It is clear as dayligth that the political and financial elites which control the “four parties” decided early in the economic collapse to sacrifice the indebted households in the country. This was done while a fortress was erected around owner of capital and the criminals who bankrupted the country.

Most things indicate that the politicians decided to fool the public by stalling for as long as possible. To issue statements which provided temporary hope, but turned out to be nothing but a longer nooze.

Let’s be clear about one basic thing: currency loans, paid out in Icelandic kronas are absolutely illegal and consumer price indexed loans are both morally wrong and against the laws on natural ways of doing business. Individuals who have been entangled in this net of debt and ask for correction are not asking for pity or special favors. They are simply asking for the laws of the country to be followed. The question is really about whether we live in a country which follows the rule of law or in a banana republic.

In the 36. article in laws number 7 from 1936 it says “A contract can be set aside on the whole or in parts, or change if it were deemed unfair or against good business practice”.

In the same laws it also says, “A contract is deemed unfair if it is against fair business practises and skews the balance of rights and responsibilities of the parties, against the consumer”.

The law is clear and a recent ruling in the favor of a financial institution in the District Court of Reykjavik only shows how the co-insurance of those who hold the reins of power has reached intolerable heights and that justice in Iceland has no relation to the systems of the countries which we want to compare ourselves with. The word “banana republic” comes to mind again, but what can you expect in a country where the servants of the judicial branch are without exception chosen according to political measures.

The consumer price indexation of loans is one of the biggest crimes in recent times. In the decades before 1980 there was anarchy in the Icelandic financial market. Inflation grew rapidly and the ruling elite either did not understand what was going on or didn’t want to. Instead of using realistic solutions, for example to halt the lending of the banks with higher reserve requirements, the system was put on auto-pilot with the consumer price indexation. This was a tactical acknowledgement by the ruling elite that they did not know how to control the economy.

The consumer price index is illegal because it is not in the spirit of normal ways of doing business. How can it be justified that only one party is liable for all the risk of everything that can go wrong in the future? When the banks offered people consumer price indexed loans in the years before 2008, the “experts” from the banks provided payment plans which indicated a 3-5% inflation in the next few years. This makes the terms of consumer price indexed loans void because laws on confidentiality and respect in contracts state that it is illegal to use a contract because of things that were supposed to be but are no longer applicable.

The fact that the financial sector itself ruined the country and drove the currency down into the mud with the accompanying inflation emphasises the illegality of consumer price indexed contracts.

In short, the financial sector ruined the economy and is fully responsible for consumer price indexed loans having risen rapidly and currency mortgages doubling. And now the same system kicks people while they are down and demands that they not only pay the extortion, but keep paying for houses and cars they’ve already taken from them. This is the most outrageous shamelessness of all times. It should be a primary demand that people who walk away from assets that are loaded with debt are free to go. The members of Althingi who stand in the way of this change have frozen hearts and are not human beings in the common understanding of that term.

The elite which has made its bed in the fortress and thrown people out gets away with its dark magic in the shadows of secrecy which has plagued Icelandic public administration for so long. Even if the assets of tens of thousands of Icelanders have been taken away, the secrecy and co-insurance continues. Where exactly are the lists of all the politicians who received bullet loans and other unusual benefits from the criminal gangs which bankrupted the country? Why can’t the people who have to pay for the crime not get concise information about the write offs in the banks?

Icelandic politicians have the tendency to behave like Danish bureaucrats around 1900. As a class, they are un-democratic and arrogant. They don’t hesitate in keeping away the most important information away from the people. Energy prices to foreign companies, something which has to do with all future construction of the country, are secret. Old contracts with the World Bank and the IMF, which shaped the industries of Iceland for decades are also secret. Remember that the government originally wanted Althingi to approve the IceSave agreement without reading it over. Everything else is of similar vein.

Much needs to be changed if people really mean to resurrect the country. The old secrecy must disappear and the buraucracy must be shaken to the core. The options are simple. Either we have a totally changed system where new brooms sweep out the corruption … or disaster of huge proportions. The livelyhood of the public cut down and massive exodus. People’s sense of justice has been abused as far as it is possible.

If the government continues down the same road then we have an altogether worse Iceland coming in a few years. Oppressionary interests, unreal payments of foreign debt and unemployment will cause even more bankruptcies and more complex difficulties. This is an untolerable vicious circle and a development which must be stopped. The knot must be untied by removing the price indexation of loans, change the currency loans into Icelandic Kronas on the price they were at 15 months ago and drive the Central Bank interest rates down.

Oppressionary interest rates are evil. While most businesses in the Western hemisphere have access to cheap money, which they need in these times of recession, wounded and dying businesses in Iceland have to pay more than a third of their turnover in interest rates. Only economists suckling from the state would think of defending such a suicide mission.

This might be understandable if some economic policies were being tried out here for the first time, but decades of experience have shown us that the oppressionary interests do not work. They ignite the flames of inflation in a small economy because competition within the state is too small. The oppressionary interest rates do not support the currency either. They only let the world know that there is something terribly rotten in the state of Iceland.

Fifteen months after a few criminals, with the help of the political elite, ruined the lives of tens of thousands of Icelanders, the state prosecutor came alive and prosecuted a bunch of youngsters for attacking the Althingi building. This is a nightmare and with it comes a certain danger. When people have to fight windmills, continually wrestling with a Kafka-esque course of events, there is a real danger of them losing their will. That can never be allowed to happen.

Let’s be clear that most all progress is made when people conquer certain difficulites, and it is almost natural that all troubles create opportunities.

An old Chinese tale tells of a farmer who owned a horse, which ran away from home. When the neighbors came to offer their condolences the farmer asked “how do you know this is bad news?” The neighbors shook their heads and left but the next day the horse returned with a wild horse. Now the neighbors arrived to congratulate the farmer but he looked at them bewildered and asked, “how do you know if I have been lucky?” A bit later the farmer’s son was taming the new horse which threw him off and he broke his leg. The neighbors returned yet again to offer their condolences and again the farmer said “how do you know that this will turn out badly?” The neighbors left speechless but the next day a warlord came by the territory and gathered round all the young and healthy men available and sent them to war.

The banking collapse has given us a golden opportunity to create a better society. We have tolerated for too long an incorrigible executive power, a limp Althingi and a judicial system which is political to the core. If we stand together then the elites will lose their grip of the system and we reap a better society, a more just society, a country of which we can be proud.

Related posts:

1. Prisoners options
2. Loans of the Icelanders
3. Inflation At 16%
4. Why do we have price-indexation?
5. State Owned Banks Gearing Up For Competition