Iceland Jails Bankers Accused of Looting Economy.....

[laughingwillow]

http://www.breitbart.com/article.php?id ... _article=1

from the linked article: More than a year and a half after Iceland's major banks failed, all but sinking the country's economy, police have begun rounding up a number of top bankers while other former executives and owners face a two-billion-dollar lawsuit.

Since Iceland's three largest banks -- Kaupthing, Landsbanki and Glitnir -- collapsed in late 2008, their former executives and owners have largely been living untroubled lives abroad.

But the publication last month of a parliamentary inquiry into the island nation's profound financial and economic crisis signaled a turning of the tide, laying much of the blame for the downfall on the former bank heads who had taken "inappropriate loans from the banks" they worked for.

[AliceTepes]

why can't we do this in Amerika?

[laughingwillow]

Good question, Alice.

My guess is that our gubmit is too cozy with big bidness to put an end to the charade on their own. Right now its capitalism for the people and socialism for corporations, imo. And there are actually people supporting the system as it stands.

lw

[Glider]

I've got to wonder where they've been living untroubled abroad.  My understanding is that China is about the only place that came through the last few years with a largely undamaged economy.

Another motivation here, I believe, can be gleaned from wikipedia's description of the nation.  While it has a free market economy, it also has a relatively small population compared to  many other nations (300,000 compared to Ohio's 7.5 million) and a rather generous welfare system.  Couple this with the bank failures looking like they hit Iceland rather hard, wikipedia describes it as a systematic failure, and I suspect that the Icelandic government is running out of options.

The US, UK, and other similar nations are borrowing money (largely from China, but from whoever can still afford to buy nationally issued treasury bonds) and raising taxes.  Iceland doesn't have a large body of taxpayers to draw on, so even a hefty tax hike doesn't provide them with a lot of wiggle room.  We've recently seen Greece, Spain, and Portugal run into a ceiling with borrowing as well (their treasury bonds were harshly downgraded due to belief that those nations will not be able to buy them back at maturity).

In my mind this paints a picture of a nation with few remaining options to obtain money in order to engage in the world wide approved practice of trying to shore up the economy, and a banking industry that cannot really be further damaged by government action.

Imagine the same action taken by US / UK government.  As their banking systems are not exactly healthy, they also cannot be described as having systematically failed.  Money is still flowing.  But start arresting bankers, and even the more honest of the bunch are likely to close up shop and try to find some place to hide.  

We live in an imperfect world, with imperfect solutions.  In this case I can imagine that Iceland's solution, while appealing to many, would not have a net positive effect in a society where other options were available.

[laughingwillow]

I don't want to arrest bankers, per se... Just those who break the law.

lw

[Glider]

Well, I agree, in general principle.  All those damn pot smokers breaking the law....  But I understand your point and agree with you.  

I think part of the problem is who is making the laws, and what they see fit to regulate.  The idea that Joe can purchase an insurance policy on Bill's mortgage such that the beneficiary of the policy is Joe and the payout is 10X what Bill owed in the first place is bad.  But then to find that Joe was selling Jack debt packages that should those debt packages not be paid, Joe makes out even better than if they are paid....  And then more of my tax money is spent making good on the insurance policy rather than paying off the loan so that the insurance policy need not be paid.....

Wow, my tiny little mind hurts.

[laughingwillow]

Well, my friend, we have crimes with bona fide victims involved and victimless crimes. I put the bankers in the first group and pot smokers in the second.

lw

[laughingwillow]

Looks like the blame game is heating up....

http://www.bloomberg.com/apps/news?pid= ... xF1YfeViEc

quote from linked article: May 16 (Bloomberg) -- Greece is considering taking legal action against U.S. investment banks that might have contributed to the country's debt crisis, Prime Minister George Papandreou said.

"I wouldn't rule out that this may be a recourse," Papandreou said, in response to questions about the role of U.S. banks in the crisis, in an interview on CNN's "Fareed Zakaria GPS." The program, scheduled for broadcast today, was taped on May 13. Neither Papandreou nor Zakaria mentioned any banks by name.

[Glider]

Greece is another one that is running out of options to continue to prop up its economy.

I was going to walk away from this thread, as I voiced my opinion.  However it occurs to me that there may be those who read this who don't quite understand.

I was not taking a pot shot (punny, eh?) at laughingwillow's politics.  Rather I was simply pointing out that sometimes it is the law itself which is wrong.  To that end, I think laughingwillow and I agree more than we disagree.  

In the case of financial politics it is easy to believe that those who craft the law prefer that anyone who can afford a lawyer to argue this point over that point can largely ignore the law, at least until someone with a better lawyer comes along wanting the law to mean something different.  However I suspect that it is closer to the truth to say that the applicable laws were written by a variety of individuals with different end goals, and none of them necessarily had a good grasp of what they were crafting, nor what effect it might have "in the wild".  After all, if these people could cut it as lawyers and business executives, why on earth would they have stooped to running for office?  

-G-

[Zaka]

I don't want to arrest bankers, per se... Just those who break the law.

lw

Irie,
Get it right..These are "Bankster"
Hope that helps with your terminology...
Respect
Z

[laughingwillow]

LOL Banksters it is, then. Lock them all up.

lw

[dendro]

Iceland is small, so everyone knows what happened, and they know the people that did them wrong. The takeover attempt by the London bank was so blatant.

IMO there would be a net gain to start game over, clear out the banksters, and return to hard currency and local banks. Even with transition losses, net gain.

Go Iceland!