Published: March 9, 2010
Faced with the failure of the Icelandic banks, the governments of Britain and the Netherlands bailed out their investors, then demanded Iceland pay them back. The Icelandic government wanted to secure a multi-billion euro loan from the International Monetary Fund, but the IMF held the loan up until Iceland promised to compensate Britain and the Netherlands.
After all the backroom negotiations, Icelanders learned just how deeply in debt they would each soon be. Britain's Telegraph reported that the agreement "will saddle each citizen with 11,000 pounds of debt and amounts to 40 percent of Iceland's gross domestic product."
The people had become desperately poor -- no one had bailed them out -- and now the government was announcing a deal that was sure to prolong their poverty for years. President Olafur Grimsson blocked the agreement and demanded a referendum on the arrangement.
Last weekend, about 90 percent of Iceland's people rejected the deal. They said no to the banks' many sweetheart deals to friends and family -- billions in unsound loans with virtually no security. They said no to rescuing foolish investors who lost their risk capital when their own savings had vanished.
They said no to their government throwing good money after bad. They said no to government taking on more debt as a solution to a debt crisis.
The voters of Iceland know more about economics than their leaders and bankers and economists. FULL STORY
Iceland opposition toughens on new "Icesave" talks
By Omar Valdimarsson
REYKJAVIK, March 10 (Reuters) - Iceland's opposition turned up the heat on the centre-left government on Wednesday to hold out for a tough new "Icesave" debt accord with Britain and the Netherlands, after a referendum rejection of its previous deal.
Iceland has for months struggled to find a way to pay back $5 billion in losses to the two European Union countries, with vital foreign aid on hold until Reykjavik resolves the issue. FULL STORY