In his April 8 article headlined, “The Economic Crisis in Iceland: ‘IMF Medicine’ is not the Solution,” Michael Hudson asked:
Will Iceland Vote ‘No’ on April 9, or commit financial suicide,” their choice being: Reject debt bondage or “subject their economy to decades of poverty, bankruptcy and emigration of their work force.
In other words, destroying the nation for profit, extorting its wealth, selling off its natural resources and public enterprises, raising taxes on working Icelanders, and transforming the country into a dystopian nightmare, what Merriam-Webster calls “an imaginary place where people lead dehumanized and often fearful lives,” the opposite of utopia under conditions of deprivation, poverty, disease, violence, oppression, and terror, like in Orwell’s Nineteen Eighty-Four.
In other writing, Hudson called debt bondage “as deadly as outright military” defeat. Loss of livelihoods and assets leave people vulnerable to sickness, despair, and early deaths, much like what happened in post-Soviet Russia under Washington-imposed “shock therapy” when:
- 80% of farmers went bankrupt;
- around 70,000 state factories closed;
- unemployment became epidemic;
- a permanent underclass was created;
- poverty rose from two million in 1989 to 74 million by the mid-1990s, and in half the cases it was desperate;
- alcoholism and drug abuse soared;
- so did HIV/AIDS 20-fold;
- suicides also and violent crime four-fold; and
- the population declined by 700,000 a year; by 2007 it was 10% lower than in 1989 because of sharply reduced life expectancies.
In March 2010, Hudson explained that 93% of Icelanders rejected bailout terms. Otherwise, they faced repayment for billions in banking fraud. In fact, they’ve already been mercilessly hammered by “a falling GDP, rising unemployment, defaults, foreclosures,” and housing prices down 70% from their peak valuation, heading for mortgaging their futures unless freed from perpetual debt bondage.
Icelanders Again Reject Debt Repayment Plan
On April 10, Al Jazeera said, for the second time, they said nyet to UK and Netherlands demands. However, whether the current Social Democratic-Green coalition government goes along is very much open to question, given its subservience to capital and history of yielding to intimidation. As a result, it may ignore the referendum results and do what it pleases. It may be a while before it’s clear.
Prime Minister Johanna Sigurdardottir strongly hinted the wrong move, telling RUV public radio that economic and political chaos could follow if debt repayment is abandoned.
“The worst option was chosen,” she said. “The vote has split the nation in two.” Incomplete totals showed 58% voting “no” against 42% “yes,” rejecting outrageous bailout terms. Sigurdardottir didn’t explain if her coalition government would resign, saying only that “We must do all we can to prevent political and economic chaos as a result of this outcome.“
Al Jazeera said the debt problem resulted from “Britain and the Netherlands compensat(ing) their nationals who lost savings in online Icesave accounts owned by Landsbanki, one of three Icelandic banks that collapsed in late 2008.“
Hudson explained it saying:
[Icelanders] dream was dashed after the Icesave electronic Internet bank branches abroad were emptied out by their proprietors. Britain and the Netherlands paid out more than $5 billion to some 340,000 of their own depositors whom their own bank oversight agencies had failed to warn about the looting going on. Iceland’s taxpayers were told to bear the cost, as virtual tribute.https://www.globalresearch.ca/the-economic-crisis-in-iceland-imf-medicine-is-not-the-solution/24217
Those voting “no” reject the “incredible financial burden,” saying “there never was any legal obligation for Icelandic citizens to shoulder the losses of a private bank.”
Iceland’s Finance Minister Steingrimur Sigfusson said, “It is clear that we have reached the end of the negotiation road.“
Sigurdardottir said Iceland would defend its position before the European trade body court overseeing its cooperation with the European Free Trade Association Surveillance Authority, EFTA Surveillance Authority (ESA).
Last year, ESA said Iceland should repay Icesave depositors. On April 8, Britain’s chief secretary to the treasury, Danny Alexander, expressed disappointment, saying:
It is obviously disappointing that it seems that the people of Iceland have rejected what was a negotiated settlement….It looks like this process will now end up in the courts. There is a legal process going on and we will carry on through these processes to try and make sure we do get back the money that the British government paid out in past years.
In fact, it was extorted. In 2010, then Prime Minister Gordon Brown stunned Icelanders by invoking anti-terrorism legislation to safeguard British savers, making him in their view no different than pillaging marauders comparable to Viking invaders.
After again rejecting debt bondage, expect more pressure and threats to intimidate Iceland’s government to dismiss voter wishes and pay up – what Hudson calls financial warfare.
Moody’s fired the first volley, saying if repayment demands aren’t met, it “may” lower Iceland’s credit rating, making if more expensive to borrow, forcing them deeper into debt. Last March, after voters first rejected repayment, Fitch Ratings cut Iceland’s credit to junk, while Moody’s and Standard & Poor’s gave it their lowest investment grade.
In fact, all the major credit rating agencies are in bed with predatory bankers and their governments, waging financial warfare when targeted nations like Iceland balk about extortion terms.
An undated Bloomberg report said:
A final count showed 59.7% of voters said no to the so-called Icesave agreement, while 40.1% said yes, according to broadcaster RUV, which based its count on figures published by regional electorate commissions today.
Voter turnout was 75%. On Sunday, Netherlands Finance Minister Jan Kees de Jager said: “The “time for negotiation is over. Now the court will decide on this.” Iceland must meet its financial obligations. Ultimately, the Netherlands will get its money back, even through extortion if Icelanders don’t accept debt bondage, poverty, bankruptcy, and perpetual misery as long as they remain in Iceland.
However, Hudson says “Iceland has a strong legal case. Social Democrat warnings about the EU seem (way) overblown” about fraud committed by others. So it’s “a strange time (to consider) tak(ing) bad debt bank debts onto its own balance sheet” instead of letting the crooks repay the losses.
Repaying, of course, will shrink Iceland’s economy (and other countries going along) making it harder ahead to service debt, a vicious downward cycle to economic ruin. For months, the same process was replicated across Europe, notably in so-called PIIGS countries – Portugal, Ireland, Italy, Greece and Spain, besides other Eastern European ones.
In the West, trouble began in Greece, Hudson explained, saying:
This led to budget deficits, and Wall Street banks helped the government conceal its public debt in ‘free enterprise’ junk accounting. German and French creditors then made a fortune jacking up the interest rate that Greece had to pay for its increasing credit risk.
The usual scenario then played out, Greece, like other troubled countries, told to tax labor, cut social benefits, slash public payrolls and wages, and charge more for government services. In other words, “turn the(ir) econom(ies) into a giant set of tollbooths.”
The Baltic Tigers led the way, explained Hudson, public wages falling up to 30% and GDP over 25%. As a result, Latvia won’t “recover even to its 2007 pre-crisis GDP peak until 2016 – an entire decade” lost to financial predators, ripping off countries for profit, strangling them, hammering ordinary people most, a disease infesting Europe and increasingly America to institutionalize neoserfdom from one country to another, perhaps going global.
In the Eurozone, Ireland’s been hardest hit, facing “decades of austerity,” unless they break out of their trap. As a result, “the largest forced emigration (followed) since the Potato Famine of the mid-19th century.”
Today, says Hudson, “finance is the new mode of warfare,” cleaner, cheaper but just as destructive, hammering people with poverty and despair instead of bombs and invading hordes. Bankers are today’s invaders, extracting neoliberal tribute through predatory debt bondage, forcing repayments in perpetuity in some cases, especially in developing countries.
Hudson explains the obvious solution, the choice Argentina made a decade ago, saying nyet to pay up demands, having “little trouble in imposing a 70%” haircut on foreign creditors, take it or leave it. They took it, returning the country to economic health and prosperity, once freed “from its financial albatross!”
The pattern repeated “in Latin America and other Third World countries after Mexico announced that it could not pay its foreign debt in 1982.” Write-downs followed in Brady Bonds, “applauded” at the time “as a success story.”
Today, it’s a different story, countries like Iceland, Greece, Ireland and others told pay up or else, and accept “a generation (or more) of austerity, shrinkage and emigration.”
Their choice, of course, is neoliberal bondage or freedom. Icelanders chose the latter in March 2010 and again on April 9. It’s now up to their government to serve them or sell them out to UK and Dutch predators. Don’t bet on it doing the right thing.
Stephen Lendman lives in Chicago and can be reached at firstname.lastname@example.org. Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.