Icelandic Voters Go Populist-- Government Ignores Them

Remember when Iceland was on the cutting edge of a kind of new and seemingly infinite economic expansion? And then you remember when they were one of the first to go right down the toilet? Now it looks like the Icelanders themselves may be on the cutting edge of telling the banksters -- and the banksters' political handmaidens-- to go fuck off. Just under one year ago we noted here that Icelanders had unceremoniously dumped their conservative government and election their first left of center government-- ever. At the time I was drawn to a quote by Finance Minister Steingrimur Sigfusson (a former truck driver and geologist who heads the Green Party, a partner in the just-elected ruling coalition):

“What are the people of the United States mad about now?” he said in a recent interview. “It is the same poisonous philosophy that we had here, based on a lack of moral awareness and greed, and people who thought nothing of flying Elton John into Iceland for their 50th birthdays and paying him 70 million Icelandic kronur.” [$600,000]

Just what the French aristocrats were doing before the rolled out Madame Guillotine-- and just what American plutocrats are still-- ever tone deaf-- doing now.

Inspired by the Republican Party of the U.S., Iceland's right-wing government went on a deregulation binge-- particularly in terms of the banks (ala- Phil Gramm)-- that made them a fave-rave of all the far right think tanks and they were extolled as a bastion of "freedom," basically the freedom of predatory capitalists. The Russian Mafia soon moved in as did lots and lots of the kinds of freewheeling economic sociopaths held up as models of virtue by conservatives.

By the fall of 2008 all three of the nation's top banks, each of which had acquired assets they couldn't come remotely close to covering, had gone into bankruptcy. But the bubble expansion was actually way beyond the entire nation's GDP and not even the right-wing Icelandic government could bail them out. The foreign debt is staggering and inflation is rampant. The left-of-center government inherited an even worse mess than Obama inherited after 8 years of Bush/GOP rule in the U.S.

Saturday the Icelanders voted in a national referendum and, as Professor Hannes Gissurarson wrote in yesterday's Wall Street Journal, "sent a resounding message to the rest of the world: We are not paying the debts of reckless financiers." The government had negotiated a deal that would have taxpayers picking up the tab owed British and Dutch banks for the excesses of Iceland's predatory banksters and other financial criminals. 98% of voters said, in effect, "Up yours," and voted no.

The Government assured international markets that Iceland will cover its debts.

Britain has warned Iceland that it risks being an international pariah if it does not pay the money back and has threatened to stall the country’s efforts to join the European Union... “I consider accession talks to be an extra tool to force Iceland to come to an agreement,” the Dutch foreign minister, Maxime Verhagen, told ANP on Saturday.
Icelandic officials have already accused Britain and the Netherlands of slowing financial aid from the International Monetary Fund to put pressure on Reykjavik.

The vote Sunday shows the depth of Icelanders’ rage. They are angry at the British and Dutch, who they say are mistreating them; angry at the regulators and government officials who failed to properly oversee the Icelandic financial system; and angry at the bankers whose recklessness helped the economy grow at a headspinning rate and then caused it to self-destruct in days.

“Ordinary people, farmers and fishermen, taxpayers, doctors, nurses, teachers, are being asked to shoulder through their taxes a burden that was created by irresponsible greedy bankers,” President Olafur Ragnar Grimsson said on Bloomberg Television.

How to repay the debt, which represents more than 40 percent of Iceland’s gross domestic product, has consumed this small, isolated nation for the last year and a half, since its banks failed, its stock market crashed and its currency collapsed.