Defaulting banks - where will it stop?

[Peter Presland]

Further to posts #416 and #418 on this thread, Iceland really is shaping up to be a defining case study in the ongoing - and soon to get much worse in my view - crisis of globalised economics.

Over the past few days there have been reports in the UK press that Iceland has agreed to repay the debts of its failed banks to the UK and Holland. All that I have read simply say that repayments are linked to Icelandic GDP and will start in 2012 with the agreement expiring in 2020 whether or not the debts have been repaid. However, it seems the Icelanders have successfully held out for the terms outlined in Post #416 - ie that repayments be linked to the GROWTH of Icelandic GDP - basis 2008. The Big UK/Dutch banks are NOT happy and are preparing a legal challenge. This article not only explains why; it also speculates about evidence of covert dirty tricks already being mounted in the form of the drugs trade and a few other things which, given the historic record, ring major alarm bells. Iceland really is a country to watch over the coming few months because it is in the eye of a storm that could consign the neo-liberal economic order to the dustbin of history. There are very powerful interests that simply cannot accept that and you can bet your sweet life thay will use every dirty trick in the book (and some not in it yet) to try to prevent that happening.

Much of the article is a rehash of the Michael Hudson article referred to in posts #416 & #418. The following is its concluding arguments. It has been posted on Wikileaks too:

Of course, the international bankers know only too well, that Iceland´s move will be imitated by others, and that´s the reason for the threats and the blackmail against the country.
The few billion $$ of debt which would break the neck of a tiny country´s economy mean practically nothing to the large debtor nations, but allowing Iceland a legal recourse connecting debts to the ability to pay without destroying the country´s economy or infrastructure will finally connect economy with social responsibility and general ethics.
The national economy has first and foremost to serve the people, the majority populations of the country and not the other way around. International trade and finance must be a tool to serve the needs of the people around the globe and not a tool for some megalomaniac corporate elites with the support of their intellectual and political lackeys to transfer most of the world´s wealth and resources into their own hands.
However the Icelandic stand has it´s risks. In the past countries which opposed the plans of the corporate and financial elites have experienced assassinations of their political leaders, false-flag terrorist attacks and all kinds of political destabilization tactics.
So friends around the world, please keep an eye on us. If something strange happens to us, you will know why it happens.
What we are already seeing here at the moment is, that we are flooded, absolutely flooded, with aggression increasing drugs like amphetamine and cocaine.
Since the banking-collapse and the government re-nationalizing of the domestic banks to prevent the foreign take-over of Icelandic resources(like land, fishing quotas and hydro and thermal energy resources), the Icelandic police has confiscated literally tons of drugs and material for synthetic drug-production, and still, the drug-prices on the Icelandic black market are at an historic low. Prices for aggression and psychosis increasing cocaine and amphetamine are far lower than for the calming drug marijuana.
Teenagers report about aggressive marketing strategies in the drug-market. Drug-promoters infiltrate groups of teenagers and give out drugs seemingly for free for many weeks. When the kids are hooked to the drugs, the drug-promoters ask for money, not only for new drugs but also for the ones already consumed. When the kids can´t pay those “debts”, they are threatened with violence to them and sometimes even their families. The only way out, they are told, is to become themselves drug-carriers, smuggling in drugs for their “creditors”.
At the moment the situation has not yet deteriorated to violent gang-wars.
When the minority neighborhoods of Los Angeles and other major American cities were flooded with cheap crack-cocaine by CIA-connected drug-cartels the situation pretty soon deteriorated into near civil-war conditions. (We know from the late Gary Webb´s investigation, which even was later verified by an Congressional Investigation, that the CIA was involved. We also know, that this was done to destroy the progress the civil-rights movement had made in the decades before.)
So my guess is, that this aggressive pushing of drugs is just as deliberate here as it was in the 90s in America, a way to destabilize a targeted society or the segment of a society.
I think, that the only way to fight covert attacks and destabilization attempts is by telling the truth, refusing the mantle of any official secret´s acts to be spread over any corruption, refusing to obey gag-orders, refusing to protect wealthy and powerful crooks and banksters, refusing to obey corrupt government organizations, refusing to give in to blackmail by intelligence agencies, refusing to be paralyzed by fear and trusting in democracy.
The ideologically motivated blindness to the fact that conspiracies do indeed exist must be cured by the courage to look the truth in the eye.
The dots must be connected. When we look at what happened in other countries today or some years ago, we will see certain patterns. If we see those patterns reoccur in our own time and our own place we will understand what is happening. We then can denounce it publicly, citing earlier examples, and so in time the tactic of false-flag, destabilization or intimidation will eventually become ineffective.

[Jan Klimkowski]

Peter - fascinating post.

So, the Icelandic government is saying NO to shock therapy, and asking for "reasonable" terms for debt repayment.

The financial elites are furious and are poised with their electrodes, desperate to see ordinary Icelanders convulse as the juice shocks their bodies.

And then there's the wildcard: a flood of agression-inducing drugs are suddenly flooding the black narcotics market in Iceland.

Hmmm - I would therefore anticipate an upgrade from cocaine and amphetamine to crack cocaine and meth-amphetamine.

I wonder if the Joker from Hell will show up.

Yup - chems to induce violent psychosis rather than peace and love.

[Peter Presland]

Peter - fascinating post.

So, the Icelandic government is saying NO to shock therapy, and asking for "reasonable" terms for debt repayment.

The financial elites are furious and are poised with their electrodes, desperate to see ordinary Icelanders convulse as the juice shocks their bodies.

And then there's the wildcard: a flood of agression-inducing drugs are suddenly flooding the black narcotics market in Iceland.

Hmmm - I would therefore anticipate an upgrade from cocaine and amphetamine to crack cocaine and meth-amphetamine.

I wonder if the Joker from Hell will show up.

Yup - chems to induce violent psychosis rather than peace and love.

Jan That's pretty much it in a nutshell.

In my judgement, what they are trying on is totally and absolutely unacceptable to those at the pinnacle of the present Western dominated globalised power system. It is the thin end of a potentially massive wedge that cannot be allowed to succeed.

It therefore seems to me that every stratagem possible will be used against it being seen to succeed.

I hope the Icelanders realise just what they are up against here because it will be no use playing Mr nice guy and appealing for fair play to the EU or anything like that. They'll need to take great care over who they decide to ally with or allow to get close to them too. They're going to need friends but they need to be ultra-cautious about anyone bearing gifts.

Since the Arctic is shaping into a major NATO -v- Russia confrontation, they could probably do worse than make some serious soundings in that direction - IOW get on the front foot and maybe put a cat among the pigeons as soon as they get concrete indications of dirty tricks. As I recall the Russian did actually offer some help early on.

[Magda Hassan]

Yeah, they should have taken the Russian money. I think they would have needed to give them access to an air base but that was all. Much less strings than the Western banks.

Personally, I don't see that the Icelanders (or any other nationality) should be responsible for for the corrupt practices of British banks or the corruption of their own leaders. The banks should go after the individuals not the nation. It was the same in Argentina. Just because a bunch of generals are offered a mountain of money - a la John Perkins - doesn't make the Argentinians responsible for their debt. The institution offering the money/loan has to play fair and reap the consequences.

I know. Back to Wonderland. :marchmellow:

[Mark Stapleton]

What a fascinating saga this is turning out to be. Thanks to Peter Presland and Jan for great posts. I agree with Magda's comments above.

p.s. the international banks must hate wikileaks. They would dearly love to close them down, imo.

[Jan Klimkowski]

ATMs not giving people their own cash?

I wonder what would have happened. :dancing2:

UK was hours from bank shutdown
FSA ready to close cash machines during crisis


Britain was within hours of a banking shutdown last autumn as the government battled to piece together a rescue plan for the stricken Halifax and Royal Bank of Scotland, it has emerged.


Treasury mandarins and Bank of England officials battled the clock to come up with a support package on the weekend of 12 October. If they had failed, the Financial Services Authority could have ordered the closure of cash machines and prevented deposits at either of the two main casualties of the global financial chaos.


Hector Sants, chief executive of the FSA, said: "The FSA knew we could not have allowed them [RBS and HBOS] to open their doors on the Monday morning without a solution."


In the absence of a deal, the FSA would have issued notices to the two banks forbidding them from taking deposits or allowing withdrawals. Such a drastic move, a year after the hugely damaging run on Northern Rock, was unthinkable and the authorities had to come up with a fully worked-out rescue.


"HBOS and RBS would not have survived without government intervention," said Sants, who was involved in the frantic negotiations that weekend to ensure the banking system did not collapse.


Our investigation into the weekend that saved the UK banking system from collapse revealed that RBS had been on "life support" from the Bank of England since the previous Tuesday. According to government sources, Threadneedle Street took aggressive action to ensure RBS had the billions it needed to keep operating on a day-by-day basis after other banks refused to lend the Edinburgh-based bank money. RBS was depositing assets at the Bank of England in return for crucial funding.


RBS was once regarded as so safe that rivals used to deposit huge sums with it overnight. Once Lehman collapsed, rivals were so concerned it been overstretched by the acquisition of ABN Amro the previous autumn that it too could have faced collapse, say government sources.


The authorities saw the Bank of England's intervention as a stopgap measure, with the taxpayer bailout for the two banks orchestrated on the weekend of 11/12 October seen as the only way regulators could have let them continue trading on the morning of 13 October given the state of their finances.


An unprecedented £20bn was pumped into RBS, and its chief executive, Sir Fred Goodwin, was ousted, while £17bn was poured into HBOS and Lloyds TSB, which had agreed to rescue the ailing mortgage lender the previous month.


But the authorities had been preparing for problems at HBOS and held discussions with the obvious suitors - HBSC, Santander (owner of Abbey) and Lloyds, which was interested in a deal with its troubled rival. The rescue of HBOS, barely 48 hours after Lehman collapsed on 15 September, meant that only one of the "mortgage banks", created from demutualised building societies a decade earlier, remained. Bradford & Bingley needed to be partly nationalised two weeks later. All the other mortgage banks - Northern Rock, Abbey National, Woolwich and Alliance & Leicester - had been consumed by rivals or failed.

http://www.guardian.co.uk/business/2009/...ial-crisis

[Magda Hassan]

I wonder if we will ever seein the UK Argentinian scenes of furious account holders attacking the banks?

[Peter Lemkin]

http://www.kpfa.org/archive/id/53363

[Magda Hassan]

Peter, I don't seem to be able to get this to work. It seems they are only archiving for 14 days now.

One thing Iceland has in their favor which many do not is the unlimited supply of geo-thermal energy. I suppose the 'leaders' have already sold all that off though. I'll have to check.

[David Guyatt]

ATMs not giving people their own cash?

I wonder what would have happened. :dancing2:

UK was hours from bank shutdown
FSA ready to close cash machines during crisis


Britain was within hours of a banking shutdown last autumn as the government battled to piece together a rescue plan for the stricken Halifax and Royal Bank of Scotland, it has emerged.


Treasury mandarins and Bank of England officials battled the clock to come up with a support package on the weekend of 12 October. If they had failed, the Financial Services Authority could have ordered the closure of cash machines and prevented deposits at either of the two main casualties of the global financial chaos.


Hector Sants, chief executive of the FSA, said: "The FSA knew we could not have allowed them [RBS and HBOS] to open their doors on the Monday morning without a solution."


In the absence of a deal, the FSA would have issued notices to the two banks forbidding them from taking deposits or allowing withdrawals. Such a drastic move, a year after the hugely damaging run on Northern Rock, was unthinkable and the authorities had to come up with a fully worked-out rescue.


"HBOS and RBS would not have survived without government intervention," said Sants, who was involved in the frantic negotiations that weekend to ensure the banking system did not collapse.


Our investigation into the weekend that saved the UK banking system from collapse revealed that RBS had been on "life support" from the Bank of England since the previous Tuesday. According to government sources, Threadneedle Street took aggressive action to ensure RBS had the billions it needed to keep operating on a day-by-day basis after other banks refused to lend the Edinburgh-based bank money. RBS was depositing assets at the Bank of England in return for crucial funding.


RBS was once regarded as so safe that rivals used to deposit huge sums with it overnight. Once Lehman collapsed, rivals were so concerned it been overstretched by the acquisition of ABN Amro the previous autumn that it too could have faced collapse, say government sources.


The authorities saw the Bank of England's intervention as a stopgap measure, with the taxpayer bailout for the two banks orchestrated on the weekend of 11/12 October seen as the only way regulators could have let them continue trading on the morning of 13 October given the state of their finances.


An unprecedented £20bn was pumped into RBS, and its chief executive, Sir Fred Goodwin, was ousted, while £17bn was poured into HBOS and Lloyds TSB, which had agreed to rescue the ailing mortgage lender the previous month.


But the authorities had been preparing for problems at HBOS and held discussions with the obvious suitors - HBSC, Santander (owner of Abbey) and Lloyds, which was interested in a deal with its troubled rival. The rescue of HBOS, barely 48 hours after Lehman collapsed on 15 September, meant that only one of the "mortgage banks", created from demutualised building societies a decade earlier, remained. Bradford & Bingley needed to be partly nationalised two weeks later. All the other mortgage banks - Northern Rock, Abbey National, Woolwich and Alliance & Leicester - had been consumed by rivals or failed.

http://www.guardian.co.uk/business/2009/...ial-crisis

Had the ATMs closed down riots would've followed Brit style, by the liberal chucking of handfuls of custard creams at bank executives amidst booing and slow hand-clapping. Having exorcised their demons it would've been home for a cuppa and months of moaning and bitching.

Of course, the real problem we face today is that we cannot stuff our money under the mattress to protect it from avaricious bankers. It therefore, behoves us to diversify our assets among several unrelated banks so that the failure of one will not too adversely impact on our finances. And the problem with that is that in the UK there are not so many as 8 unconnected banks, and in a few years this number will, I think be done to five or four or even less.

Then we truly will be in fuck street.