Hey Kid!!!! Me again...

[ss12]

Iceland did tax increases and cuts in spending simultaneously. We had our tax increases a last month, its time for spending cuts.

Iceland got rid of the federal reserve type banking system. Now they are going after the bankers for fraud.

[Clayton_Wetter]

Careful ss12, the elites wouldn't like this getting around. lol

[LITE-INN]

yep iceland is good role model

http://blogs.ft.com/economistsforum/2012/02/iceland%E2%80%99s-new-banking-disaster/

[kidrock]

Iceland got rid of the federal reserve type banking system. Now they are going after the bankers for fraud.

I was waiting for you to give the right answer. That's what needs to be done here.

[kidrock]

Careful ss12, the elites wouldn't like this getting around. lol

You can count on it that the elitist are not happy about this.

[mudslinger47]

I looked at it for a bit, but not knowing their exchange and their writ-offs it is hard to figure out, I did see three income taxes and a VAT tax. It doesn't make any diff, until we get rid of these politicians we have they'll still just spend that and more. I have said before, raise my tax, I'll get by, but the gubmint has to do real cuts, none of this baseline crap, real cuts.15% on every budget, period. From defence to welfare...

[ss12]

Careful ss12, the elites wouldn't like this getting around. lol

http://www.youtube.com/watch?v=ds6Rmg9Uzf4

[ss12]

The man who changed Iceland

http://www.youtube.com/watch?v=YH0_JQW--gc

[ss12]

Who's this banker?

http://www.youtube.com/watch?v=mOwZwkhFemQ

[LITE-INN]

By Olafur Arnarson, Michael Hudson and Gunnar Tomasson

Today, from Greece to Iceland, governments are acting as enforcers or even as collection agents on behalf of the financial sector — and Iceland stands as a dress rehearsal for this power grab.

The problem of bank loans gone bad has thrown into question just what should be a “fair value” for these debt obligations. The answer will depend largely on the degree to which governments back the claims of creditors. The legal definition of how much can be squeezed out is becoming a political issue pulling national governments, the IMF, ECB and financial agencies into a conflict, pitting banks, vulture funds and debt-strapped populations against each other.

This polarising issue has broken out in Iceland with the country now suffering a second round of economic and financial distress stemming from the collapse of its banking system in October 2008. Stuck with bad loans and bonds, foreign investors in the old Icelandic banks and their institutional investors sold their bonds and other claims for pennies on the dollar to hedge funds commonly known as vulture funds.

At that time, Iceland’s government owned 100 per cent of all three new banks, which were raised from the debris of the old, bankrupt banks. It intended for the banks to pass on to the debtors the discount on assets they had received from the old banks. This was supposed to be what “fair value” meant: the low market valuation at that time. It was supposed to take account of the reasonable ability of households and businesses to pay back loans that had become unpayable as the currency had collapsed and import prices had risen accordingly.

The IMF entered the picture in November 2008, advising the government to reconstruct the banking system in a way that “includes measures to ensure fair valuation of assets [and] maximize asset recovery.” In fact, the government negotiated an agreement with the hedge funds which is now seen as so loose as to give them a hunting licence on Icelandic households and businesses.

These groups, viewed by some people as the scavengers of the financial system, are the bane of many states. But there is now a danger of such funds oppressing entire national economies.

Iceland’s case has a special twist. Icelandic mortgages and many other consumer loans are linked to the country’s consumer price index or, until recently, to the krona exchange rate against leading currencies. Creditors can not only demand 100 per cent of face value, but also add on the increase in debt principal from the indexing. Thousands of households face poverty and loss of property because of loans that, in some cases, have more than doubled as a result of the currency crash and subsequent price inflation.

Something has to give. But so far it is Iceland’s economy, not the funds in question. The new banks have written off claims on big corporate debtors but household debts acquired at 30 to 50 per cent of face value have been re-valued at up to 100 per cent. As a result unpayably high debts are kept on the books at transfer prices that afford a windfall to financial predators, dooming debtors to a decade or more of negative equity.

The problem is now becoming a global one. How are the IMF and ECB to respond? Will they prescribe the Icelandic-type model of collaboration between governments and hedge funds? Or should governments be given the power to resist funds striving to profiteer on an international scale, backed by international sanctions against their prey?

Populist rhetoric is crafted to mobilise the widespread financial distress and general discontent as an opportunity to turn losers against each other rather than at the creditors. Neo-liberals have persuaded the public to believe that banks are needed to “oil the wheels of commerce” — that is, provide the credit bloodstream that brings nourishment to the economy’s moving parts. Only under such crisis conditions can banks collect what has become a fictitious build-up of debt claims.

Foreclosure time is not sufficient, because much property has fallen into negative equity — about a quarter of US real estate. In Ireland market value of real estate covers only about 30 per cent of the face value of mortgages. So a bailout becomes necessary.

The banks turn over their bad loans to the government in exchange for government debt. The Federal Reserve has arranged over $2 trillion of such bank-friendly swaps. Banks receive government bonds or central bank deposits in exchange for their bad debts, accepted at face value rather than at mark-to-market prices.

At least in the US and Britain, the central banks can print as much domestic currency as is necessary to pay interest and keep these government bonds liquid. Public agencies then take on the position of creditor vis-à-vis debtors that can’t pay.

These public agencies then have a choice. They may seek to collect the full amount (or at least, as much as they can get), as in the case of Fannie Mae and Freddie Mac in the US. Or the government may sell the bad debts to vulture funds for a fraction of their face value.

In the US, banks receiving TARP bailout money were supposed to negotiate with mortgage debtors to write down the debts to market prices and/or the ability to pay. This was not done. Is this the future of Europe as well? If so, the present financial crisis will become the great windfall for banks. Whereas the past few centuries have seen financial crashes wipe out the savings and creditor claims that are the counterpart to bad debts, today we are seeing the bad debts kept on the books, but the banks and bondholders that provided the bad loans being made whole at taxpayer expense.

Olafur Arnarson is an author and columnist at Pressan.is. Michael Hudson is professor of Economics at the University of Missouri-Kansas City. Gunnar Tomasson is a retired IMF advisor.

[ss12]

Michael Hudson Iceland

http://www.youtube.com/watch?v=UK8k5ST4zWU

[LITE-INN]

your going to follow a country that the population is only 320 ,000 people and still failing wow

[LITE-INN]

remember following a tiny country wow

[15D]

Iceland got rid of the federal reserve type banking system. Now they are going after the bankers for fraud.

From the two or three articles I read it appears that they "nationalized" 1 of 3 of the largest banks. All three where going bankrupt because of the shear amount of governmental debt they were carrying, somewhere in the neighborhood of 10 x GDP of combined debt. None of the articles mentioned anything about outright fraud on the part of the bankers.

The articles made it appear as a combination of austerity measures, also known as spending cuts, and tax increases is what made the turn-around along with a decent growth rate of 3-4 percent.

Now, if you are advocating to remove our Federal Reserve or Federal Banking System whom would you propose become the entity to set monetary policy? An elected politician? A group of Senators or Representatives? My thought is that the latter two would set policy based on incredibly short term gains causing much more havoc then the current system causes.

If you still want some scalps over the fiscal meltdown of 2008 I think you're going to be disappointed. With some small exceptions we're going to find that our banking system was caught holding the bag over home mortgages that should have never been issued due to meddling of tried and true banking principles by our government.

We're also going to find out it was a large mistake to repeal Glass-Stengle (I probably have this name wrong) from the 1930's that made it illegal for commercial banks to also double as brokerage houses. This law was repealed in the late 90's with a republican congress at Clinton's insistence.

[ss12]

From the two or three articles I read it appears that they "nationalized" 1 of 3 of the largest banks. All three where going bankrupt because of the shear amount of governmental debt they were carrying, somewhere in the neighborhood of 10 x GDP of combined debt. None of the articles mentioned anything about outright fraud on the part of the bankers.

The articles made it appear as a combination of austerity measures, also known as spending cuts, and tax increases is what made the turn-around along with a decent growth rate of 3-4 percent.

Now, if you are advocating to remove our Federal Reserve or Federal Banking System whom would you propose become the entity to set monetary policy? An elected politician? A group of Senators or Representatives? My thought is that the latter two would set policy based on incredibly short term gains causing much more havoc then the current system causes.

If you still want some scalps over the fiscal meltdown of 2008 I think you're going to be disappointed. With some small exceptions we're going to find that our banking system was caught holding the bag over home mortgages that should have never been issued due to meddling of tried and true banking principles by our government.

We're also going to find out it was a large mistake to repeal Glass-Stengle (I probably have this name wrong) from the 1930's that made it illegal for commercial banks to also double as brokerage houses. This law was repealed in the late 90's with a republican congress at Clinton's insistence.

1st good post 15d, I understand your concerns I have often wondered who would replace the federal reserve if things were to change. Then I think of North Dakota who has their own banking system and are doing quite well. We do have a department of treasury which should be taking care of it anyway. As far as the government medding in the home mortgages. I believe the
mortagae lenders took advantages of who they were loaning to and there have been several investigation on this fraud. I know if I go to my local bank they will not give me a loan on a house for 500k when all I can afford is a 125k loan. There has to be a better way and there is.