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Iceland bails out the people. International financial institutions cry foul

"Iceland’s government has announced that it will be writing off up to 24,000 euros ($32,600) of every household’s mortgage, fulfilling its election promise, despite overwhelming criticism from international financial institutions.

The measure was introduced by the country’s prime minister, Sigmundur David Gunnlaugsson, the leader of the Progressive Party which won the late-April elections on a promise of household debt relief.

According to the government’s website the household debt will be reduced by 13 percent on average.

Citizens of Iceland have been suffering from debt since the 2008 financial crisis, which led to high borrowing costs after the collapse of the krona against other currencies. "

http://rt.com/news/iceland-debt-relief-measure-535/

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Misconception

Most people outside of Iceland don't understand how household debt works in Iceland.

In the 1980's there was a huge recession that happened in Iceland where the government massively inflated the currency. (Causing us to drop the Aur which was our Cent only leaving us with whole amounts).

At the same time this massive inflation took place, to protect the financial institutions from future problems, Mortage debt was tied to Inflation. So if you owed 10 Million Kr. on your loan and there was 15% inflation of the currency, your Premium would be raised accordingly leaving you with 11.5 Million Kr. debt.

This in addition to most mortages made between 2003-2008 were made in "buckets of currencies" caused the premium of those loans to jump in some cases by 80-100% when the Krona devaluated during the crisis in addition to the inflation that the Icelandic central bank did.

This Bloomberg article kinda goes into it. While the RT article doesn't talk about exactly what this "debt relief" is really about.

This "Bailout" only applies to those Inflation-Indexed Mortages.

http://www.bloomberg.com/news/2013-11-30/iceland-reveals-1-2...
http://www.bloomberg.com/news/2013-09-05/iceland-s-banks-fac...

A little addition,

http://www.dw.de/five-years-on-a-change-of-heart-in-iceland/...

"About 85 percent of household debt is inflation-indexed and the average homeowner has seen the principal of his loan rise in excess of 40 percent due to the inflationary wave that followed the collapse of the Icelandic krona (ISK) in 2008."

Iceland didn't bail out 'the

Iceland didn't bail out 'the people'. It bailed out indebted people, essentially giving a gift of 24,000 euros to people who irresponsibly went into debt in order to buy a house that they could not afford in the first place.

The government picked the winners and it picked the losers. This is no different from a government getting elected on tax-the-rich promises. A good illustration of the failure of democracy.

Guess how those banks will compensate for their loss? By imposing higher fees on innocent people or, more likely, by seeking more taxpayer money from the central bank.

The only 'bailout' we need is the cancellation of taxpayer-funded government debt, not the cancellation of the debt of irresponsible people by majority fiat.

Please visit my site for more information about my libertarian book. Thanks!

Ya know...

if a gov is gonna do a bailout this is the way todo it. now the banks wont be collecting twice or more, like they did with our bailouts.

i hope this little geothermal tapping, hydrogen gas powered car useing country prospers.

meow

Lets hope and pray

Hoorah for Iceland. What a beacon of light in such an oil addicted, debt ridden world. God bless the Icelandic people (beautiful country by the way). Please teach our dysfunctional elected controlling clowns for the empire a thing or two.

GOOD!!! Leadership by the People, For the People!!!

Wish WE had Some of That!!!

You've got it!

His name is Obama, and he is the Progressive leader of the US of A.
Be careful what you wish for....it might come true!

not a word in mainstream

not a word in mainstream media.

Be Your Own Media!!!

MODS - This is a duplicate

link. 2 threads down is the same story.

Ron Paul is My President

Whoa, pull up, hold your horses.

Hasn't anyone noticed the words, "Leader of the PROGRESSIVE PARTY"?
Oh, that's right, lets ignore that.We don't care who they are, they're redistributing wealth!
Yeah... 3 cheers for COMMUNISM Hip Hip Hurrah
Dr Ronald Paul who????

Lets be real

This is exactly what the U.S should have done. It gives back to CITIZENS!!! Not foreign interests and loser speculator's!!

The problem is the U.S political system is so corrupted and morally bankrupt, you would have to have a bloody civil war to remove any of them!

So you agree with

redistribution of wealth?
Let's get real. Iceland has a population of less than 400,000.
Remember, this is the Progressive party, communists are well known through history as giving you something with one hand and shooting you with the other.

No, I agree with

our country breaking up monopolies and putting corporations under heavy scrutiny much like Adam Smith and our FOUNDERS advised. It's not about controlling, regulating, or "socialism" of the market it's about the government doing it's ONLY job, to protect Liberty (including economic Liberty). Many of our founders stated that corporations and banks were not inherently evil but if left to their own devices they would hurt people and start wars for profit. Was breaking up Bell "socialism"? Turn off Fox News and read Jefferson's view on corporations for once.

This whole "well you should have never bought a house in the inflated bankster fed market, your fault sucker" is about a dumb as an answer that us Libertarians give, it flat out makes up look stupid, STOP IT. People NEED houses and government shouldn't been in the business of HELPING banksters hurt people just to own one. Yes you CHOOSE to buy a home, and nobody makes you do it, but we must be REALIST and stop being hung up by ideology. If we want to win elections we have to stop being so high minded and realize people's Liberty is being robbed and government is HELPING them do it.

Nice reply!

Well stated.

Next stop for the US

Next stop for the US military, Iceland. They have vast reserves of hot water and they arnt sharing it with any other country...

To climb the mountain, you must believe you can.

LOL

That or it's a new hot bed of terrorism.

Ice Land Has Become A World Leader !

In showing the world how to get out of DEBT slavery !

My computer froze when reading this story.
Who wouldn't like the American public to read it?

Here is the link again:

http://rt.com/news/iceland-debt-relief-measure-535/

Please read the comments under the original article at R.T.

beesting

Iceland did the right

Iceland did the right thing.
This is what the American public should have been demanding of the government all along.

It's not so much a matter of debt relief as much as it is saying F U.

Not my debt. I say shut it all down to bring them all to their knees, even their worthless employees.

Be Your Own Media!!!

Congress will claim Constitutional authority.

They may also point out that the debt they create cannot be questioned by the 14th amendment.

The creditors have the paperwork in place.

Giving Congress the authority to borrow was a mistake.

It destroyed the democratic process, IMO.

Free includes debt-free!

...may not be questioned by

...may not be questioned by whom? Answer: 14th Amendment Federal citizens. Those Americans who are NOT Federal citizens, State Nationals, do not have this problem.

~ Engage in the war of attrition: http://pacalliance.us/redamendment/

Are those that Pledge Allegiance Federal citizens?

One should be careful when taking pledges and oaths. Some may have economic risk attached.

Would Congress sacrifice our wealth to satisfy the creditors?

Free includes debt-free!

Thanks, Johnny.

I'll read it in the morning.

Free includes debt-free!

One can only be true to one

One can only be true to one lover. To pledge allegiance to one, is to disavow allegiance to all others. The States and the Federal Government are two different lovers. One properly pledges allegiance to the Union by pledging allegiance to his State and nationality of birth. This is possible because of the fact that his State is a member of the union. For me this is Massachusetts. But to pledge allegiance to a foreign government, which is what the United States is to each State government, is to disavow one's own State, and thus undermine the Union.

With respect to your second question, I must ask, what is "our wealth?" Is it,
a) the sum of the wealth of every individual in each State of the Union?
b) the wealth of the United States? or,
c) the collective wealth of the people of the United States?

I would argue that Congress cares not for the wealth of any people, State or Federal, except as it relates to their ability to nationalize it for private gain.

The United States is, after all, a Marxist plantation. Congress and their creditors, their true masters, are only conserned with achieving the maximum productivity from the plantation and its "workers" with a minimum amount of effort. The brilliant thing is that they have all the "wokers" on the plantation paying for their own enslavement while still remaining remarkably profitable for the plantation owners. If only this brilliant ingenuity were more righteously focused.

~ Engage in the war of attrition: http://pacalliance.us/redamendment/

Yah then we the people can

Yah then we the people can claim Jubiliation as a legal defense. We the People have the ultimate authority.
We need to create allodial title law so our lands cannot be stolen or trespassed or sold out.
We should take the legal step via Writ of Mandamus or via Declaration of Independence.

Be Your Own Media!!!

Unfortunately, 14th Amendment

Unfortunately, 14th Amendment Federal citizens, aka US citizens, are not "We the People." US citizens were invented by the 14th Amendment in 1868, not in 1789. In 1789 there were only the peoples of the several States: Massachusettsans, Connecticuters, New Hampshireites, & etc. These are the peoples that ratified the federal Constitution, but were not governed by the Congress or any aspect of the Federal Government, and thus enjoyed the freedoms and unalienable rights protected by their State Constitutions.

US 14th Amendment citizens have no such freedoms or unalienable rights protected by the Federal Constitution. They fall under the direct governance of Congress, and are subjects of the whims of Congress (the American parliament), and the President (the American King).

No one but those in Congress can even remotely call themselves "We the People" these daze.

~ Engage in the war of attrition: http://pacalliance.us/redamendment/

At least prohibit Congress from borrowing more.

Is 220 years long enough to live with a mistake?

When the bubble unwinds we'll evaluate the final damage. Under a 100 kilo-tonnes of gold?


Free includes debt-free!

Helicopter

drop.

"Endless money forms the sinews of war." - Cicero, www.freedomshift.blogspot.com

While I dont think this will

While I dont think this will help Iceland's economy....at least the move helps the average citizen there. At least if they are spending 1.6 billion its citizens who benefit in this case...much better than sending that 1.6 billion to pakistan wouldnt you say? The article doesnt even say how it will be funded....they just imply that foreign investors will pay for it as if thats finalized. Even if foreign investors do pay for it....whats to say those investors wont be paid with interest....aka investing. Good economic move? No...but its crap debt based "money" anyway.

not sure why you're getting

not sure why you're getting so much hate here... seems like a reasonable comment. i do think it will prob help the economy to have the debt burden removed. it is definitely not free market economics and is fraught with all kinds of dangers as a long term policy, but as a one time debt relief for the private sector it will definitely restore a healthy balance.

whether the bad incentives and moral hazard it causes are as bad as some would predict, who knows. after bubbles, where people take on absurd amounts of debt, there are only two ways to get rid of it... bail out or default. or the third way, giving money to banks to sit on (US and japan) which accomplishes nothing.

the dynamics of boom and bust and social mood are so hard to control or explain with normal economically rational actor kind of model. why did iceland get into so much debt? why do people buy into wars one decade and shun them the next? the irrational factor of crowd behavior, once a mania gets started, overwhelms normal individual economic rationality.

Excluding Kosovo (genocide),

Excluding Kosovo (genocide), all wars since Vietnam should have been avoided by western empires and their minions.