The UK government will provide the Icelandic government with a loan that is supposed to cover its total commitments because of IceSave in the UK and Holland. These commitments are 650 billion ISK, according to the agreement between the nations and the interest rates are 5,5% annually. Payments of the loan will not begin until seven years from now.
During those seven years, attempts will be made to sell Landsbankinn’s assets. When the payments are supposed to begin it will be clear how much Icelandic taxpayers will have to assume. If the government is able to refinance this loan at that time, then it will.
Opinion is divided in Iceland on this outcome. The opposition criticizes the government for not offering enough transparancy on either the build up or the conclusion of the agreement. That would not be the first time this government is critizised for such lack of keeping its nation informed.
Assuming the foreign debts of Bjorgolfur Gudmundsson’s Independent Party bank is also hard for the nation to swallow. Just wait until his son starts buying up assets in Iceland on the cheap. Then the saucepan revolution will pale in comparison.
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Vilhjalm A.
1 year ago
I get the impression from the news articles and comments on Eyjan that people are pretty pissed off, not surprisingly. The first problem is that Iceland now officially assumes official, inescapable responsibility for the Icesave fiasco, caused by the reckless bankers, Sjalfstaedisflokkur, Bjorgulf et al. It seems that many were expecting some sort of compromise, for instance, 25-50% reduction based on Iceland’s inability to pay, the irresponsibility / criminality of the bankers, and Britain’s culpability in causing the banks to crash. Instead, there was no compromise, just a demand for payment, to which Iceland has more or less capitulated. The second problem is the terms – 5.5% that accumulates every year, which amounts to about 35 billion ISK every year, so that the amount in seven years will be 850-900 billion ISK. Nobody is paying 5.5% interest – except Iceland, and perhaps some gamblers to their bookies in Vegas. The third problem is the way the agreement was made – in secret, without discussion or approval by Althingi, by the usual gang of incompetents.
I think this agreement shows that no one in the international community cares about Iceland or what happens to it. By international consensus, Iceland is to be turned over to the Germans, British, Dutch, EU, and IMF, with the process to be completed in the next 10-15 years. First you Icelanders hand over most of the country’s assets to the German banks, then you give the fish to the EU, then you continue paying taxes to the British. Icelanders (what’s left of them) in the future will be working for the foreigners. Your own politicians are the debt-collectors.
Vilhjalm A.
1 year ago
Yes, it is true that Landsbanki’s “assets” in Britain will cover some or most (?) of the amount due, but how much? My guess is that shares in luxury / topend clothing and retail stores will continue to decline in value, since Britain is basically a bankrupt state itself and in a year or two, once this current economic crisis continues its downward spiral, consumers there will stop spending. I suppose the one postive is that the debt is due in British pounds and the pound will decline another 30% against the Euro.
Bromley86
1 year ago
>I suppose the one postive is that the debt is due in British pounds and the pound will decline another 30% against the Euro.
What are the assets in though?
Vilhjalm A.
1 year ago
The assets, as far as I know, consist mostly of Landsbanki’s shares in British retail companies, and maybe some UK real estate, which it took over from Jon Asgeir / Baugur. So these shares are pound-denominated. As inflation hits the UK (due to Britain’s wholesale printing of money through “quantitative easing”), the stock shares may actually stay the same or go up in value, in terms of pounds, even though the real profits and value of the companies go down. Just a guess.
thoughts of the driver » New ICESAVE agreement compared to treaty of Versailles
1 year ago
[...] of economy at Reykjavík University, Ólafur Ísleifsson. They discussed the commitments of the new ICESAVE agreement entered into by the Icelandic government. Pundits are expressing extreme concern over the [...]