More on Icesave and the EU regulations

I wrote about the EU regulations about two weeks ago. See the post here.  A new argument has been brewing within me and probably many others as well.

The Icesave accounts and the mess surrounding them is explained here:

I was going to write about this anyway, but when I read The Economist lead article yesterday it prompted me to write it now. This quote from the Economist article explains the problem we in Iceland are facing; “Here the EU has identified a genuine problem—the system for supervising cross-border banks. But the result is a fudge. The failure of the Icelandic banks in the autumn highlighted the dangers to host countries of relying on the quality of foreign banks’ home regulators; the dismemberment of Fortis into its constituent parts reminded everyone that national governments are likely to be on the hook if trouble strikes.

This is in fact not just an Icelandic problem, this is a pan-European problem. The flaw came out when the banks here failed like the quote correctly say’s. The result for Iceland is the Icesave deal. A very unfair deal that we as a nation can never pay. What is a very real possibility is the collapse of the infrastructure of the nation. What makes us Icelandic can be destroyed such as our health care system, the insurance benefits for elderly, the educational system and unemployment will increase and the brain drain will increase.

The best and the brightest will leave and nobody will be left to pay the incredible taxes who have now been put on food, clothing, petrol, service and the companies and the individuals. A news story last week said that the income tax could be raised to 45%. Health care will be very expensive, food, education, transport, energy, everything is getting so expensive that we cannot pay, people cannot live. The income simply does not cover basic needs.

I know that the Brits and the Dutch are protecting their people by playing hardball when negotiating the Icesave deal. But I seriously doubt that those nations and in fact the IMF and the EU have the single mission to destroy Iceland. It’s not their goal to ruin a whole nation. EU regulations

The EU regulations

The reason the deal is actually worse than it should be is explained here.  Iceland should get a better deal, for the simple reason that when the banks fell, the regulatory failure appeared. After that, the EU regulations changed to prevent similar things taking place in the future. But the whole cost of this regulatory failure is falling on Iceland who has to pay insane amounts of money (we do want to pay, that is not in any doubt) but 5,5% interest on such an incredible amount of money is insane. No rights to pursue legal actions, over ten clauses by the UK and Dutch to default the deal and pursue legal actions against Iceland. The list of one sided restrictions goes on like this.

Iceland should in fact pay zero interests to cope with the currency failure on top of the Icesave debts, for the simple reason that Iceland exposed the weakness of the regulations and by doing so paved the way to a better reglulatory system for the EU and by doing so prevented massive loss of money. The Brits and Dutch used the EU to pressure Iceland not to take legal actions, because the system was so flawed, it could have collapsed the whole banking system in Europe.

So the question remains why should Iceland have to clean up the mess of EU regulations and in fact protect the financial system of Europe?

Advertisements

About this entry