[andyt]

I still don't understand how if the banks were private it affected the Islandic govt. Nowhere does anybody talk about depositor insurance being the cause of all this. If the private bank collapses, what does that have to do with the Icelandic govt? Anybody that can explain that? In both articles they switch back and forth between the banks and Iceland as if they were the same entity.

[Proculation]

andyt wrote:

I still don't understand how if the banks were private it affected the Islandic govt. Nowhere does anybody talk about depositor insurance being the cause of all this. If the private bank collapses, what does that have to do with the Icelandic govt? Anybody that can explain that? In both articles they switch back and forth between the banks and Iceland as if they were the same entity.

From Wikipedia, Icesave dispute:

Quote:

Iceland's three major banks: Kaupthing, Landsbanki and Glitnir were all highly leveraged by international standards,[16] and their combined foreign debt was more than five times Iceland's gross domestic product (GDP).

[...]

On 6 October, the Icelandic government pushed an emergency law through Iceland's parliament, the Althing, in response to the "unusual financial market circumstances".[21] In a separate measure, the government also guaranteed "that deposits in domestic commercial and savings banks and their branches in Iceland will be fully covered."

[andyt]

OK so that is the problem then. They should honor that.

[Proculation]

Also:

Quote:

Two days later, on 9 October, the Icelandic assets and liabilities of Landsbanki were transferred to a new government-owned bank, Nýi Landsbanki.

So the brankrupt bank was nationalized, transfering the liabilities on the government.

[andyt]

Makes em look like a bunch of doofuses. Privatize the banks so they can get into trouble, then nationalize them and take on the mess.

Maybe all banks should be nationalized, since they all come crying to daddy when the shit hits the fan. What we're doing now is privatizing profits and socializing losses. I just hope at some point all the Joe the Plumbers wake up to that and vote for change.

[Proculation]

Looking at how governments manage money, I doubt nationalizing them would be a good idea. The central banks need to be independent from the government for a reason.

[Psudo]

Thank you Scape!

Government has a responsibility to fulfill it's financial obligations, but it also has a responsibility to use taxpayer's money responsibly and to obey the dictates of voters. If a government bankrupts itself it has failed it's constituency, too. It deserves to be institutionally replaced for the same reasons the banks were.

I think. We'll see if some evidence from Scape's sources changes my mind.

[Batsy]

martin14 wrote:

Let's face it. If Iceland decides to default and not pay, it's not a big deal
to the rest of the world.

Except, maybe, to Kerry Katona.