Iceland Declares Independence from International Banks


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, international bankers.

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. The  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.   As  noted 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 Television.

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 international  bankers.

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 overleverage 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.

Bill Wilson is the President of Americans for Limited Government. You can  follow Bill on Twitter at @BillWilsonALG.
Bill Wilson for NetRightDaily