On August 11, I wrote this to the IMF representative in Iceland, Mr. Franek Roswadowski in light of comments made by Icelandic banks and ministers that the IMF was the entity responsible for debt reorganization.

Unlike Icelandic officials, Mr. Roswadoswki answers his emails and today I recieved this from him:

Dear Daði,

No, the IMF is not against household debt being reorganized, but we (like the government) have spoken out against one specific approach: across-the-board debt reduction. The problem with across-the-board debt reduction is that it supports those who don’t need it as well as those who do, it supports the rich more than the poor, and it supports those who took exceptionally high risks more than those who didn’t.

Sincerely,

Franek

So it is true that the IMF, like the government is against “across the board solutions”. Agreeably the concern for the wealthy and the risk-taking being rewarded more than others is rightful.

But the IMF is not against reorganization and the issue still remains that until Lilja Mosesdottir’s awakening in the last couple of weeks, the lack of solutions for Icelandic households has made the aftermath of the economic crisis even worse.

I’ve thought a lot about this in the past few months and this is my stance on the subject right now.

a) Household debt should be given priority. Business debts are much more complicated so the solutions should be completely seperate.
b) Those with currency loans and price-indexed loans should both be offered solutions. Both have suffered because of the economy crashing.
c) The bill, proposed by Lilja Mosesdottir and others whereas the bank can only collect the mortgaged home makes a lot of sense. The lender is risk-free today and basically has collateral in his borrower’s life.
d) The Zingales Plan is worth a look. As are any other plans that keep the interests of society in mind.

I am afraid that the government and the IMF are officially only concentrating on answering the Progressive Party’s mad 20% idea. The discussion has to move, like any sensible discussion must, away from the Progressive Party.

Thanks to Mr. Rozwadowski for taking the time to answer my email. If only Icelanders were as polite: I wrote to this MP months ago with these questions and he still hasn’t answered. Maybe his computer is at the repair shop.

Related posts:

1. What Is Missing From The “Definite” Household Debt Solutions?
2. Open Letter To The IMF Representative In Iceland
3. Discussion On Household Debt Held Hostage By Progressive Party
4. Niall Ferguson on debt cancellation
5. A Mediocre Mind In An Extraordinary Time