Little Iceland kicks UK in the face

Quote from Ghost of Cutten:

What's so hard to understand about this? Greedy ignorant foreign speculators deposited money in Icelandic banks, ignoring the clear risk and balance sheet insolvency that even a blind bat at midnight could see, ignoring their own local banks which had iron-clad domestic deposit insurance guarantees from their own government, for a few extra % in annual yield.

Any time you find something that pays a couple of % more per annum in yield and think you have cleverly outsmarted the market - well, guess what...

This is pure pinko bitching after the fact, woe is me bullshit of the highest order. Some greedy retarded foreign gamblers took stupid risks to make more money for themselves, and when their idiocy was found out, they started crying and now want use violent force to steal money from innocent people who have done no wrong. The depositors trying to get taxpayer money are basically trying to use threat of kidnap, imprisonment and theft of life savings (of Icelandic taxpayers) to fund their own greed. That is a grotesque moral crime and the perpetrators deserve a bullet in the head, just like at the Boston Tea Party.
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Huh? What violent force? You're talking loco bullsh1t here, GoC.

Let me spell things out for you. Firstly, let's look at the legal side of the issue. In 1999 Iceland signed the EEA depositor protection regulations into national law. This means that, according to Iceland's own laws, the government MUST honor a guarantee that it offered depositors for the first EUR20,000 in their accounts, WHEREVER these depositors might be located in the EEA. I repeat this is Iceland's own laws that require the government to compensate ALL depositors that had funds at Landsbanki/Kaupthing, not just Iceland's own citizens. Now it would be mighty nice if we could all just ignore the law every time we think that it's somehow unfair when applied to to our specific situation, but something tells me this isn't how things are supposed to work. Iceland has to honor its own laws, period.

Let me try to offer you an analogy that you might understand (I assume you're American). Let's say you live in LA and have $250k on deposit at WaMu. You think your funds are covered by the FDIC deposit guarantee. WaMu goes down and is taken over by the FDIC, which then unilaterally decides that it's just too painful for the DIF bottom line (and thus for the taxpayers in all the other states) to compensate the Californian WaMu depositors. Everyone else gets their $250k back, but you? Well, you are screwed. How would you feel about this?

As to your points about speculators, that's just plain silly. The Dutch and UK claim is about recovering the MINIMUM EUR20,000 amounts for its retail depositors, not for some bazillions of speculative investments. The speculators should and will lose everything in excess of the minimum.

Now, as to the moral side of things, you don't seem to get it either. The Icelandic people, the government and President Grimsson were happy to take the upside of their completely unregulated banking system. In terms of quality of life, Iceland was the best country in the world in 2007. During the good times, they didn't bother to either regulate their banks or to make sure their deposit insurance fund could cover its minimum liabilities in all eventualities, as required by their OWN laws. Now that the sh1t has hit the fan, who, in your opinion, should bear the responsibility for these excesses?

Finally, let me add that I hope you don't fail to see the lessons in this case and how they apply to the issues of TBTF banks in the US.
 
Did the UK have a savers deposit guarantee before this crisis started?

I know the Dutch didnt but such a guarantee was implemented somewhere after Lehman failed.

I also know the Germans have a full guarantee regardless of the amount deposited.
 
Quote from Debaser82:

Did the UK have a savers deposit guarantee before this crisis started?

I know the Dutch didnt but such a guarantee was implemented somewhere after Lehman failed.

I also know the Germans have a full guarantee regardless of the amount deposited.
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Yep, it's called the FSCS (amounts covered and procedures changed on 1-Oct-2007 and 6-Oct-2008; currently GBP50k per person per account is covered). There's also a special arrangement for EEA banks that offer their services to UK depositors, called the 'passport scheme'. Whether the specific bank account falls under FSCS, FSCS with passport exemption (which may actually mean no FSCS coverage) or is an EU bank that's not regulated by the UK FSA depends on the specific bank.

All countries in the EEA had a common scheme in place pre-crisis, mandated by the EU directive 94/19/EC. The minimum amount covered was standardised to a common EUR20k per depositor (EUR15k prior to 31-Dec-1999).
 
Quote from Martinghoul:

Yep, it's called the FSCS (amounts covered and procedures changed on 1-Oct-2007 and 6-Oct-2008; currently GBP50k per person per account is covered). There's also a special arrangement for EEA banks that offer their services to UK depositors, called the 'passport scheme'. Whether the specific bank account falls under FSCS, FSCS with passport exemption (which may actually mean no FSCS coverage) or is an EU bank that's not regulated by the UK FSA depends on the specific bank.

All countries in the EEA had a common scheme in place pre-crisis, mandated by the EU directive 94/19/EC. The minimum amount covered was standardised to a common EUR20k (EUR15k prior to 31-Dec-1999).
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Thanks, I should have known this.

I live in Belgium (where guarantees were raised from 20k to 100k during the crisis) but in stead of going after the minimum deposits from the Icelandic people they managed to save the local branch of Kaupthing bank trough a joint effort of savers, other banks and the government who really pressured the deal clearly fearing the backlash of a situation where thousands of people would have been left with their wallets empty.
 
Quote from Debaser82:

Thanks, I should have known this.

I live in Belgium (where guarantees were raised from 20k to 100k during the crisis) but in stead of going after the minimum deposits from the Icelandic people they managed to save the local branch of Kaupthing bank trough a joint effort of savers, other banks and the government who really pressured the deal clearly fearing the backlash of a situation where thousands of people would have been left with their wallets empty.
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That is a choice that your government made on your behalf. For the sake of greater common good (as determined by your government), you are going to be paying for the awesome times Iceland had during the noughties and the excesses of the Icelandic vikings. Whether this is good or bad, whether Icelanders deserve to punished according to the exact letter of the law or if they have now paid enough and the rest of the EC should forgive Iceland's debts and shoulder the rest of the burden, that's a completely different question. Each member of the community, through the dicisions of its democratically elected govt, will act in a way they feel is just, just like the Belgian govt did, based on what you describe.

However, none of this changes the fundamental legal and moral principles that pertain to the situation.
 
Quote from Martinghoul:

That is a choice that your government made on your behalf. For the sake of greater common good (as determined by your government), you are going to be paying for the awesome times Iceland had during the noughties and the excesses of the Icelandic vikings. Whether this is good or bad, whether Icelanders deserve to punished according to the exact letter of the law or if they have now paid enough and the rest of the EC should forgive Iceland's debts and shoulder the rest of the burden, that's a completely different question. Each member of the community, through the dicisions of its democratically elected govt, will act in a way they feel is just, just like the Belgian govt did, based on what you describe.

However, none of this changes the fundamental legal and moral principles that pertain to the situation.
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Yes... Good point...

From my point of view Icelandic Vikings or Vikings in general are just "GYPSIES IN BOATS"...

See... if you call them that it doesn't seem as cool does it...?

Vikings were just a bunch of nomadic thieves who occasionally attacked unarmed monks to steal their gold or silver. For some strange reason there is an entire fantasy culture built on how great it was to be a “gypsy in a boat”… Personally I don’t understand why anyone would idolize such people but it does seem to appeal to the Nordic racist types…

So I would not be surprised if Iceland decides not to pay. After all they are just going back to their roots as “mighty” pillagers.
 
That is true. viking "culture" ( they never had one) is often idolized to nonsensical levels. The Romans stopped their conquest at the Rhine because they realized there was nothing on the other end worth taking ( except people living in mud hovels )

Now back to the main topic. Iceland was warned many times about their debt levels. They'll have a snowballs chance in hell to join the EU and get the extra funds if they don't pay up.


Quote from CoolTraderDude:

Yes... Good point...

From my point of view Icelandic Vikings or Vikings in general are just "GYPSIES IN BOATS"...

See... if you call them that it doesn't seem as cool does it...?

Vikings were just a bunch of nomadic thieves who occasionally attacked unarmed monks to steal their gold or silver. For some strange reason there is an entire fantasy culture built on how great it was to be a “gypsy in a boat”… Personally I don’t understand why anyone would idolize such people but it does seem to appeal to the Nordic racist types…

So I would not be surprised if Iceland decides not to pay. After all they are just going back to their roots as “mighty” pillagers.
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Quote from fkbsuhites:

That is true. viking "culture" ( they never had one) is often idolized to nonsensical levels. The Romans stopped their conquest at the Rhine because they realized there was nothing on the other end worth taking ( except people living in mud hovels )
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Correct me if I'm wrong here, but didn't Romans make it as far north as Scotland?
 
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