Justice - Icelandic Style
Eliminating Banker-Originated Fraud ─ Permanently
Creating a Permanent Deterrent for White Collar Criminals aka Banksters
In American journalism, very little serious investigative reporting occurs. It is hard enough to understand a complex news story from start to finish, let alone learn significant lessons from these stories, then apply the lessons locally. However, thanks to the Internet, anyone who desires to gain a broader knowledge and understanding of events within the US or globally can easily do so.
Such is the case with the amazing story of Iceland and how this little country defeated banker fraud and tax-payer funded bailouts of private debts incurred by private parties. This story has been under-reported and certainly not cohesively reported, by mainstream US media. Yet, it is very instructive for learning how a nation can defeat the bankers who are trying to saddle taxpayers with debts that are their problem - not the people's problem.
Before telling the story, it's instructive to look at the population of Iceland, so as to understand how this small nation came together to defeat banker-bailout fraud. Here are a few stats on Iceland:
• Population is approximately 320,000 - A population small enough to come together en masse to bring about the change they desire.
• Literacy rates of 99% - Which makes it very difficult for bankers and the Icelandic government to dupe their own citizens into accepting taxes that are designed to pay off private, banker-generated debts.
An Icelandic university publication about its own country it states:
"Iceland possesses a literacy rate of 99%, has an extensive welfare system, low unemployment (2.1% is the 2005 estimate), and a remarkably even distribution of income. As of 2001 there were 20 Internet service providers and, in 2005, 258,000 Icelanders were Internet users. As of 2003, 71.4% of the labor force was engaged in services, 18.3% in industry, and 10.3% in agriculture (CIA Factbook, 2006). Given a population of about 300,000, Iceland is reputed to have the highest Internet penetration in the world (86%)… "From the above statistics, one can easily observe that Icelanders are a very well educated and thinking population. Therefore, it is quite difficult to con them, especially given the proliferation of Internet use and easy access to all types of information.
The Banker Backstory:
If you scan mainstream news publications, it is difficult to piece together how, specifically and sequentially, the events in Iceland played out. Therefore, it would be hard for Americans to look to the Iceland story as a template for how to do the same here in the United States.
Nonetheless, a radio interview with an Icelandic member of Parliament in 2011 told the story in such a way that other nations could learn from Iceland's experience and - perhaps - use its experience as a template to defeat banker bailouts around the world.
Her name is Birgitta Jónsdóttir, and these are the key events she witnessed: In the 2003 timeframe, Iceland "privatized" its banks, meaning the banks were practically given away to friends of the government. From 2003 - 2008, the banks proceeded to make a large amount of bad loans.
By October 2008, three large Icelandic banks were experiencing major problems. The three banks were: Kaupthing (who offered Kaupthing Edge), Glitnir and Landsbanki (who offered an online savings account called Icesave). Kaupthing Edge and Icesave offered high interest (too good to be true?) accounts that attracted both Dutch and British savers. This factor, among others, gave the British and Dutch governments stakes in the outcome of the Icelandic banking "crisis."
In the midst of the financial crisis, there were runs on these banks, and they became insolvent, for all intents and purposes. Additionally, they were saddled with bad loans due to their own mismanagement. At this point in time, the Icelandic government was considering a bank bailout, despite the fact that these three banks' problems were due to their own bad management, and were not legal obligations of the Icelandic people. However, the people of Iceland were not easily duped into paying for a banker bailout and were resisting. Gordon Brown, prime minister of the UK at that time and the UK Finance Minister (Alistair Darling) designated Iceland as a terrorist state employing a particular UK law, putting this small nation in the same diplomatic category as North Korea and Zimbabwe. This designation was insane, as Iceland's policemen don't carry guns and the country does not have its own military! Through this terrorist designation, all lines of credit were withdrawn from Iceland, and they were at risk of both food and medicine shortages. Clearly, Gordon Brown and Alistair Darling were representing the banks' interests, demonstrating how thoroughly banks can control elected governments that should be representing the interests of the people. (Was Iceland meant to be the example to the world that if anyone doesn't immediately and completely comply with banker demands that a nation will be designated as "terrorists" and be cut off from the world economy? Hmmm….)
The Icelandic people began demonstrating to achieve a referendum so the people could determine whether or not the taxpayers should foot the bill for the bankers' private financial problems. Birgitta Jónsdóttir (who was not in Parliament at this time) and a few others had taken to the streets. They protested 24 hours / day in front of the Icelandic capital. (This was in the winter when there are very few hours of daylight with terribly cold winter weather.) Soon, thousands of others joined them. They threw rocks at the capital and banged pots and pans all day and all night. The government finally relented after the protesters burned down a Christmas tree that is annually gifted to Iceland from Norway.
The police had run out of mace and were starting to use tear gas on its own people. At that point, the police and the government knew they could not resist the protesters any longer. Ultimately, 60,000 people (almost 20% of Icelanders) signed a petition to cause the government to hold a referendum. In the end, 63% of the population voted in the referendum and, of that group, 93% voted against bailing out the bankers. There would be no bailout.
In the meanwhile and after she had been elected to Parliament, Birgitta Jónsdóttir was anonymously provided with documents from the US embassy, who had obtained them from WikiLeaks. The documents demonstrated that both the British and the US Treasury were desperately trying to prevent the Icelandic referendum from taking place. Additionally, a little known group called the Paris Club was also trying to prevent the referendum. The documents showed that the US and British governments were afraid that citizens of Europe would learn from Iceland's experience and also demand referendums, and reject bailouts.
Criminal Prosecutions and Jail Time:
In early 2009, the Icelandic government resigned and a new one was elected.3 The new government has been investigating the perpetrators of the banking collapse and bringing charges against them.
For example, Bloomberg has reported:
Iceland’s special prosecutor has said it may indict as many as 90 people, while more than 200, including the former chief executives at the three biggest banks, face criminal charges. Larus Welding, the former CEO of Glitnir Bank hf, once Iceland’s second biggest, was indicted in December for granting illegal loans and is now waiting to stand trial. The former CEO of Landsbanki Islands hf, Sigurjon Arnason, has endured stints of solitary confinement as his criminal investigation continues. Imagine that - solitary confinement for a banker!!!
Another news website, Infowars.com, reported that:
Iceland did something unthinkable in the United States – it went after the banksters and their minions. In early March, Sigurdur Einarsson, former chairman of the defunct Icelandic bank Kaupthing, was arrested in London. The Special Prosecutor’s Office in Reykjavik ordered the police to raid the homes of other bank principals. Ivar Gundjonson of Iceland’s failed Landsbanki bank was also arrested.
So, with serious criminal prosecutions of many of the perpetrators of the banking crisis, a deterrent has been created that will cause any future bankers to think twice before looting their own banks, then demanding the Icelandic people bail them out.
Another step the government of Iceland took was to forgive all debts on homes where the debt against the home was above 110% of its value. So, as opposed to forcing Icelandic citizens to bailout the banks, the banks were forced to forgive loans that never should have been made in the first place. The total amount of loans forgiven so far is approximately $1.6 billion - a bailout for the people! Further, the Supreme Court of Iceland ruled that loans that were indexed to various currency exchange rates were illegal,4 so the borrower is no longer obligated to make additional payments due to various currency fluctuations impacting their total obligation to the banks. In other word, not only did the citizens take steps to ensure the banks weren't bailed out, they actually ensured that the people were bailed out of illegal loans that never should have been made to them!
Last, the people of Iceland took one final step to ensure a future banking crisis could be averted, the Icelandic people sought to change their constitution. In October 2012, a referendum was held where the voters agreed that certain constitutional changes be made. Ultimately, the Parliament must act on the issued voted upon, but it seems the political will is present to put in place the changes recommended by the people.
It is easy to see the Icelandic people mean business, and will not mortgage theirs and their children's future by saddling themselves with debt they have no legal or moral obligation to assume.
Lessons Learned:Stealing is stealing: Any way you shake it, stealing is stealing. It doesn't matter if a bank is robbed by someone holding a gun, or if it's robbed by the very people running the bank. As William Black entitled his book, "The Best Way to Rob a Bank Is to Own One."7 The bankers of Iceland robbed the banks they controlled by rendering them insolvent, but they didn't get away with it. Some of them are even doing time in solitary! Further, to tax citizens - at "gunpoint" - to pay for the private obligations between two contracting parties is a type of theft. Just because the government makes it "law," that doesn't mean citizens are morally or in any way legally obligated to cover the losses of out-of-control business men disguised as respectable bankers.
In the US, we are lulled into a sense of powerlessness that Washington is too big and too far away to influence. We think, who are we to try to change anything when we have no power compared to special interests, such as the banking lobby. However, it is important to remember that the only way change ever occurs is for small, committed minorities to get together and cause change to happen. In the Revolutionary time period, it is estimated only 10% or less of colonists wanted to gain independence from Britain.8 Despite being outgunned and outnumbered, the American colonies won that war, thanks to a small, committed minority.
It is the same today. If enough Americans came together and demanded that both state governments and the federal government stop pandering to special interests and actually uphold the Constitution, our representatives would finally listen. The problem is, we feel too disempowered or too apathetic to actually flex our political muscles to make it happen. When we have finally had enough, change for the better can and will finally come.
Chicken Little - the Sky Wasn't Falling Down: One of the key ploys of bankers demanding bailouts is that the sky will fall down if the taxpayer doesn't immediately agree to the egregious bailout terms being demanded.
When Iceland hesitated, and then refused, to bail out the bankers, the usual threats were heard. Bankers threatened to not loan to the country for at least 10 years. Then it dropped to five years. Then it dropped to sometime in the near future.3,9 Supposedly their country was going to go through horrible economic times by NOT bailing out the bankers. Instead, they have experienced healthy growth that exceeds the rest of Europe. Even the IMF has taken note of this "miracle"! It's amazing what kind of "miracles" can occur when those responsible for the problems have to solve it themselves, and not "socialize" their problems to the taxpayers.
It's easy to see why the US and the UK were so worried, as revealed by the WikiLeaks document. They don't want the average taxpayer figuring out that the Chicken Little Sky Is Falling Down routine is a lie. They don't want US citizens figuring out that Too Big to Fail is also a lie. The banksters want to keep on duping the American taxpayer into thinking we have to pay for their egregiously bad (criminal?) business decisions.
The story of Iceland is an excellent lesson for the US and all the other countries in the world that are held hostage by bankers who are too irresponsible to handle the fallout of their own messes. By now, US bankers have learned that there won't be any criminal prosecutions; there won't be any shameful "perp walks" in front of TV cameras; and there won't be any long-term jail sentences, let alone solitary confinement. For the criminally-minded, it seems that banking is a viable and profitable career choice, especially here in America. With this in mind, we give special thanks to the SEC and FBI for their non-prosecutions of bank executives, because without them, the next banking crisis in America won't have been possible.10 We don't know how it will happen, but we can probably all agree that it's not a question of if but when.
3. http://www.youtube.com/watch?v=wca0-2HGu-I - This is a four part interview where Birgitta
Jonsdottir provides the sequence of events in Iceland.
8. Rebels & Redcoats by Hugh Bicheno, Harper Collins 2003
10. See Matt Taibbi's article in Rolling Stone, "Why Isn't Wall Street in Jail?
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