Category Archives: Iceland

how the Greeks were railroaded and what it means for all of us

Dear Greeks,

You are a proud people, a proud nation. Tomorrow you have yet another set of elections.

You say: We’re free. Bild says: It’s in your hands. There is a difference. If you did not want our billions, it would have been fine by us for you to vote for any leftists or rightist clown you wanted. But for over two years now, the situation is like this:

Your ATM’s continue to give you euros, only because we put them there, the Germans and the other nations that have the euro. Yet you still call us Nazis, which we do not fine funny. But anyway.

But let’s be clear on this:

If the elections are won by parties that want to put an end to austerity and reform, breaching every agreement, we will stop paying. The agreement was: you fix your country and meanwhile we will help you. If you do not want this anymore, then we do not want it either. It’s in your hands.

Tomorrow is your choice. But actually there is none. Namely, you have to choose between painful 
 reason and utter destruction. And we are very much afraid that you don’t get that yet.

Yours in friendship

Your Bild.”.1

They might just as well have added – P.S. Nice little place you’ve got here, you wouldn’t want anything to happen…

Bild were far from alone. For the last few weeks almost all of the loudest voices have been bullying the Greek people into submission, including their two main political parties New Democracy and Pasok – the very parties that helped plunge the country into the crisis to begin with.

Sadly, it seems to have worked. At least for the time being. Enough Greeks voting for the pro-bailout/austerity package to secure an election defeat for the only party offering any genuine alternative, which was Syriza. So what happens next? Well, a pro-austerity government has since been formed, and under its authority the Greek people can now look forward to the further ruination of their country.

On election day [June 17th] Yanis Varoufakis, a Greek-Australian economist and head of the Department of Economic Policy at the National and Kapodistrian University of Athens sent a letter to the BBC and “assorted international media”. It begins as follows:

Over the past 48 hours, as Greek voters are mulling over their options prior to entering the polling stations, the international media have indulged in a frenzy of disinformation and scaremongering. Gone is the nuanced reporting of the BBC, nowhere to be seen the critical approach to the Euro Crisis that the rest of the international media have shown over the past few weeks. As if united behind a common cause, the hordes of international TV and Radio reporters are now peddling a simple line: Today, the Greek people are choosing between ‘Reason’ (meaning the pro-bailout New Democracy party) and ‘Indulgence’; between staying in the euro and leaving on a whim. In moment of greater exuberance, they add that, today, Greeks can deal a decisive blow at the Eurozone by voting against the European Union’s strategy for dealing with the Euro Crisis. What utter nonsense!

This is nothing but an Assault on Truth. First, Greeks are NOT voting on whether they want to stay in the Eurosystem or to leave. They are voting between two different programs on how to survive within the Eurozone. On the one hand, there is the discredited ‘establishment’ line which has it that, to stay in the Eurozone, Greeks should simply do as they are being told by the troika. On the opposite corner, there is the Syriza position that doing as we are told is guaranteed to lead to the wholesale and final collapse of what is left of the Greek social economy, thus leading us out of the Eurozone by default. Their recommendation is that Greece should adopt a determined bargaining stand.

Click here to read the full letter.

Perhaps in response, Varoufakis was then invited to give an interview to BBC news. The interview can be seen here:

Strangely (as you will see if you watch the clip) the link to Athens failed. Varoufakis says:

[So,] It was with great relief that I received a call from their TV News Dept offering me a chance to make my point on camera. But as I was coming to that point, the link surreptitiously caved in. Now, I have no doubt that it was, most probably, a genuine technical failure. Having said that, the fact that I was not given a chance to complete my point at a later stage raises questions.

Click here to read more on Yanis Varoufakis’ blog.

The problems facing Greece began as a banking crisis that was born in the USA and frankly I can barely believe my ears when I hear some (especially American) commentators talking about the dangers of ‘Greek contagion’. The situation in Greece and elsewhere is the product of deregulation (especially of Wall Street and the City of London) combined with banker incompetence and criminality. Meanwhile, the endless bailouts just about pay to keep the banks afloat whilst compounding the debts and thus actually deepening the crisis itself. Only one country has so far stopped this rot and that country, Iceland, tackled their own problems by means of criminal prosecutions and a debt moratorium:

Iceland also did what other parts of Europe haven’t dared to do – let its banks go under. It took some of the cost itself but forced foreign creditors to take the biggest hit.

Lauded by some economists for taking unorthodox measures to fix its broken economy, others see it as a one-off example that would be hard to replicate.2

Even Iceland did not survive entirely unscathed but they have at least turned the corner. Their own economy is growing again:

Iceland’s GDP growth estimated at some 2.6 percent this year will outshine even powerhouses like Sweden.

“These are among the highest numbers in Europe,” said Finance Minister Steingrimur Sigfusson. “Sometimes it is easier to turn a small boat around than a big ship.”3

No doubt this is true, although tragically we may never find out how quickly our own ships might be turned around with Greece and the larger European flotilla still steering towards inevitable disaster:

Europe’s peoples are being marched into a catastrophe. They know that this is their predicament. They can see their march is leading them off a mighty cliff. But they are too afraid to veer off, in case there are beaten back into line, in case they get lost in the woods, for reasons that sheep know best. However, the only way this hideous march can end is if someone summons up the courage and does it. And steps out, showing the others that this march can stop and must stop – for everyone’s benefit. Who is that someone? We, Europeans, do not have many options. As I wrote above, the Irish people had a chance but did not take it. In two weeks, the Greeks have their chance. Voting for Syriza would offer us (and by ‘us’ I mean all Europeans) a chance of this circuit-breaker. A chance to say: Enough! Time to change course in order to save the Eurozone, so as to prevent the Great Postmodern Depression which lurks once the euro-system fragments formally.4

The abiding question: how many more opportunities can we afford to miss?

Click here to read more of the same excellent article by Yanis Varoufakis.

1“Liebe Griechen,

Ihr seid ein stolzes Volk, ein stolzes Land. Morgen wählt 
Ihr mal wieder Euer Parlament. Ihr sagt: Wir sind frei. BILD sagt Euch: Ihr habt es in der Hand. Das ist ein Unterschied. Wenn Ihr unsere Milliarden nicht bräuchtet, dann könntet Ihr von uns aus jeden Links- oder Rechts-Hallodri wählen, den Ihr wollt.

Seit mehr als zwei Jahren ist es aber so:

Aus Euren Geldautomaten kommen nur deshalb noch Euro heraus, weil 
wir, die Deutschen, und die anderen Euro-Staaten sie 
reingesteckt haben. Dass wir in Griechenland trotzdem als Nazis beschimpft werden, finden wir nicht komisch. Aber sei’s drum. Nur eines muss klar sein:

Wenn bei Euch jetzt Parteien gewinnen, die entgegen aller Verträge Schluss machen wollen mit dem Sparen und den Reformen – dann werden wir nicht mehr zahlen. Der Deal war: Ihr bringt endlich Euer Land auf Vordermann und wir helfen Euch über die Durststrecke. Wenn IHR das nicht mehr wollt, wollen WIR auch 
nicht mehr. Ihr habt es in der Hand.

Morgen ist Eure Wahl. Aber eigentlich ist es gar keine. 
Ihr habt nämlich nur die Wahl zwischen schmerzhafter 
Vernunft und völligem Untergang. Wir fürchten: Ihr habt das immer noch nicht begriffen.

Liebe Grüße

Eure BILD”

From an article entitled “Liebe Griechen, macht jetzt keinen Fehler” [literally, “Dear Greeks, don’t make a mistake now”], published in Bild, on June 15, 2012.

2 From an article entitled “Banking crisis over, Iceland’s economy thaws: Many see Iceland as offering a lesson to struggling European countries such as Greece and Spain”, written by Mia Shanley for Reuters, published on May 3, 2012.

3 Ibid.

4 From an article entitled “Why Europe should fear Fine Gael-like ‘reasonableness’ much, much more than it fears Syriza”, written by Yanis Varoufakis and posted on thegreekperspective.


Filed under analysis & opinion, austerity measures, Greece, Iceland, Ireland

lessons from Iceland – the new IMF poster-child

In 2008, Iceland suffered the third largest financial meltdown in history. It was a crisis that had been triggered when some of Iceland’s leading bankers were caught running a Ponzi scheme, and as a consequence, Gordon Brown’s government actually applied anti-terrorist legislation to freeze Icelandic bank assets in Britain:

“We’re still on the list — in the wonderful company of al-Qaeda, the Taliban, Sudan, North Korea, Iran and a number of other entities — where we do not belong,” Iceland’s Prime Minister, Geir Haarde, said in an interview with TIME, referring to the British government’s website listing of regimes subject to financial sanctions. “The application of the antiterrorist legislation has created a lot of ill will here,” said Haarde — particularly in combination with London’s demand that the Icelandic government recompense British depositors in a subsidiary of the failed Icelandic bank Landsbanki to the tune of $5 billion, or “roughly half of Iceland’s GDP,” Haarde added. “Our parliament will never agree to accepting that kind of debt burden. It’s unsustainable.”1

So you might very reasonably suppose that some of these ‘financial terrorists’ would by now have been put away behind bars, but think again. Instead, this same criminal elite is not only at large, but still very much in the business of financial speculation. Meanwhile, and in time-honoured tradition, it’s the people of Iceland who are being punished for these crimes; with the country already in ruins and their government having to run into the arms of the IMF to secure a $2 billion loan, which it may or may not have spent (this apparently remains unclear), but which has certainly not as yet been repaid.

On Wednesday [Nov 2nd], Birgitta Jónsdóttir, who is a member of the Icelandic parliament (Althing), formerly representing the Citizen’s Movement, but now one of three Icelandic MPs representing The Movement (Hreyfingin), spoke with Max Keiser on Russia Today‘s Keiser Report. She told him:

“The interesting thing is that the IMF has now decided to use Iceland as a promotional kick for them being the new cuddly and soft IMF. I had to remind the people from the IMF, at the conference in Iceland last week, about their policy in Greece, and their policy and programme in Lithuania, where they indeed have not changed anything from the previous disasters in Asia. But they’re still trying to market the IMF as if it has changed. And I think it’s dangerous. Many economists who looked at the Icelandic example have proved that the IMF has changed. Now, hear my warning, they have not!”

Of course, ‘help’ from the IMF always comes with strings attached; a set of ‘conditionalities’ that demand the fire sale of national assets and the weakening of welfare systems, which is precisely what’s happening to Iceland right now:

“We had an IMF deputy managing director speaking at this conference in a panel. She said that the IMF had helped strengthen the welfare system. Which is, of course, a ludicrous lie… We are having an exodus out of Iceland. We don’t even have properly staffed hospitals. And all the hospitals have been slashed so badly that we’ve been getting letters from all of them – the parliamentarians in Iceland – just basically saying that they can’t cut any more unless we will have health hazards. The same applies to the educational system.”

Yet in spite of such IMF involvement, Jónsdóttir says that there’s still no transparency in the Icelandic banking system:

“I think that we have to bear in mind that most politicians, or you know, people in power are puppets. They’re puppets for the financial sector. And we just have to face it. And it is really time that we looked beyond the traditional politics, because let’s face it, our democracies, they are dictatorships with many heads. Because we, the people, we do not have access to decision-making, or to making sure that they are doing their jobs in favour of our needs, and the needs of the great many, but only the few.”

But in a way, Iceland have escaped lightly, because at least their banks were allowed to fail, which means no more bail-outs, and so, unlike with the situation in Greece, there has been no descent into such a bottomless debt spiral. And unlike the Greeks, the people of Iceland were granted not one, but two referenda (March 2010 and April 2011) and, on both occasions, very sensibly voted against a bailout. Although, as Jónsdóttir explains, there were also more practical reasons for the Icelandic default and the collapse of their banks:

“It was not because the Icelandic government was so smart that they decided to let the banks fail. They just couldn’t get the money to save them. Everybody thought that was really bad, but that actually has turned out to be a great blessing for us. That the three banks were actually allowed to fail.”

Jónsdóttir says that she doesn’t believe the IMF will ever change because “we all know what the function of the IMF is. And that is not to look after the people but to look after the people that have the power. So they’re looking after the 1%, not the 99%.”

However, during the recent IMF conference in Iceland, a surprise suggestion did apparently come from the chief economist of Citigroup, Willem Buiter, who said that there should be a debt jubilee for Iceland.

Jónsdóttir adds that:

“Maybe that time has come everywhere. Maybe it’s time that we start anew. And I think that what I’ve been hearing everywhere is that people don’t trust in the system – any aspect of the system, because the system is self-serving; it doesn’t matter if it’s the financial system or other systems. So yeah, why don’t we take this good man’s advice and have debt jubilee everywhere.”

1 From an article entitled “Iceland to Britain: ‘We’re no terrorists’”, written by Jonas Moody, published by Time on November 3, 2008.,8599,1855901,00.html

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Filed under austerity measures, Britain, debt cancellation, Greece, Iceland, Max Keiser

the IMF and its part in our downfall

For a refreshingly frank and insightful examination of the reasons for the current global economic crisis, and, more specifically, of the IMF’s part in our accelerating downfall, I recommend the following programme:

Empire: The IMF on trial

broadcast on Al Jazeera on Thursday 11th August at 9:00pm–10:00pm

Presenter Marwan Bishara leads a searching debate into the historic failures of the IMF, with reflections on the legacy of its intervention in Latin America — most especially in Argentina — as well as in East Asia and Africa. There is also speculation about what is likely to happen to Egypt, after calls for IMF intervention were declined, and to Greece, where the imposition of “austerity measures” is already in full swing.

The guests are:
Professor Alex Callinicos, director of European Studies, King’s College London and author of “Bonfire Of Illusions”.

Ann Pettifor, fellow, at the New Economics Foundation and author of “The Coming First World Debt Crisis”

Georges Corm, former Lebanese finance minister and former special consultant, World Bank

Dr Mario Blejer, former governor, Argentine Central Bank and former advisor, Bank Of England

Also included are interviews with:
Christine Lagarde, managing director, International Monetary Fund

Professor Alan Cibils, chair, Political Economy, Universidad Nacional Sarmiento

The programme is still available on Al Jazeera at the following times next week:

Sunday: 7:00 am; Monday: 9:00 pm; Tuesday: 1:00 pm; Wednesday: 2:00 pm; and Thursday: 7:00 am.

Click here to watch on the Al Jazeera website.

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Filed under Argentina, did you see?, Egypt, Europe, Greece, Iceland, Ireland, Italy, Latin America, Spain, Tunisia, Uncategorized, USA