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The wikipedia article on the Icesave dispute (which seems not to have been updated since end of 08) has more on the legal details. To my mind, the legal case was overwhelmingly on the side of the English and Dutch.
by nanne (zwaerdenmaecker@gmail.com) on Mon Aug 17th, 2009 at 08:24:13 AM EST
[ Parent ]
I still see no reason to saddle the Icelandic taxpayers for liabilities incurred by Icelandic citizens (or rather, corporations) in actions where the UK and Dutch regulators don't seem to have done their work properly or diligently.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Aug 18th, 2009 at 05:38:23 AM EST
[ Parent ]
But they did, this is due to rules pertaining to the European Economic Area. Whose fault those rules are is a different question - and I can understand that it is hard to feel sympathy for the Brits who are simultaneously working against meaningful forms of regulation on banks and hedge funds.

The fact that Icelandic citizens have to pay up has to do with the actions of the previous Icelandic government, which decided to nationalise the banks and apply for an IMF credit rather than letting the banks and the country simply go bankrupt and wipe out the savings of Icelanders and foreigners alike.

The main principle here is discrimination. The Icelandic government saw fit to protect savers in Iceland itself but not foreign savers. This is not something you can do in an 'economic area' where your companies can operate abroad without subjecting themselves to the protection regimes abroad.

The British and Dutch are already letting Iceland off the hook for pragmatic purposes, they would be in a good legal position to ask for than what they are getting.

by nanne (zwaerdenmaecker@gmail.com) on Tue Aug 18th, 2009 at 07:34:04 AM EST
[ Parent ]
nanne:

The fact that Icelandic citizens have to pay up has to do with the actions of the previous Icelandic government, which decided to nationalise the banks and apply for an IMF credit rather than letting the banks and the country simply go bankrupt and wipe out the savings of Icelanders and foreigners alike.

Trying to sort this out for myself, this statement confused me.

If Iceland had let the banks go bankrupt, would they not have had to pay for some savings anyway as deposit guarantees? And is deposit guarantees not exactly what the present conflict is about?

Another thing that confuses me is, what did the icelandic government do when they took over the banks? Did they
a) put the banks into receivership?
b) take over the stocks and continue running the operations?
c) transfer the debt of the banks to the government?

If a or b they could still let the banks default on their debts, and if they need to start a new bank for those icelandic savings and loans operations. If c they are criminally insane, like their US counterparts.

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by A swedish kind of death on Tue Aug 18th, 2009 at 01:43:49 PM EST
[ Parent ]
You're right, it was muddled thinking. The banks were largely put into receivership, one bank was nationalised (see here). The banks were then restructed, and new ones split off by the government of Iceland.
by nanne (zwaerdenmaecker@gmail.com) on Tue Aug 18th, 2009 at 03:15:09 PM EST
[ Parent ]
If c they are criminally insane, like their US counterparts.

Or the Irish.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Wed Aug 19th, 2009 at 01:34:02 AM EST
[ Parent ]
See also A Modern Icelandic Saga: Part One by ChrisCook where the infamous phone call between Darling and Mathiesen is transcribed in full...

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Tue Aug 18th, 2009 at 06:30:54 AM EST
[ Parent ]

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