The Really Big Election This Weekend: Not in Iraq But In Iceland
Attention world: Iceland is about to speak. And maybe everyone, including the world’s financial elite, better listen closely.
There’s a referendum today in that tiny country with just 319,000 people. A vote with a great deal more symbolic as well as practical importance than the vote in Iraq tomorrow. This vote involves whether the people of Iceland will reimburse the governments of Britain and The Netherlands that have already reimbursed their own investors who bought deals sold by private Icelandic banks.
Here’s the choices in this Icelandic referendum. Does this small country go into deep penury for long years to make good on the promises of a few of its private bankers who have already brought it to the brink of financial ruin? Or not.
Those who who think they should point to the need for IMF loans and the fact that paying the debt is key to entering the Eurozone at a later date. Those against call this bailout the socialization of huge debt run up by private banks.
In an American context, this is the ultimate Tea Party issue. This referendum embodies populist revulsion by a citizenry being forced to bailout out the greedy and stupid few. That view is aligned against the one held by officials — officials not direct beneficiaries of this greed-based stupidity — who recognize that the entire world financial system as presently constituted is based on honoring even these awful, unwisely contracted debts.
It’s really comes down to a heart versus head thing. My heart is with the “we won’t pay for their vile behavior” crowd. My head says this could lead to a worldwide populist movement with totally unforeseen but predictable massive consequences.
An historical note here when viewing this seemingly piddling debt (in the larger debt picture) in a postage sized country. The event usually believed to have triggered the Great Depression was the failure of a piddling- size bank in the small country of Austria.
Is there an Iceland in the world’s near future? Don’t bet against it.
2 Responses to “The Really Big Election This Weekend: Not in Iraq But In Iceland”
Like a return to personal responsibility? Real risk assessment and management? If we're going to suffer consequences, wouldn't it be better to suffer the pain of repair than the pain of keeping the problem?
Actually, the thing to do is probably to combine observing this with what's happening in Greece.
It's not only that IMF-style austerity is overdue for a number of European nations with “social” spending excesses.
That's the future for much more of Europe, and something like it due someday here in the USA.