So, Iceland says "sod off you cant have your money back"
Discussion
Globs said:
How did Joe Public get bailed out?
Because they were cretinous enough to put money on deposit with these institutions. When it was possible to borrow money from pretty much any other bank and put it on deposit with the Icelandic banks at a profit that really should be telling you something.....something like "why won't these other banks lend money to Landesbanki and make more money than they can by lending it to me" ?
It's a pretty simple dynamic....banks are there to make money so if they are paying you a ridiculously high interest rate maybe it's not because they are a charity but because no one else will lend money to them ?
Anyone with a deposit of say over £10,000 should have been given only 90% of the money back above that level. That way people would now understand that higher interest rates are supposed to compensate you for taking higher risk.
What people should really be thinking about right now is that the Depositors Protection Scheme may get withdrawn from deposits held with overseas banks in the future.......that's the big implication of this.
Beardy10 said:
Globs said:
How did Joe Public get bailed out?
Because they were cretinous enough to put money on deposit with these institutions. :
It's a pretty simple dynamic....banks are there to make money so if they are paying you a ridiculously high interest rate maybe it's not because they are a charity but because no one else will lend money to them ?
As for people being cretins, while this may apply to many trusting and unthinking souls you always need to do the 'mother' or 'grandmother' test - if you think your mother may have put money in there then it's not just cretins, it's ordinary people who may not know much about finance.
In fact this is what I find so disturbing about this banking free for all in the last decade - because of the system of built-in-inflation (caused by using central banks to loan at interest, forcing money supply growth), people have to chase 'investments' to keep the value in their money, which means everyone turns into a financial expert, property speculator etc. when they could really be doing something rather useful instead, and about half of them will be taken to the cleaners.
This free-for-all 'I/m all right jack' way of running our (financial) lives has certain drawbacks I feel, one of which is needing to study the geneology and risk profile of where you put your money. This is especially galling in light of the number of highly paid and decorated government bodies whose job was to do just that, but when they fail spectacularly and everyone else lands in the s
t their gold plated jobs, bonuses and pensions are still just fine, and they can continue to enjoy an extraordinary standard of living way above those they have failed..Ozzie Osmond said:
Beardy10 said:
When it was possible to borrow money from pretty much any other bank and put it on deposit with the Icelandic banks at a profit ....
Any facts to back that up? Sounds like nonsense to me.http://walletwatchershow.com/2008/05/26/icesave-sa...
As you can see they were paying 2% over bank base rates...as you will recall there were plenty of banks offering cheap finance around that time which was close to base rates. In the wholesale markets at the time if you were foolish enough to put your money on deposit with them you could have easily got 10%....and if you had bought their debt closer to 20%. So whilst the consumer thought they were getting a great deal by getting 7% they were actually being mugged. The worst thing is that the BoE let them carry on taking deposits from UK customers when they were clearly going bust.
Look at this awards list for accounts in 2008
http://www.moneyfactsgroup.co.uk/awards/2008/mf/wi...
Like a bloody rogues gallery. Funny how AIB and Icesave appear so prominently..........
As for people being cretins, while this may apply to many trusting and unthinking souls you always need to do the 'mother' or 'grandmother' test - if you think your mother may have put money in there then it's not just cretins, it's ordinary people who may not know much about finance.
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Absolutely which is why I said everyone with deposits of under £10k gets everything back and anything over that they only get 90%. That way the mothers and grandmothers that can least afford it get all their money back and the slightly richer learn a lesson. What people don't seem to understand is that when you put money on deposit you are actually lending that bank money and their is a risk involved with that...the interest rate reflects that risk.
The banks may have been Icelandic, but had UK subsidiaries, with whom British clients were banking. The Icelandic govt guaranteed all deposits up to a certain amount, which allowed the banks to become part of the FSCS. Upon the banks failing, the FSCS payed out, in order to keep British account holders unaffected by the collapse, as the Icelandic govt had guaranteed the deposits.
Then the problem came in getting the money from Iceland. I don't know what law this falls under, be it breach of contract or something different. Regardless, diplomacy has failed. Time to get some use out of them Eurofighters.
Then the problem came in getting the money from Iceland. I don't know what law this falls under, be it breach of contract or something different. Regardless, diplomacy has failed. Time to get some use out of them Eurofighters.
Ash333 said:
The banks may have been Icelandic, but had UK subsidiaries, with whom British clients were banking. The Icelandic govt guaranteed all deposits up to a certain amount, which allowed the banks to become part of the FSCS. Upon the banks failing, the FSCS payed out, in order to keep British account holders unaffected by the collapse, as the Icelandic govt had guaranteed the deposits.
Then the problem came in getting the money from Iceland. I don't know what law this falls under, be it breach of contract or something different. Regardless, diplomacy has failed. Time to get some use out of them Eurofighters.
This, One such subsidiary is Derbyshire Building Society, still a lot of folk trying to get their money back.Then the problem came in getting the money from Iceland. I don't know what law this falls under, be it breach of contract or something different. Regardless, diplomacy has failed. Time to get some use out of them Eurofighters.
Looks like after a quick shock things are back to normal in Iceland:
"Iceland’s decision to break with global crisis-fighting efforts and raise interest rates this month may presage the return of the very same carry trade that channeled fast money into the country before its banking crisis.
Iceland raised its main interest rate on Aug. 17 by a quarter point to 4.5 percent, the first increase since its banks collapsed almost three years ago. The central bank, which also raised its economic forecast for 2011, is increasing rates as it eases capital controls that have locked in $4.3 billion in krona assets since 2008.
Iceland, where a 2008 banking implosion left bond investors trying to recoup $85 billion, can now boast a lower risk of default than the average for the European Union. The central bank signaled this month it may continue to raise rates to support the currency as the U.S. and the euro area resort to emergency easing to keep their economies afloat
Credit default swaps on Iceland’s five-year debt were at 278 basis points on Aug. 26, compared with a 345 basis point average for the 27-member European Union, CMA prices show.
“Investors are redefining risk,” Jonsson said. “Now bonds issued by sovereigns in the emerging markets are more desirable than those of countries such as Italy.”
Iceland’s economy will next year outgrow the euro area and maintain a smaller budget deficit in the process, the Organization for Economic Cooperation and Development said May 25. The island’s gross domestic product will expand 2.9 percent in 2012, compared with 2 percent in the 17-member euro area. Iceland’s government deficit will narrow to 1.4 percent of GDP, versus a 3 percent shortfall in the euro bloc in 2012, the OECD estimates.
‘Road to Recovery’
The island completed a 33-month International Monetary Fund program this month after the Washington-based lender established that all economic “objectives have been met and the country is on the road to recovery,” according to an Aug. 26 statement marking the island’s final review. The IMF praised the central bank’s decision to raise rates as an appropriate measure to tame inflation as import prices rise. Consumer price growth held at 5 percent in August, the highest level since June 2010. The krona has lost 6.5 percent versus the euro this year."
http://www.bloomberg.com/news/2011-08-28/iceland-r...
Maybe we should use Iceland, rather than Japan as a template on how to deal with a crisis.
"Iceland’s decision to break with global crisis-fighting efforts and raise interest rates this month may presage the return of the very same carry trade that channeled fast money into the country before its banking crisis.
Iceland raised its main interest rate on Aug. 17 by a quarter point to 4.5 percent, the first increase since its banks collapsed almost three years ago. The central bank, which also raised its economic forecast for 2011, is increasing rates as it eases capital controls that have locked in $4.3 billion in krona assets since 2008.
Iceland, where a 2008 banking implosion left bond investors trying to recoup $85 billion, can now boast a lower risk of default than the average for the European Union. The central bank signaled this month it may continue to raise rates to support the currency as the U.S. and the euro area resort to emergency easing to keep their economies afloat
Credit default swaps on Iceland’s five-year debt were at 278 basis points on Aug. 26, compared with a 345 basis point average for the 27-member European Union, CMA prices show.
“Investors are redefining risk,” Jonsson said. “Now bonds issued by sovereigns in the emerging markets are more desirable than those of countries such as Italy.”
Iceland’s economy will next year outgrow the euro area and maintain a smaller budget deficit in the process, the Organization for Economic Cooperation and Development said May 25. The island’s gross domestic product will expand 2.9 percent in 2012, compared with 2 percent in the 17-member euro area. Iceland’s government deficit will narrow to 1.4 percent of GDP, versus a 3 percent shortfall in the euro bloc in 2012, the OECD estimates.
‘Road to Recovery’
The island completed a 33-month International Monetary Fund program this month after the Washington-based lender established that all economic “objectives have been met and the country is on the road to recovery,” according to an Aug. 26 statement marking the island’s final review. The IMF praised the central bank’s decision to raise rates as an appropriate measure to tame inflation as import prices rise. Consumer price growth held at 5 percent in August, the highest level since June 2010. The krona has lost 6.5 percent versus the euro this year."
http://www.bloomberg.com/news/2011-08-28/iceland-r...
Maybe we should use Iceland, rather than Japan as a template on how to deal with a crisis.
http://en.wikipedia.org/wiki/Iceland#Military
This thread made me look, they have a coast gaurd and 'fought' us in the 'cod wars'.
Surprised Somali pirates haven't had a crack at 'em.
This thread made me look, they have a coast gaurd and 'fought' us in the 'cod wars'.
Surprised Somali pirates haven't had a crack at 'em.
Quite the bump.. Anyway, IIRC the only reason we lost the cod war was because of the cold war. We needed to have arms on iceland to protect us against the soviets and they were threatening to kick us out if we didn't give them fish.
Fish for a strategic military base? Fair trade, lmao.
Fish for a strategic military base? Fair trade, lmao.
Frankeh said:
Quite the bump.. Anyway, IIRC the only reason we lost the cod war was because of the cold war. We needed to have arms on iceland to protect us against the soviets and they were threatening to kick us out if we didn't give them fish.
Fish for a strategic military base? Fair trade, lmao.
I would rather have the fishFish for a strategic military base? Fair trade, lmao.
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