"Power To The People" Iceland Edition......

I expect that hand in hand with a rising Sovereign Misery Index the times for bailing out anyone without ( hopefully non violent ) brewing tensions & extreme political backlash are at least getting tougher (outside the US ;-) ..... Needless to say that i largely agree with the following quote from Mish... Iceland has a good chance to nagotiate a much better deal after the referendum......

Ich denke das Hand in Hand mit einem steigenden Sovereign Misery Index die Zeiten der "bedenkenlosen" Bailouts ( Ausnahme selbstredend die USA ;-) ohne "größeren" öffentlichen Widerstand ( hoffentlich weiterhin gewaltfrei ) nicht mehr ohne weiteres ohne politische Folgen durchgewunken werden können... Überflüssig zu erwähnen das ich größtenteils mit dem nachfolgenden Fazit von Mish übereinstimme..... Ich jedenfalls wäre ebenfalls erbost für Kunden, die wegen eines minimalen Zinsvorteiles oftmals mit gewaltigen Summen zu Kaupthing & Co gewechselt sind, jetzt die Zeche zu zahlen...... Gehe jede Wette ein das Island nachdem das Referendum stattgefunden hat einen deutlich besseren Deal aushandeln kann und wird......

Iceland's President Effectively Tells UK "Go To Hell" - Hooray For Iceland Mish

Congratulations to Iceland for figuring out that it is better to suffer a credit rating downgrade than to torture its citizens for a decade or longer Iceland may have other problems but at least that one was resolved (hopefully), the quick and painless way.

And that should have been the model for US banks as well. The stockholders and bondholders should be the first ones wiped out.

Instead Bush started and Obama continued with a policy to punish the innocent to bail out the wealthy, leaving the average taxpayer deep in the hole, against the clear will of the majority.

Photo Gallery: Iceland's Deeply Unpopular Payback Der Spiegel

WSJ Iceland's president vetoed a bill to reimburse the U.K. and the Netherlands for bailing out depositors of a failed Icelandic bank, throwing into question the international plan to rescue the island nation's banks and casting doubts on its bid to join the European Union.

President Ólafur Ragnar Grímsson on Tuesday cited massive public opposition in his decision to reject the bill, which was approved in late December by the Icelandic parliament after months of wrangling.

Iceland's president is the head of state, but rarely wields real executive power.

The veto was only the second time since Iceland's independence from Denmark in 1944 that a president used that authority.

Under Iceland's constitution, the bill -- which calls for nearly $6 billion in repayment ( The money represents 40 per cent of the country's gross domestic product via Times Online, see also Wikipedia ) over 15 years, plus interest -- will be put to a public referendum.

Opinion polls suggest it has little chance. ( 70% against )

But without the payback, Iceland may lose or delay access to badly needed bailout money from the International Monetary Fund and Nordic neighbors. The IMF has approved $2.1 billion in

British and Dutch authorities were stern. The U.K. Treasury said Britain "expects Iceland to live up to its obligations."

"We are very disappointed about the decision," said a Dutch finance ministry spokesman. "Iceland has the obligation to pay back the money."

Almost since the onset of the financial-system collapse in October 2008, Icelanders have blamed a cadre of greedy bankers for turning a prosperous nation into an international economic pariah.

There is strong resistance to piling debt on ordinary citizens to undo the bankers' mess. The bill would have seen Iceland repay the U.K. £2.35 billion ($3.79 billion) and the Netherlands [euro €1.32 billion ($1.89 billion) over 15 years.

That amounts to nearly $20,000 for each of the 300,000 Icelanders.

The October 2008 collapse of one bank, Landsbanki Islands, triggered the trouble.

Hundreds of thousands of British and Dutch depositors, wooed by high interest rates, had placed money with Landsbanki through an Internet arm operating in those countries called Icesave

Under European financial rules, Iceland was required to maintain deposit insurance for those customers, but the collapse of all three of the island's big banks swamped the tiny insurance program. Britain and the Netherlands stepped in to cover their own citizens, and then demanded the money back from Iceland.

Eiríkur Svavarsson, a spokesman for InDefence, a group of Icelanders that organized the petition, said the country would honor its debts but would do so "in line with its economic strength."

It isn't clear how badly Mr. Grímsson's veto will disrupt the international aid on which Iceland depends. The IMF has said its funding isn't directly tied to an Icesave resolution, but notes that other lenders have made that condition, and it is reluctant to put money forward if others don't.

After the veto, Fitch Ratings cut Iceland's long-term foreign-currency credit rating to junk and said the future outlook was negative. Fitch also cut the long-term local-currency rating to BBB-plus.

NYT

But the presidential rebuke is being described as a momentous decision for Iceland. It also highlights a widening rift between European governments — pressed by bond investors, ratings agencies and the International Monetary Fund to cut budgets and shrink deficits — and their recession-battered citizenry.

Late last month, the constitutional court in Latvia vetoed a move by the government there to cut pensions in line with an I.M.F.-sponsored austerity package. That development threatens the I.M.F. agreement and the country’s ties with foreign creditors.

Governments in Ireland, Greece and even Britain are also finding it difficult to satisfy both bond investors and voters

> I highly recommend to read the official declaration..... Well said!

> Empfehle sich die offizielle Deklaration im Wortlaut durchzulesen..... Klasse und einleuchtend logisch!

Ice Land Declaration

> Here a very good clip how from 2008 how Iceland got into deep deep troubles.....

> Hier ein sehenswerter Clip aus dem Jahr 2008 der schön aufzeigt wie Island in den Abgrund stürzen konnte.....

> I just couldn´t resist to post this Kaupthing Bank commercial..... You cannot make this up...... Enjoy if you are not an Icelander.....

> Kann mir nicht verkneifen nochmal die inzwischen berühmte Werbung der Kaupthing Bank zu bringen..... Tragisch genial! Für alle die nicht Isländer sicher ein Vergnügen......



H/T Ultimi Barbarorum

Clusterf#@k to the Poor House - Bailout Bill Passes / Daily Show

This sums it up.... It looks like McCain has some kind of Amnesia or Alzheimer within one Interview.... Stunning....Have a nice weekend....

Nette Zusammenfassung... Es sieht ganz so aus als McCain an schwerem Alzheimer leidet... Anders sind die Aussagen in einem nur einzigen Interview nicht zu erklären.... Erschreckend ( selbst im Verhältnis zu dem was man von deutschen Politikern so hört ) ......Allen ein schönes Wochenende und einen schönen "Tag der Deutschen Einheit"....



Formidable Opponent - Business Syphilis
Business syphilis infects the market after a corporate orgy.



On top of this a nice rant from Rep. Peter DeFazio (D-Oregon) via Tim from The Mess That Greenspan Made

Hier kommt ein sehr treffender Kommentar von Rep. Peter DeFazio (D-Oregon)via Tim von The Mess That Greenspan Made

Long-Term Capital: It’s a Short-Term Memory

Market amnesia..... The following article comes from ROGER LOWENSTEIN the author of When Genius Failed: The Rise and Fall of Long-Term Capital Management. I recommend to read the entire peace.

Manchmal könnte man wirklich meinen das der Markt an unheilbarer Amnesie leidet..... Der nachfolge Bericht kommt von ROGER LOWENSTEIN der den Bestseller When Genius Failed: The Rise and Fall of Long-Term Capital Management verfasst hat. Ich empfehle den kompletten Report zu lesen. Bleibt zu hoffen das der auch den Weg zu den Aufsichtsbehörden, Zentralbanken usw findet........


Long-Term Capital: It’s a Short-Term Memory NYT

A FINANCIAL firm borrows billions of dollars to make big bets on esoteric securities. Markets turn and the bets go sour. Overnight, the firm loses most of its money, and Wall Street suddenly shuns it. Fearing that its collapse could set off a full-scale market meltdown, the government intervenes and encourages private interests to bail it out.

The firm isn’t Bear Stearns — it was Long-Term Capital Management, the hedge fund based in Greenwich, Conn., and the rescue occurred 10 years ago this month.

AS striking as the parallel is to Bear, Long-Term Capital’s echo is far more profound. Its strategy was grounded in the notion that markets could be modeled. Thus, in August 1998, the hedge fund calculated that its daily “value at risk” — meaning the total it could lose — was only $35 million. Later that month, it dropped $550 million in a day .....

Rather than evaluate financial assets case by case, financial models rely on the notion of randomness, which has huge implications for diversification. It means two investments are safer than one, three safer than two. .....

The fund’s partners likened their disaster to a “100-year flood”— a freak event like Katrina or the Chicago Cubs winning the World Series. (The Cubs last won in 1908; right on schedule, they are in contention to repeat.) But their strategies would have lost big money this year, too.

John W. Meriwether, the fund’s founder, later organized a new fund, which suffered big losses early this year, according to press reports.

If 100-year floods visit markets every decade or so, it is because our knowledge of the cards in history’s deck keeps expanding. When perceptions change, liquidity evaporates quickly. Indeed, the belief that one can safely get out of a “liquid” market is one of the great fallacies of investing.

This lesson went unlearned. Banks like Citigroup and Merrill Lynch felt comfortable owning mortgage securities not because they knew anything about the underlying properties, but because the market for mortgages was supposedly “liquid.” Each firm would write down the value of its mortgage investments by more than $40 billion. .....

....the notion that a private hedge fund with but 16 partners and fewer than 200 employees could cause lasting harm was never truly examined. It was simply accepted.

The concept of too-big-to-fail, exceptional in 1998, is now a staple in the regulators’ playbook. Bear Stearns and, by implication, other troubled investment banks have been taken under Washington’s protective skirts; Fannie Mae and Freddie Mac, too. The Federal Deposit Insurance Corporation is pushing for easier terms for millions of homeowners; auto companies are demanding loan guarantees.

....Incredibly, six months after the Long-Term Capital affair, Mr. Greenspan called for less burdensome derivatives regulation, arguing that banks could police themselves. In the last year, he has been disproved to a fault.