[kentbrookug]

Oct. 13 (Bloomberg) -- Iceland's government will this week present a bill allowing debtors to walk away from obligations that exceed asset values and to nullify personal bankruptcies after four years, Internal Affairs Minister Ogmundur Jonasson said.

"All Icelanders can see that our society is currently in turmoil," Jonasson said in an interview in Reykjavik. "We're therefore required to sit down at the table and offer solutions; I don't anticipate that the people running financial institutions will disagree."

Prime Minister Johanna Sigurdardottir's coalition is holding talks with the lenders today to thrash out housing market reforms after about 8,000 protestors gathered outside parliament last week to show their anger over rising homeowner insolvencies. The International Monetary Fund, which is leading Iceland's $4.6 billion bailout, estimates that 63 percent of the island's loans are non-performing.

Jonasson says he favors a proposal put forward by the Interest Group of the Homes, which represents households demanding debt relief. The lobby group wants lenders to forgive about 200 billion kronur ($1.8 billion) in mortgage debt.

The opposition, which met with the government yesterday, is likely to back the proposals.

IMF Obstacles

"The banks need to be willing to accept that the debts of households are corrected," said Gunnar Bragi Sveinsson, a Progressive Party lawmaker, the country's second-biggest opposition group, in an interview. "The opposition has been of the opinion that some kind of a general reduction of debt needs to take place; the form and shape of that reduction has to be calculated down to a number that society can agree on."

Sigurdardottir has already extended by five months a moratorium on foreclosures due to expire in October, a measure that may breach the terms of her government's agreement with the IMF. The fund won't be "allowed" to hinder the government's efforts to reduce household debts, she said on Oct. 8.

The country's banks are state-controlled successors to the failed lenders that brought down the economy two years ago. The resolution committees of Kaupthing Bank hf and Glitnir Bank hf agreed on behalf of creditors to take stakes in the new lenders, Arion hf and Islandsbanki hf, to cover part of their claims. Creditors of Kaupthing, Glitnir and Landsbanki Islands hf are owed as much as $86 billion in total.

'Enormous' Problem

A write-down of $1.8 billion is equivalent to about 8 percent of total assets at Iceland's three biggest banks, their 2009 balance sheets show.

"The problem is enormous," Eyglo Hardardottir, a lawmaker in the Progressive Party, told local broadcaster RUV today. "No solution is simple, but this is doable."

Most of Iceland's mortgage debt is based on inflation- linked bonds. The consumer price index soared 41 percent from January 2007 through September this year, according to Statistics Iceland. Real wages fell 10.1 percent from the beginning of 2007 through August this year, the last period for which data are available, according to the office. Real disposable incomes slumped 20.3 percent last year, the central bank estimates.

"Yet another matter we need to complete in the next few days is how we can rid Iceland of the inflation index, which is atrocious," Jonasson said.

Footing the Bill

Though most of the country's non-performing loans stem from Arion, Islandsbanki and Landsbanki successor NBI, according to the IMF, the biggest provider of inflation-linked debt is the state-backed Housing Financing Fund. The HFF accounted for 64 percent of Iceland's 1.23 trillion kronur in outstanding mortgage debt at the end of June, according to the Financial Supervisory Authority.

HFF Director Asta H. Bragadottir said the mortgage lender isn't able to withstand a flat reduction of all its home loans, in an interview today. If it is forced to write down the debt, the government will need to cover the loss or the country's pension funds, which hold most of the bonds backing the debt, would need to agree to take the loss.

http://www.sfgate.com/cgi-bin/articl...#ixzz12QwVyiKN

[Carfanate]

They are dreaming.

They will blow Iceland off the map with tacttical nukes before the allow a debt jubilee of ANY KIND.


The ability to collect on unpayable debts is why they get the money in the first place. Do you really expect the bankers are gonna walk way

Please.


T

[nithhysfusy]

Vid is in spanish, but subtitles are there.

Way to go Iceland. This happened back in late February. I wonder why I never heard this on any news sites here?



http://www.youtube.com/watch?v=uyxzg...feature=colike


Icelandic Anger Brings Debt Forgiveness in Best Recovery Story


Icelanders who pelted parliament with rocks in 2009 demanding their leaders and bankers answer for the country’s economic and financial collapse are reaping the benefits of their anger.

Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association.

Icelandic Anger Brings Debt Forgiveness

A cyclist passes an Icelandic national flag hanging in a popular shopping street in Reykjavik, Iceland.

A cyclist passes an Icelandic national flag hanging in a popular shopping street in Reykjavik, Iceland. Photographer: Paul Taggart/Bloomberg



“You could safely say that Iceland holds the world record in household debt relief,” said Lars Christensen, chief emerging markets economist at Danske Bank A/S in Copenhagen. “Iceland followed the textbook example of what is required in a crisis. Any economist would agree with that.”

The island’s steps to resurrect itself since 2008, when its banks defaulted on $85 billion, are proving effective. Iceland’s economy will this year outgrow the euro area and the developed world on average, the Organization for Economic Cooperation and Development estimates. It costs about the same to insure against an Icelandic default as it does to guard against a credit event in Belgium. Most polls now show Icelanders don’t want to join the European Union, where the debt crisis is in its third year.

The island’s households were helped by an agreement between the government and the banks, which are still partly controlled by the state, to forgive debt exceeding 110 percent of home values. On top of that, a Supreme Court ruling in June 2010 found loans indexed to foreign currencies were illegal, meaning households no longer need to cover krona losses.

Crisis Lessons

“The lesson to be learned from Iceland’s crisis is that if other countries think it’s necessary to write down debts, they should look at how successful the 110 percent agreement was here,” said Thorolfur Matthiasson, an economics professor at the University of Iceland in Reykjavik, in an interview. “It’s the broadest agreement that’s been undertaken.”

Without the relief, homeowners would have buckled under the weight of their loans after the ratio of debt to incomes surged to 240 percent in 2008, Matthiasson said.

Iceland’s $13 billion economy, which shrank 6.7 percent in 2009, grew 2.9 percent last year and will expand 2.4 percent this year and next, the Paris-based OECD estimates. The euro area will grow 0.2 percent this year and the OECD area will expand 1.6 percent, according to November estimates.

Housing, measured as a subcomponent in the consumer price index, is now only about 3 percent below values in September 2008, just before the collapse. Fitch Ratings last week raised Iceland to investment grade, with a stable outlook, and said the island’s “unorthodox crisis policy response has succeeded.”

People Vs Markets

Iceland’s approach to dealing with the meltdown has put the needs of its population ahead of the markets at every turn.

Once it became clear back in October 2008 that the island’s banks were beyond saving, the government stepped in, ring-fenced the domestic accounts, and left international creditors in the lurch. The central bank imposed capital controls to halt the ensuing sell-off of the krona and new state-controlled banks were created from the remnants of the lenders that failed.

Activists say the banks should go even further in their debt relief. Andrea J. Olafsdottir, chairman of the Icelandic Homes Coalition, said she doubts the numbers provided by the banks are reliable.

“There are indications that some of the financial institutions in question haven’t lost a penny with the measures that they’ve undertaken,” she said.

Fresh Demands

According to Kristjan Kristjansson, a spokesman for Landsbankinn hf, the amount written off by the banks is probably larger than the 196.4 billion kronur ($1.6 billion) that the Financial Services Association estimates, since that figure only includes debt relief required by the courts or the government.

“There are still a lot of people facing difficulties; at the same time there are a lot of people doing fine,” Kristjansson said. “It’s nearly impossible to say when enough is enough; alongside every measure that is taken, there are fresh demands for further action.”

As a precursor to the global Occupy Wall Street movement and austerity protests across Europe, Icelanders took to the streets after the economic collapse in 2008. Protests escalated in early 2009, forcing police to use teargas to disperse crowds throwing rocks at parliament and the offices of then Prime Minister Geir Haarde. Parliament is still deciding whether to press ahead with an indictment that was brought against him in September 2009 for his role in the crisis.
A new coalition, led by Social Democrat Prime Minister Johanna Sigurdardottir, was voted into office in early 2009. The authorities are now investigating most of the main protagonists of the banking meltdown.

Legal Aftermath

Iceland’s special prosecutor has said it may indict as many as 90 people, while more than 200, including the former chief executives at the three biggest banks, face criminal charges.

Larus Welding, the former CEO of Glitnir Bank hf, once Iceland’s second biggest, was indicted in December for granting illegal loans and is now waiting to stand trial. The former CEO of Landsbanki Islands hf, Sigurjon Arnason, has endured stints of solitary confinement as his criminal investigation continues.

That compares with the U.S., where no top bank executives have faced criminal prosecution for their roles in the subprime mortgage meltdown. The Securities and Exchange Commission said last year it had sanctioned 39 senior officers for conduct related to the housing market meltdown.

The U.S. subprime crisis sent home prices plunging 33 percent from a 2006 peak. While households there don’t face the same degree of debt relief as that pushed through in Iceland, President Barack Obama this month proposed plans to expand loan modifications, including some principal reductions.

According to Christensen at Danske Bank, “the bottom line is that if households are insolvent, then the banks just have to go along with it, regardless of the interests of the banks.”

[Gazeboss]

The ONLY reason this is happening is because Iceland is on an island and everyone knows everyone else (in a manner of speaking).

Remember what happened - people showed up at the President or Prime Minister's house, surrounded it, and lit flares in protest. Only THEN did the political weasel listen to the public.

[Aozenee]

They are dreaming.

They will blow Iceland off the map with tacttical nukes before the allow a debt jubilee of ANY KIND.

The ability to collect on unpayable debts is why they get the money in the first place. Do you really expect the bankers are gonna walk way

Please.

T

i'm not sure but i think there might be only 300,000 people in Iceland.

maybe they make exceptions for small frozen islands. maybe the Prime Minister met with the bankers and offered to pay them in frozen polar bear turds (no, it's not a new kind of Ben & Jerry's Ice Cream ) and they realized that, well, basically, they (the banksters) were idiots to loan such a small country so much money.

[GustavM]

And being homeless in Iceland would be a very chilling event.......

[AutoCadPhotoSHOP]

If the debt jubilee happens, when the promised shit storm of economic collapse doesn't happen and people realize the only ones who suffered were the thieving banks, the rest of the world just might take notice. We can hope, right?

[nithhysfusy]

Not a lot of coverage on the latest out of Iceland. Still looking for corroborating articles.


GLOBAL ELITES THROWN OUT OF ICELAND: Iceland Dismantles Corrupt Gov’t Then Arrests All Rothschild Bankers



Since the 1900′s the vast majority of the American population has dreamed about saying “NO” to the Unconstitutional, corrupt, Rothschild/Rockefeller banking criminals, but no one has dared to do so. Why? If just half of our Nation, and the “1%”, who pay the majority of the taxes, just said NO MORE! Our Gov’t would literally change over night. Why is it so hard, for some people to understand, that by simply NOT giving your money, to large Corporations, who then send jobs, Intellectual Property, etc. offshore and promote anti-Constitutional rights… You will accomplish more, than if you used violence. In other words… RESEARCH WHERE YOU ARE SENDING EVERY SINGLE PENNY!!! Is that so hard? The truth of the matter is… No one, except the Icelanders, have to been the only culture on the planet to carry out this successfully. Not only have they been successful, at overthrowing the corrupt Gov’t, they’ve drafted a Constitution, that will stop this from happening ever again. That’s not the best part… The best part, is that they have arrested ALL Rothschild/Rockefeller banking puppets, responsible for the Country’s economic Chaos and meltdown.

Last week 9 people were arrested in London and Reykjavik for their possible responsibility for Iceland’s financial collapse in 2008, a deep crisis which developed into an unprecedented public reaction that is changing the country’s direction.
It has been a revolution without weapons in Iceland, the country that hosts the world’s oldest democracy (since 930), and whose citizens have managed to effect change by going on demonstrations and banging pots and pans. Why have the rest of the Western countries not even heard about it?
Pressure from Icelandic citizens’ has managed not only to bring down a government, but also begin the drafting of a new constitution (in process) and is seeking to put in jail those bankers responsible for the financial crisis in the country. As the saying goes, if you ask for things politely it is much easier to get them.
This quiet revolutionary process has its origins in 2008 when the Icelandic government decided to nationalise the three largest banks, Landsbanki, Kaupthing and Glitnir, whose clients were mainly British, and North and South American.
After the State took over, the official currency (krona) plummeted and the stock market suspended its activity after a 76% collapse. Iceland was becoming bankrupt and to save the situation, the International Monetary Fund (IMF) injected U.S. $ 2,100 million and the Nordic countries helped with another 2,500 million.
Great little victories of ordinary people
While banks and local and foreign authorities were desperately seeking economic solutions, the Icelandic people took to the streets and their persistent daily demonstrations outside parliament in Reykjavik prompted the resignation of the conservative Prime Minister Geir H. Haarde and his entire government.
Citizens demanded, in addition, to convene early elections, and they succeeded. In April a coalition government was elected, formed by the Social Democratic Alliance and the Left Green Movement, headed by a new Prime Minister, Jóhanna Sigurðardóttir.
Throughout 2009 the Icelandic economy continued to be in a precarious situation (at the end of the year the GDP had dropped by 7%) but, despite this, the Parliament proposed to repay the debt to Britain and the Netherlands with a payment of 3,500 million Euros, a sum to be paid every month by Icelandic families for 15 years at 5.5% interest.
The move sparked anger again in the Icelanders, who returned to the streets demanding that, at least, that decision was put to a referendum. Another big small victory for the street protests: in March 2010 that vote was held and an overwhelming 93% of the population refused to repay the debt, at least with those conditions.
This forced the creditors to rethink the deal and improve it, offering 3% interest and payment over 37 years. Not even that was enough. The current president, on seeing that Parliament approved the agreement by a narrow margin, decided last month not to approve it and to call on the Icelandic people to vote in a referendum so that they would have the last word.
The bankers are fleeing in fear
Returning to the tense situation in 2010, while the Icelanders were refusing to pay a debt incurred by financial sharks without consultation, the coalition government had launched an investigation to determine legal responsibilities for the fatal economic crisis and had already arrested several bankers and top executives closely linked to high risk operations.
Interpol, meanwhile, had issued an international arrest warrant against Sigurdur Einarsson, former president of one of the banks. This situation led scared bankers and executives to leave the country en masse.
In this context of crisis, an assembly was elected to draft a new constitution that would reflect the lessons learned and replace the current one, inspired by the Danish constitution.
To do this, instead of calling experts and politicians, Iceland decided to appeal directly to the people, after all they have sovereign power over the law. More than 500 Icelanders presented themselves as candidates to participate in this exercise in direct democracy and write a new constitution. 25 of them, without party affiliations, including lawyers, students, journalists, farmers and trade union representatives were elected.
Among other developments, this constitution will call for the protection, like no other, of freedom of information and expression in the so-called Icelandic Modern Media Initiative, in a bill that aims to make the country a safe haven for investigative journalism and freedom of information, where sources, journalists and Internet providers that host news reporting are protected.

[Badyalectlawl]

The new Cuba........ blockade it and starve the little f*ckers (easy enough to do if thats what TPTB want). Maybe, Russia could buddy up to them and we can deja vu the whole Cuban missile crisis bullshit again. Wash rinse repeat.

[JewJoleSole]

frozen polar bear turds (no, it's not a new kind of Ben & Jerry's Ice Cream )...

Yes it is.