Iceland's Parliament Coerced Into Offering Bribes, Hoping For Quick Entry Into EU

British and Netherlands savers lost $5 billion when Iceland's banks collapsed during the financial crisis. In a controversial vote, hoping for quick entry into the European Union, Iceland parliament approves Icesave repayment bill, a bailout of those foreign savers.

Icelanders Protest Vote

Please consider Icelanders petition president to veto Icesave bill.

Nearly a quarter of Icelandic voters have signed a petition asking their president to veto a bill on repaying $5 billion lost by British and Dutch savers when the island's banks collapsed, organizers said on Saturday.

The petition also called on President Olaf Ragnar Grimsson to call a referendum on an issue which has aroused resentment that taxpayers are being left to pay for banks' mistakes.

Earlier this week parliament approved the amended bill to reimburse Britain and the Netherlands for the amount, which was lost by savers in both countries in 2008 who deposited funds in high-interest "Icesave" online savings accounts.

But the president has yet to sign the bill into law and 56,089 people, who represent 23 percent of the island nation's electorate, have signed the petition, the organizers said.

The longstanding dispute has held up payment of some aid funds from international lenders, made it difficult to relax capital controls imposed at the height of the financial crisis, and clouded Reykjavik's chances of joining the EU.

The UK and Netherlands are guilty of coercion and the IMF is a willing participant as well. Iceland's parliament is too willing to pay this bribe.

The citizens of Iceland have it correct. British and Netherlands savers were seeking higher interest rates and speculating in currency plays by depositing funds into Iceland banks.

This is really an extremely simple matter. When you chase yield making risky bets on interest rates in a foreign currency, and that risk blows sky high as it eventually always does, someone has to pay. That someone ought not be the citizens of Iceland.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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