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Iceland recap - Icelandic Justice and Criminal Bankers

An update on the current state of affairs - also note the second last
paragraph - now ex- prime minister Gunnlaugsson resigned/ stepped down
due to "Panama Papers", as he was "the only Western politician who was
directly mentioned in those papers".

Just who do those Nords think they are, putting bankers in jail?!!?!!!
Who ever heard of such preposterosity?!

 17.04.2016 Author: F. William Engdahl
Icelandic Justice and Criminal Bankers
Column: Society
Region: Europe

On September 15, 2008, a former Goldman Sachs chairman, US Treasury
Secretary Henry Paulsen, deliberately triggered a predictable global
financial meltdown when he decided to break precedent and let Lehman
Bros, the fourth-largest Wall Street investment bank, go bankrupt. The
reasons for his decision are for another time. The fallout from that
traumatic financial crisis remains very much with the world financial
system to this day, more than seven years later. One of the
little-noticed casualties of that Lehman Bros. debacle was the worst
banking crisis in the history of one of the worldâ??s smallest
countries, Iceland. How that country of 323,000 citizens chose to deal
with the crisis is a model for the rest of the world. Instead of
beatifying the criminal bankers responsible for worst world financial
crisis in history, the people of Iceland did something quite

Iceland, a beautiful Nordic island in the far North Atlantic between
Greenland and Norway, with active volcanoes, streams with some of the
most delicious non-industrial and non-GMO wild salmon, self-sufficient
in energy from thermal springs and hydroelectric power, got lured into
the mad, greed-driven frenzy of the US sub-prime real estate crisis in
a big way. In October 2008, amid the global financial Tsunami
triggered by Paulsenâ??s Lehman act, the Iceland government nationalized
the three largest private banks, Glitnir, Landsbanki and Kaupthing,
following depositor panic withdrawals. The three banks, in a few short
years after they were privatized had managed to amass debts ten times
Icelandâ??s annual DGP.

When a group of sensible US economists proposed Paulsen nationalize
the top Wall Street banks behind the crisisâ??JP Morgan Chase,
Citigroup, Bank of America, Goldman Sachsâ?? to restore order and keep
credit flowing to the real economy, he replied that would be
â??socialism. We donâ??t do that in America.â?? Instead, Paulsenâ??s US
Treasury used hundreds of billions of US taxpayer dollars to buy
non-voting shares of the Wall Street banks, meaning the Government
didnâ??t demand any say in the banksâ?? policies in return. That might be
called bankersâ?? socialismâ??privatize the profits and socialize the

By November 2008 the UK and Dutch investors in a now-defunct savings
scheme of Landsbanki, Icesave, found their hundreds of millions of
Pounds of investments were, indeed, frozen like iceâ??their savings were
frozen ice. When the British government demanded of the Iceland
government the repayment of the deposits in the UK branches of the
formerly private Landsbanki bank, an international dispute, known as
the Icesave dispute, erupted. The British government invoked
anti-terrorism legislation against Iceland in order to freeze the
UK-based assets of Kaupthing, Icelandâ??s biggest bank, bankrupting the
bank. Icelandâ??s government turned to the IMF for a $5 billion bailout,
the first European country since Italy in 1976 to do so.

Citizen revolt

The Governor of the Iceland Central Bank, David Oddsson went against
the government of Geir Haarde, who had been complicit in facilitating
the private bankersâ??s criminal Ponzi schemes, and stated on national
TV, â??Icelanders will not pay the debts of profligate financiers (
).â??  In January 2009 Haardeâ??s coalition was forced to resign following
massive protests as unemployment soared from 1% before the crisis to
over 9% in months. The IMF, as always, was demanding severe Greek-like
austerity from the government as condition for its bailout. In
September 2010, Haarde became the first Icelandic minister to be
indicted for misconduct in office, and the only politician in the
world to be charged with responsibility for the financial crisis. He
stood trial before a special court for official offenses, the
Landsdómur. He was convicted on one count.

The Haarde government had twice negotiated terms under which Iceland
would repay the UK and the Netherlands governments, with interest, for
the cost of bailing out Icesave savers. The IMF demanded it as
condition for its money. And Parliament bowed. But Icelandâ??s staunchly
independent voters twice passed popular referenda rejecting the UK,
Dutch and IMF demands. Under the IMF austerity program, until it was
ended in 2011, Iceland went into an economic depression. Disposable
income fell by a quarter, and 30,000 people â?? one-tenth of the
population â?? went into serious loan default; thousands of homes were
repossessed ( http://www.theguardian.com/world/2013/oct/06/iceland-financial-recovery-banking-collapse

In April, 2013, 38-year-old Prime Minister, Sigmundur Davíð
Gunnlaugsson, was elected on promises of mortgage relief for every
homeowner instead of relief for foreign bank bondholders in Icelandâ??s
three failed banks. His government left international bondholders and
depositors out in the cold, as his government and Icelandic bank
administrators froze some 9 billion Pound sterling in foreign assets
the three banks held at the time of nationalization (

The new Finance Minister imposed a 39% tax on Icelanders wanting to
invest money abroad, as well as imposing capital controls, a move that
stabilized the currency. Most tellingly, the government prioritized
saving its people and economy and prosecuting and even jailing the
private bankers and politicians responsible for the crisis, a
180-degree contrast to the US or EU where governments used taxpayer
money to bail out the criminal banks responsible for the fraud in the
first place.

Jail the corrupt bankers!

On November 15, 2015, Iceland courts convicted the 26th banker
involved in the scandal that burst in September 2008. The bankers who
have gone to prison were charged with crimes ranging from insider
trading to fraud, money laundering, misleading markets, breach of
fiduciary duties, lying to the authorities, market manipulation to
embezzlement. Combined, the 26 jailed bankers will serve some 74 years
behind bars. As well, to date criminal fines totaling $212 billion
have been imposed on the 20 biggest banks. More bankers await trial (

By contrast, at the failed British HBOS bank group, the largest UK
mortgage lending bank, taxpayers were forced to make a $29 billion
taxpayer bailout. The UK Financial Services Authorityâ??s only
enforcement was against the head of corporate lending who was fined
£500,000 and banned from the financial services industry, and loss,
(the dishonor!) of knighthood for one HBOS director. In the failed
Royal Bank of Scotland, also bailed out by taxpayers billions, Fred
Goodwin, the head of Royal Bank of Scotland also lost his knighthood.
He had been knighted in 2004 for awarded in 2004 for â??services to
banking.â?? In the USA, not even a whisper of criminal charges against
the CEOs or directors of JP Morgan Chase or Goldman Sachs or Citigroup
has been heard. Government fines against various banks are written off
and the same criminals that Iceland put behind bars are left free.

The Iceland difference

Today Iceland is the successful model for the precise opposite of the
IMF Greece model of squeezing blood from a stone with brutal
austerity. It is the first and so far only European country to surpass
the 2007 pre-crisis economic levels. GDP grew for the first six months
of 2015 at an impressive 5.6%. Inflation went from 18% at the start of
the 2008 crisis to 2% by 2015. National debt went from 88% of GDP in
2010 to 81%, below most EU levels. In March 2015, the government of
Iceland officially withdrew its earlier candidacy to join the European
Union, the only country ever to do so.

Paradoxically, Prime-Minister Sigmundur Davíð Gunnlaugsson was caught
in the middle of the Panama Papers scandal and was forced to resign
due to the fact that he didnâ??t disclose all the financial assets that
were in his possession. His was the only Western politician who was
directly mentioned in those papers, which seems odd at best. However,
Iceland is still reluctant to back down.

Icelandâ??s President, Ã?lafur Ragnar Grímsson, explained the feelings of
his countrymen: â??We were wise enough not to follow the traditional
prevailing orthodoxies of the Western financial world in the last 30
years. We introduced currency controls, we let the banks fail, we
provided support for the poor, and we didnâ??t introduce austerity
measures like youâ??re seeing in Europe. Why are the banks considered to
be the holy churches of the modern economy? Why are private banks not
like airlines and telecommunication companies and allowed to go
bankrupt if they have been run in an irresponsible way? The theory
that you have to bail out banks is a theory that you allow bankers
enjoy for their own profit, their success, and then let ordinary
people bear their failure through taxes and austerity (
). â??