Wednesday, April 11, 2012

Iceland vs. Europe

I do not mind getting older. Compared to the alternative it is great. Well, except for one thing. I hate my deteriorating eyesight and having to carry glasses around, in the case that something with smaller lettering than the Hollywood sign requires my attention. The funny thing is though, despite having to rely on lenses to read most of the time, when extremely angry I can see whatever I want. The chemicals anger pumps out into the veins seem to replenish the retina. But it only lasts until the anger subsides, which in my case does usually not take very long. All for the best, I would rather see poorly than be angry all the time.

Today I saw quite well for a spell. The reason, upsetting, unfair news from abroad.

Iceland is not a member of the European Union. It is however, along with Norway and Lichtenstein, a member of the European Economic Area. This means that we take up a lot of the EU regulations and get to trade pretty freely with the EU states, also being party to the European Free Trade Agreement. All in all I think most people are pretty happy with this state of affairs. But every silver lining has a cloud. This in our case is something called the EFTA Surveillance Authority or ESA.
ESA's function is to make sure that Iceland, Liechtenstein and Norway follow the free trade agreement. In this past December ESA decided to take Iceland to court over the Icesave accounts, a sucker punch considering that the estate of the fallen bank had begun to pay back the debts, plus penalty interest. Not to mention that the estate assets that are now being sold off appear to be able to cover the debt in full, or the fact that neither of the two countries that the money is owed to filed suit. These countries are England and Holland and they are content with getting the money back although they probably would have liked to get it sooner, understandably. The last payment against the debt and the interest is expected to take place next year, payments are made in accordance with the unloading of assets and these are believed to have all been sold at that time.

One other thing that cannot be mentioned too often. These banks were private banks. They were not owned by the Icelandic state and the money that disappeared from the accounts was used by the owners of the banks to invest abroad. In mainland Europe. It did not end up here. The Icelandic population did not get dibs on it and was not overly enthusiastic in having to take on a massive debt to pay it back. Or in a position to. To pay back one must at some point have had. Otherwise you are just paying. So we voted against an agreement to take onboard the debt of these private banks. Sort of a no-brainer.

Today we learned that the European commission, the executive body of the European Union, has requested to become part of the suit being filed against Iceland. Not to take our side but that of ESA. They want to help them build up a case against us in a hope for a ruling in the favor of the opposing party to Iceland. This is the first time in the history of the EU that the commission has asked to actively cooperate in such proceedings. Undoubtedly I am being sentimental and not in the best place to judge objectively but it feels as if cannons are being pointed at a slingshot. I am not a big fan of expletives but they do feel appropriate now.

Iceland vs. Europe. Anyone know a really, really good lawyer?

Yrsa - Wednesday


  1. As to the lawyer, I suggest you ask Jeff.

    I love the image of "every silver lining has a cloud."

  2. Jeff would be perfect. This case definately needs a smart lawyer with a good sense of humor. But alas, he is in Mykonos and I cannot see how a court could have much appeal. But one can hope....


  4. ...against hope.

    I did that very sort of thing once in my life and am happy to say "once." It's the sort of highly profitable fee generating legal task measured against a decade of exhaustive labor. The seduction that kills one might say.

    The good news is that although national pride is affected, it probably won't play out as much more than a symbolic lawsuit IF the facts are as you say.

    However, without knowing any of the facts and having just returned from several Mykonian club openings this evening, my suggestion is to find a lawyer willing to file claims on behalf of Iceland against the Europeans who got Iceland into trouble in the first place--claims seeking to hold those banks and the individuals behind them responsible for whatever EU/ESA seeks against Iceland.

    I'd be surprised if the downside risk of such a precedent wouldn't generate more than some serious anxiety in the banking world. But who cares how the world markets react? If the EU wants to play hardball, Iceland should bring the bat. [I'm sure Beth can explain that metaphor.:)]

  5. Jeff is referring to the opening of baseball season. The season started less than a week ago and the Red Sox haven't brought their bats to the games yet.

  6. I sympathize with your aging eyes. I don't mind the glasses as I have to wear them -- bifocals. What I am aghast at now is that I'm reading the Large Size print version of Donna Leon's latest book.

    And I can't read subtitles on my tv screen and I can't read descriptions on the TV guide of the programs and the news crawl is blurry.

    And I can barely read these mystifying hieroglyphic word verifications for blog commenters these days.

    Considering the alternative, I can live with this.

  7. Whenever my wife complains about deteriorating eyesight and having to keep track of glasses, the four of us in the family who've been wearing them full time since we were 8-9 commence a mock pity party.

    As for the lawsuit, it's another example of how asleep at the switch Iceland's regulators were. They paid no attention to the guarantees the banks were making on offshore accounts, a foolish oversight at best, but in this case deliberate. There are plenty of bankers and politicians in Iceland who should be kicked to the curb in criminal court, and Hannes Hólmsteinn should be kicked academically, but it will never happen.

    I figure the EU is getting involved to make this as painful as possible for Iceland, and for one reason: Iceland's recovery is an embarrassment to the EU. While Fitch upgrades Iceland's credit rating and Business Week praises the country's recovery, EU members Greece, Portugal, Ireland, Italy, and Spain continue to circle the drain. This is a mortifying comparison for the EU, and since it can't fix its members, it must break Iceland.

  8. Hi Knit - I woudl fit right in beside your wife at your pity party. My husband has had all sorts of complications with his eyes from childhood and he finds my grumbling pretty lame.

    Regarding the Icesave fiasco we are now seeing the courts come alive although all of the bad guys will not get their comeuppance. A few of the top bankers have now been indicted as an example but for some reason these are not the Icesave guys. And the bank owners in all cases will mostly go scot free.

    I just don't get how a system that allows people that work normal-ish jobs (banking) to make more in a year than many in a hundred lifetimes and then when these businesses go belly up these same guys carry little or no responsibilty. This goes for Iceland as well as other countries. So odd.

    thanks for your input

  9. Hi Kathy - I sympathisze with the hieroglyphic thing, most often glasses do not suffice to work them out in my case, might as well be chinese symbols. But like you say, considering the alternative...

    1. Yup. The guys at the top (and it is guys) rarely, if ever, are held accountable. Here, the top financial wheelers and dealers on Wall Street, hedge fund managers and even mortgage brokers -- who have been found to have swindled so many people -- are all walking around unindicted and certainly not in jail, while lots of people are in jail for crimes worth a small fraction of the amounts swindled by the above-listed financiers. I'd like to see the chickens come home to roost.