..better do soon: while they still can afford to food shop.
Reply from The Daily Bell
We have written about Ireland a good deal.
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Posted by Chrysotheras on 10/18/10 01:27 PM
DB: "...What has begun in Europe (see recent protests in France and Greece) is likely, increasingly, a full-scale class war."
...I can feel it coming, in the air at night!
Reply from The Daily Bell
Of course, nothing good comes of violence, if it comes to that. Hopefully it won't. Non-violent protest is far more effective.
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Posted by Mihail on 10/18/10 07:24 AM
Everybody is talking about euro,dollar,federal reserve etc.Who are those people behind the scheme?Federal reserve is private and own by jews(Ashkenazi)euro=control by them.The Bible call them(Synagogue of satan,Revelation 2:9,,3:9).If you read the old and new testament you will find out that European people(Caucasian)are the lost tribe of Israel,jews have nothing to do with the Bible.In Zechariah 2:1,,2:2,,2:3,,2:4 We can read that America is THE NEW JER-USA-LEM.
We have exterminated the property owners in Russia. We are going to do the same thing in Europe and America."
(The Jew, December 1925, Zinobit)
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Posted by Bob Bbq on 10/18/10 05:22 AM
Volcanic ash from Iceland may also soon be headed for Europe--
many investors are recently cognizant of the imminent eruption of large Iceland volcanoes--
This fellow, who lives atop an extinct volcano in Iceland- and keeps track of the volcanoes in his neighborhood, and carefully examines the data available from the Iceland geology authorities before posting information, seems to believe in the imminent
cataclysmic eruption of Grmsjall -which would quickly foreclose most european economic activity along with the Euro.
Click to view link
Click to view link
Click to view link
http://en.vedur.is/earthquakes-and-volcanism/earthquakes
Click to view link
Right now could be the best opportunity to short the Euro.
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Posted by Zenbillionaire on 10/18/10 02:48 AM
@Jacob
"They would no longer be anarchists."
I should always put ironic looking smily faces on things. To paraphrase W. Somerset Maugham, "That's the trouble; people always think I'm being vulgar when I'm being funny and they think I'm funny when I'm being vulgar".
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Posted by Don on 10/18/10 02:42 AM
The citizens of all the nations of the Earth should find a common unity against these international fraudulent bankers and their scams. We have to start talking to each other and stand united against this invasion of this foreign tribe. These ancient International Carpetbaggers, this syndicate from hell is bent on dominating humanity's cultures and economies. "They" alone are responsible for most of the major wars since the Internationalist took control of the Dutch and English economies during the 17th Century. Same Folks.
All of the people of the Nations should just say no we won't pay it. It's their scam, it's their problem not ours.
Trade, itself, happens naturally without Cabals infecting the natural tendency or flow of trade. Trade we are taught, in Economics 101, is that the "Invisible Hand" would benefit all nations. What we're finding instead is that of a "Heavy Hand" and a slap in the face. These off shore Pirates have, by stealth, invaded our home country's usurping our Sovereignty and Laws of our cultures. We have been invaded by these Pirates who now present themselves in the uniform of the "suit" of Corporate interest. A foreign virus infecting humanity. They no longer have to raid far off islands and primitive peoples for their booty. They developed a ancient version of Voodoo Economics for all of us. We get to suffer their wealth so they may rule. Just like the Greek Tale Of King Midas who's golden touch ended up destroying everything he loved and because of this desire his golden touch eventually killed him.
If we start talking to each other about this problem perhaps we could unite around a common unity, against a common enemy and defeat them globally.
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Posted by Jacob on 10/17/10 04:34 PM
@DB
I readily agree with you, I assume most do as well, and that's can seem most frightening. Unless I grossly misunderstand the PE, I don't expect their complacency to the internet phenomenon.
Misinformation campaigns are relatively useless in the net, so I dread to think what new strategy they might employ to the public's detriment. I pray that enough of their kind recognize the extraordinary beauty in this and join our ranks. I wish they knew that they would profit far more handsomely if they let liberty flourish.
Reply from The Daily Bell
Ha, not really. They own most of the world now in our opinion, so they are in fact faced with grievous losses. And it all looked so hopeful, especially before 9/11!
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Posted by Imp on 10/17/10 04:25 PM
It's only a matter of time before the Icelanders realize their current government is incorrigible and decide to ignore it and form a new government by meeting together in a field and legislating by a show of hands. There are only about fifty thousand adult Icelanders so that would actually work. Who do the banksters bribe when there are no politicians?
Reply from The Daily Bell
Yes, Iceland has the opportunity for an efficient repudiation. We shall see if its citizens seize it.
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Posted by Alf Van Der Sneppen on 10/17/10 12:23 PM
@DB
Of course, that's what I've said: "they've been duped"...but they will be duped again because people don't understand what's being played. Would anyone let his 10year old son play in the NHL just because the coach of the Vancouver Canucks thinks he's such a talented and gifted icehockey player and told you he's ready for it and the son is screaming with excitement...you wouldn't because you know they will carry him of the ice on a stretcher. No, because you know it will take years more of practice and endless repetition before he's ready to do battle with giants. And that's what the bankers' game's best described: a battle with giants...they DO understand.
Without education and understanding of the diabolic game, people will remain victims. The Daily Bell aims to educate its readers about what's behind the hypes and with great succes I presume. Friends asked me to teach them how to invest and how to trade the markets...
Funny, money makes the world go round but nobody cares to hear about the fractional reserve banking scam or OTC derivatives, the number one enslaving machines of every citizen of this planet and coming to a place very near to you soon. But they don't wanna know how it works or to understand the mechanisms and logic behind the bankers' tactics and strategies, they're too complacent to spent hours of research.
All they want is the easy money and they want it now for the rest of their lives. Guess what: that's exactly what the bankers know and want...a financially uneducated mass which knowingly or not, takes up battle with giants. Take away their markets by educating the people and their game is finished, just like the Global Warming hype seems finished.
Reply from The Daily Bell
The Internet combined with the financial crisis itself has proven to be an overwhelmingly educative force. Ron Paul, Mises, etc., have provided the pedantry, but the Internet has distributed their insights in literally millions of articles and comments, and thousands EVERY DAY. The mainstream media has not been able to compete and has taken to offering its Crown Jewels (Newsweek, BusinessWeek) for a dollar plus debt. This is not merely an aberrant episode, but like the Gutenberg Press and the Renaissance, it is an unfolding process.
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Posted by Jacob on 10/17/10 10:24 AM
@Zenbillionaire
They would no longer be anarchists. They would be anarchists in name only.
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Posted by Alf Van Der Sneppen on 10/17/10 08:51 AM
So the icelandic population are your new heroes? Did we forget that nearly every Icelandic citizen took out loans in CHF and EUR, paid almost no interest on the loans but instead got 15% interest on their saving accounts...a classic example of the carry trade.
Why is nobody mentioning the greed of the Icelanders? If speculators do the same thing, they're marked "Scum" and "Manipulators". Everybody cheers when they lose and go down but if gullible citizens with no clue of the market risks involved, play the same game and lose, they start crying and become world heroes.
Yes, they were duped but they've lost the game because they had no clue of what they were doing. This money-making machine was to good to be true. They proudly claimed Reykjavik would become the world's new financial hub, building skyscrapers and luxury appartment blocks for themselves, the new yuppies.
Thus, as long as the party was good and they made big bucks and lived the millionaire's fancy life, you didn't hear the Icelanders complaining. Now they're stuck with their big houses and skyscrapers, big cars, a huge new university, new museums, operas and congress halls, all built with the most exquisite and most expensive materials. They can't afford their arrogance anymore and can't service their CHF and EUR-loans with their devalued krona. How pathetic.
Reply from The Daily Bell
You want to blame Icelanders go ahead. We blame the distortive, central banking economy worldwide, which is an abomination in our view.
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Posted by Victor Barney on 10/17/10 06:33 AM
If Iceland is connected to Germany in anyway, I'm sure that they will also have a somewhat good ending. I understand that Germany is of the Israelite tribe of Gad and I figure that Iceland must be related to them in some way? According to Revelation, only 144,000 Israelites will survive in the end days, excluding the tribe of Dan(Ireland) according to Revelation Chapter 11!
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Posted by Zenbillionaire on 10/17/10 05:37 AM
@Jacob
"As political solution anarchy would eliminate the worldwide madness of people ceaselessly warring with one another over who and how governing entities should rule."
But Jacob, the underlying threat is that anarchists might band together and force everyone on the planet to live by their own means, taking nothing from each other and therefore destroy the very fabric of collectivism.
Anarchists of the World Unite! You have nothing to lose but your... well anyway you have nothing to lose.
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Posted by Jacob on 10/17/10 12:21 AM
@Grekko
I'm with you on this. I see no solution better than anarchy. Anarchy has been mischaracterized for centuries as chaos and social disorder, a deliberate fabrication.
Anarchy is merely the state of affairs reflecting the commonly held desire people have to be left alone. As political solution anarchy would eliminate the worldwide madness of people ceaselessly warring with one another over who and how governing entities should rule.
In reality, people don't freely choose these entities, and they don't freely grant their authority. People generally have no desire to impose their will upon others except to defend their life, liberty and property, and I suspect most would provisionally cede authority to protect same and revoke authority if misapplied.
Icelanders' financial problems resulted from their having abided by their ruling entities conducting their economic affairs without their true consent (democracy creates the illusion of consent). Here, international bankers exploited that lack of true consent with unfortunate consequences.
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Posted by JDHoward on 10/16/10 10:27 PM
I would rather see a DB FACEBOOK account than a Twitter account.
Secondly, your article predicts class warfare by freedom lovers against the financial elite. But today's French riot is a tantrum by entitlement recipients who want their gravy train on the backs of the productive. Their riot is not a revolt by freedom lovers. Am I missing something?
Reply from The Daily Bell
"They are driven out of a profound sense that the Europe's expanding union was built on the backs of the middle class that will now receive the full brunt of austerity measures that should be more appropriately aimed at the elites and the banks themselves."
This is our point, above. You are welcome to believe these protests are over entitlements and are a tantrum. Our point is that the argument on the surface is not representative of the mostly unspoken discontent that is fueling the fire. It is not being reported adequately in our view. In Greece, France and Iceland, especially, far more is going on than just a defense of a gravy train. But we shall see ...
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Posted by Acudoc on 10/16/10 08:38 PM
What is really frustrating in all this financial turmoil is that the solution is so conceptually simple: quit with the paper money flim-flam, go to money backed by inherent value, and make loans at freely-determined interest rates only from existing savings.
Gold and silver would go through the roof but at least the extant money would be usable. Are these buggers at the top really that g-d selfish? They would still hold most of the cards even!
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Posted by Ken on 10/16/10 07:03 PM
Didn't Iceland buy a bunch of the worthless mortgage backed securities from this country? Or did I just imagine that?
Reply from The Daily Bell
Probably.
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Posted by Philip Mccormack on 10/16/10 04:51 PM
Fred Folvary. An excellent summary of H.Georges work. Thank you .Pxhilip
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