Iceland’s President refuses to sign Icesave deal

Iceland’s president refuses to sign the Icesave deal, which would pave the way to reimburse Britain and the Netherlands for nearly €4bn lost in a failed Icelandic bank. According to the FT he took this decision as it was “in the interests of democracy to put the legislation to a referendum, given the importance of the issue to Iceland’s future”.  NAMA would seem to be similarly important to Ireland’s future?

By Edgar Morgenroth

Professor of Economics at Dublin City University Business School

49 replies on “Iceland’s President refuses to sign Icesave deal”

Can anybody clarify the basis upon which the Dutch and the Netherlands contend that there is an obligation for Iceland to repay the debts of its banks? Did a legal obligation arise upon nationalisation of the banks or is this good old fashioned bullying?

From an Irish perspective, is it good or bad if Iceland successfully defaults on nationalised bank debt? On the one hand it could lead to contagion. On the other hand it could lead to the markets to accept that the losses were incurred prior to the implicit/explicit state guarantee and therefor it is a lesser form of sovereign default which should not turn Iceland into a pariah state. Then again, what will the Greeks think if Iceland pulls this off.

In confident anticipation of there being lots of silly posts comparing Ireland with Iceland, may I simply point out that there is no comparison. No need to take the word of a nonentity like me for that. The following is from Patrick Honahan in the Guardian on 1 March 2009.

From the Guardian – 1 March 2009:

Other economists like Patrick Honohan, a former economist at the World Bank who teaches at Trinity College Dublin, argue that Ireland will NEVER go the way of Iceland, because Ireland’s public debt is a MANAGEABLE 40% of gross domestic product.

The banking sector, more than 200% of national income, does NOT EVEN APPROACH that of Iceland, they add, which was about 10 times the size of its economy.

Honohan said that at worst, bank losses will compose about 20% of national income. “Are we another Iceland? No. The numbers just are NOT BIG ENOUGH,” he said.

As pointed out by JtO, the Icelandic Bank debt was 10 times that of national income. How on earth can the UK and the Netherlands argue that there should be an implicit state guarantee in relation to deposits and investments made prior to nationalisation in such circumstances?


Are the Dutch and UK not looking for more than that? The UK and Netherlands have already compensated savers because it is beneficial to them to do so.

The UK said savers would get savings back in full: “The Treasury has said every UK customer will get back their savings in full.”

A previous FT article by Michael Hudson, professor of economics at the University of Missouri, said the UK and the Netherlands should be more understanding of Iceland’s plight:
“Iceland’s debt repayment limits will spread”,dwp_uuid=a36d4c40-fb42-11dc-8c3e-000077b07658.html

@ John you are of course quite right. The similarity that I thought of was not the absolute size of the problem (or indeed the precise nature), but the fact that decisions taken now have long-lasting consequences. In that context it is interesting to see that the Icelandic president thinks that the people should decide rather than the parliament.


As I understand these were not legal obligations arising on bank nationalisation. Rather the UK and Dutch governments pressed Iceland to reimburse them for their costs in compensating the Icesave depositors. Iceland’s bargaining position was weak because Nordic countries made resolution of the dispute with the UK and Dutch a condition for their financing under the IMF-led rescue.

“Patrick Honohan, a former economist at the World Bank who teaches at Trinity College Dublin”
Good to see our posters have their finger on the pulse…

@ YM

“The first 16k euro of each deposit was guaranteed by the Icelandic financial regulator (their deposit protection scheme)”

The problem however…”The Icelandic scheme has only £88 million to cover £13 billion of deposits.”

The other problem is that some UK local councils had millions in individual deposits, so 16k doesn’t matter too much to them.

@ Zhou

this is in many ways a test case, albeit at an extreme side of the problem, with testing an implicit government guarantee on its financial sector (and, like it or not people, there has always been some sort of implicit guarantee on most 1st world financial systems).

Although comparisons with Iceland are imperfect, and there are many key differences in both scale and scope, there are, nonetheless, some important similarities. Chiefly, the main comparison would be that when an entire financial system, as opposed to individual banks, becomes technically insolvent, it then becomes a quasi-sovereign issue which the State is expected to rectify, and which Ireland has, for better or worse, decided to do.

I wonder if the Greeks will be watching this one closely? 😉

I wonder which Icelandic MP will be brave enough to front up the argument that they should cough up? Their economic affairs minister was on C4 news last night – seemed far too nice and smart a guy to commit political hari-kari.

When you think of how many billions countries like the UK write off in things like e.g. non-implemented IT systems for their health service, MOD, etc. and other wastes of public money you have to wonder if this isn’t a simple case of bullying. Give us yer dinner money for the next 20 years or you get it!

Anybody care to run a book on the outcome of the referendum? I’m sure there must be an actuary or two out there who can come up with the odds. I’ll take a spread bet in the range 78-83%.

@ Kevin

“Good to see our posters have their finger on the pulse…”

fairly sure JtO was transcribing one of the paragraphs from the Guardian article in March…

@Joseph – you forget that the parliament passed the law to cough up, or be it narrowly. The president just won’t sign it into law as he feels the people should decide.

@ Joseph

“I wonder if the Greeks will be watching this one closely?”

The two issues are somewhat different, no? Iceland’s President has decided that their people should decide whether they should as a community pay up for the losses of their banking sector. Greece’s problem is a far more mundane issue of a country spending far far far more than it takes in in income. I don’t really think there is much in comparison between the two.

“The problem however…”The Icelandic scheme has only £88 million to cover £13 billion of deposits.”

The other problem is that some UK local councils had millions in individual deposits, so 16k doesn’t matter too much to them.”

Indeed, that was the problem with the deposit scheme and many other similar deposit schemes. That’s why they are state backed.

I believe it is accepted, even by the UK and the Netherlands that the Icelandic obligation extends only to the amount they insured.


My previous post is awaiting moderation as it contains multiple links. I am replicating part of it here.

Are the Dutch and UK not looking for more than the amount guaranteed by the Icelandic financial regulator? The UK and Netherlands have already compensated savers because it is beneficial to them to do so.

The UK said savers would get savings back in full: “The Treasury has said every UK customer will get back their savings in full.”

I am still not clear whether the IMF/UK/Netherlands behaviour constitutes real politik at its most fundamental or whether there is some legal basis for their behaviour. Also, I think it is hard to argue there was an implicit state guarantee in Iceland’s case. The leverage was too great and the explicit guarantee was much less. Furthermore, it is clear that the guarantor was not aware of the guarantee. If we are talking about real politik and financial aggression/bullying then let’s call a spade a spade.

@ Zhou

sorry, i should have said, this is definitely realpolitik. At the end of the day, Iceland needs IMF assistance of some sort, regardless of this problem, and they also want eventual EU membership. The UK and the Dutch can essentially scupper both if they don’t get their way. It’s bullying, but does anyone think Germany wouldn’t do whatever they could to regain their lost monies if we let one of our banks default? It might be tamer due to our EU membership, but they’d try nonetheless.

“Also, I think it is hard to argue there was an implicit state guarantee in Iceland’s case.”

Well they were regulated by the Icelandic central bank, and their profits were taxed by the Icelandic government, so if you could argue that there was huge levels of irresponsible regulation (and at 10 x GDP in assets, i thinks its a fair argument), then you could argue that the Icelandic banks problems are now the Icelandic state’s.


I was thinking more in terms of watching what happens to small countries that don’t toe the line and do as they’re told.

‘Toast’ is the word that comes to mind.

I expect they will end up having to go with the floe (just my little joke).

The President of Iceland may refuse to sign the deal and the electorate of Iceland may decide to reject it in a referendum: it won’t make their problem go away.

People will not generally vote in favour of taking money out of their pockets and giving it to other people they don’t know or care about in Holland and the UK, so its practically a certainty that the referendum will be lost. Unless Iceland wants to take the consequences of welching on the deal with the UK and Dutch governments, which may be even more wretched than paying out on ICESAVE, presumably they will all sit down again to negotiate another package. Third time lucky?

There’s no comparison between the Government’s decision here to establish NAMA and the ICESAVE agreement. Sinn Fein was the only political party demanding a referendum on NAMA, a demand that was universally derided as ridiculous. Our President doesn’t have the option of referring a law back to the people. She can only refer a Bill to the Supreme Court if the Council of State agrees there is a constitutional issue. Anyway, referendums are the ultimate political cop-out.

This is an interesting one because there seems to a European-wide presumption that depositors should be made whole – even if some of them (e.g., English local authorities) should not, perhaps, be considered as unsophisticated – maybe just greedy and stupid. I don’t think there is any question of hosing depositors in the Irish context. Bondholders, in the context of the expiry of the blanket guarantee, are another issue.

I have always felt that the fear of contagion is overdone. The international pool is very big and some bondholders (who went in with their eyes open) taking a bath provides a lucrative opportunity for others. Another reason, perhaps, for a change of government before Sep. 2010?


Nobody has cited failure by the icelandic regulator to monitor its banks afaik.

The Brits have a strong record in this stuff. They invaded Egypt in 1882 and attacked Istanbul in 1876 after Turkey’s default. I think those were straight sovereign debt defaults though. Suffice it to say that killing a few foreigners hasn’t caused them to pause for thought in the past.

Obviously one would have to be more subtle in the case of trying to make third parties liable for a bank’s default. The big countries said they would not let a bank fail and made this the rule for the little countries. We are now seeing how such a rule can be enforced. We are probably better off dancing to the ECB tune rather than dancing to the tune of the IMF and its individual backers.

Instinctively, my sympathies are with the Icelandic people.

But they should make an honest attempt to live up to their obligations. They should hand over the full assets of the offending banks, and if they have guaranteed the first 16k of deposits, then hand that over or make arrangements for repayment. I assume they have already done this and this escapade has cost them a lot of money. They can then claim that the people of Iceland have behaved honourably and have lived up to their obligations.

Then they should be given the time and space to come to a decision on how to react as a nation to the demands from Britain and the Netherlands. They should consider what their actual liabilities are but also how they can prove their good faith to the international community. They are dealing with very powerful creditors but they are still a sovereign nation.
I would advise they go the extra mile in co-operation with the international community. The bottom line is money has gone missing and both the people of Iceland and those who have lost money in the UK & Netherlands are victims.

One possibility is arbritration or trials, particularly if fraud is suspected

I would recommend they resist the temptation to flash the 2 fingers and take a long term view.

Offer to make all those banks documents and records available, including regulators documents, to whatever organization Iceland, the UK, the Netherlands and the international community decide to use.

In addition, I would suggest Iceland offers to strip all current end ex employees of the offending banks of any protection under Icelandic law, and offer to extradite any or all employees of the banks to stand trial in either the UK or Netherlands if as a result of arbitration fraud is found to have occurred.
If its found that state organizations or employees have been complicit in the fraud; the state will have additional liability. Those state employees should similarly be made available for extradition or should be punished appropriately under Icelandic law.

If they do something like that; I think sanctions which would punish ordinary people would be impossible to get international support for.

And hopefully, if things get bad here, some Chinese banks will come looking for money from Anglo.

@ Veronica – yes “referendums are the ultimate political cop-out” but they can also serve a useful purpose. As was noted above a no to the deal does not make the problem go away but at that point the issue is no longer a political football and the voters have themselves to blame for the fallout. There is a general tendency to blame governments for bad decisions but voters rarely take responsibility for their bad voting decisions – it looks like the Icelanders will get a chance at deciding their own fate.

“Are the Dutch and UK not looking for more than the amount guaranteed by the Icelandic financial regulator? The UK and Netherlands have already compensated savers because it is beneficial to them to do so.”
The UK alone had 300k accounts amounting to STG 5 bn. I believe 3.1 bn euro is the Dutch amount?

In addition to the Icelandic deposit scheme, Icesave depositors were also protected up to 50k STG in the UK and up to whatever the Dutch scheme is, but the first 16k euro is the bit that the Icelandic scheme is responsible for. Yes, the UK and Dutch governments have paid the full amount. There would be panic if they did not. But I am not aware that they are looking for more than the 16k back.

This is a big lesson for small countries that want to ‘punch above their weight’ in financial services. They better be bloody sure they know what they are doing.


Trouble is, voters never take responsibility for making bad decisions; they always blame the politicians. If it turns out it was a bad idea (e.g. 1983 referendum to insert ban on abortion in the Irish Constitution; rejection of the first Lisbon referendum) they still blame the politicians for ‘not explaining it properly’. The media perpetuate the delusion that the people always speak wisely by saying exactly that. Collectively, our wisdom is supposedly always greater than our individual thoughts, a dodgy proposition at the best of times and definitely not the case when it comes to highly complex propositions on which one is required to provide a simplistic and highly subjective answer.

I think it’s downright scary to ask any electorate to make ‘yes’ or ‘No’ decisions on financial issues, whether tax or internationbal treaties or whatever. That’s what we elect parliaments to do. If a finance motion fails in the Dail, a general election follows automatically. Same as if the Taoiseach goes for a ‘snap’ election. But that way there’s a wider range of issues debated about the direction the country should go in and no one issue will predominate over the period of any campaign. I have great sympathy with the people of Iceland, but they are being poorly served by their political class.


I found the following copy of the UK agreement. I cannot vouch its provenance.

It appears that the Icelandic State is being asked to guarantee the compensation fund, a separate corporate entity (presumably so to cap the State’s liability).

An article by Iris Erlingsdottir in the Huffington Post on 2 Jan 09 suggests that the deposits fell outside the guarantee:
“Tens of thousands of investors–individuals, municipalities, and charities–took advantage of the exceptionally high rates offered on Landbanki’s IceSave savings accounts, only to discover that these accounts were not formally backed by any government. Landsbanki officials had inexplicably failed to register as a domestic bank in either country, and thus were not backed by government deposit insurance. When Landsbanki went into receivership on October 7th, British authorities invoked anti-terror legislation on October 8th to freeze Landsbanki’s assets there.

When Davíð Oddsson, the head of Iceland’s Central Bank, and Icelandic finance minister Árni Mathiesen indicated–Davíð on TV: “We will not pay the foreign debts of irresponsible mess makers; we’d be saddling our children with such debt, it would be slavery…”- that Iceland would guarantee losses suffered by Icelandic depositors, but not foreign depositors, Gordon Brown noted that Iceland was in violation of the European Economic Area’s (EEA) anti-discrimination laws and insisted that the Icelandic government reimburse all depositors. Although the International Monetary Fund (IMF) agreed to assist Iceland, it has refused to release additional funds until the IceSave matter is resolved.”

the last time the UK tried to unilaterally impose something on iceland was in the early 1970’s : the cod wars ring any bell?

Iceland agreed lat October with the British and Dutch governments to repay almost €4 billion paving the way for more IMF aid.

Iceland was required by EU rules to maintain deposit insurance for its banks and when Landsbanki Islands bank collapsed in 2008, billions of dollars in deposits were lost in its Internet unit named Icesave by British and Dutch depositors.

The deposits were attracted by the highest interest rates in the UK and the Netherlands.

The British and the Dutch governments refunded the deposits and Gordon Brown’s government used the UK Prevention of Terrorism Act to freeze the transfer of funds from the UK.

UK local authorities alone had deposited £900 million in Icelandic banks.

The UK agreed to lend Iceland £2.35 billion and the Netherlands will lend €1.2 billion, Prime Minister Jóhanna Sigurðardóttir said last October.

The first seven years would be interest-only, then repayments will be tied to Iceland’s economic growth.

In fairness to the UK governemnt, it did guarantee for example Irish Northern Rock depositors.


Can you clarify the conditions in the Act previously passed by the Icelandic parliament which were unsatisfactory to the UK and Netherlands?

On August 28 the Icelandic Parliament approved the bill after adding a condition linking annual repayments to GDP growth. The revisions still needed the approval of the British and Dutch governments. A further Bill had to be passed. That Bill led to a petition by 60,000 people and a referendum. What was the difference between the two?

@ zhou_enlai

The FT reports: “In August, Reykjavik struck an initial deal to reimburse the two EU nations for bailing out investors who lost money held in high-interest online savings accounts when Iceland’s financial system cracked under the pressure of the global credit crunch.

But Britain and the Netherlands balked at changes to the so-called ”Icesave bill” introduced by the Icelandic parliament that would have meant the government’s repayment guarantee running out in 2024.

Iceland’s coalition government has struggled to push the new bill – which extends the payment guarantee – through parliament.”

So it appears that Iceland changed the repayment guarantee expiry of 2024.

In October, the terms of the loans from the UK/netheralnds were agreed.

The problem however…”The Icelandic scheme has only £88 million to cover £13 billion of deposits.”

Anybody able to put an exact figure on what the Icelandic 16K guarantee would amount to? I guess the guarantee would be a bigger problem the more small (16K or less) depositors there are.

Thanks for that. It is a game-changer in my book if it is true. And I don’t really doubt it.

@Edgar Morgenroth
The opposition complained but they never wanted to stop NAMA. George Lee was gagged by Kenny. Kenny himself went missing almost completely.
Kenny was presumably shushed by the 2 former FG leaders. They in turn intrigued machiavellienly to stop the economists letter from gaining momentum.

Eamon Gilmore went missing too. I believe Labour were shushed by the unions and by Dick Spring. The unions hardly said a word about NAMA. I fear that they prostituted their silence on NAMA to FF for no pay cuts. Now the same thing that happened to them on pay cuts will happen to the country through NAMA.

The many days and late sittings now all seem to have been part of an establishment pantomime. Opposition and government conducted a WWF debate on NAMA. Burton and Bruton haven’t made too much trouble for the government on the banking cover up either. The end result was a proposal as bad and NAMA organisation as secretive as if the opposition had not existed. The banking cover up could hardly have been less extensive if Burton and Bruton, Gilmore and Kenny had spent the last year on holidays. I am afraid the same applies to the media. Most supported it even though the government’s arguments were trashed repeatedly by the academics. Even among opponents, few were willing to describe it as a bailout for the elite and a cover up in progress.

The opposition and our media failed in their constitutional duty to treat NAMA with due scrutiny – given the nature of our current government – let alone the relentless scepticism that was appropriate.

Given their abdication the case for a referendum is overwhelming and NAMA would be massively defeated. Therefore we won’t be given one.

The law is what is accepted to be the law. A hyper realist school of jurisprudence.

Most international treaties are not tied to an enforcement system as the signatories are likely to abide by a freely contracted obligation, for which there was a likely quid pro quo.

Banking however is a club and can be used like a club against countries. Members of this club control countries as war is not possible without extensive capital, most of which is borrowed. From bankers. Not banks. Banks are what bankers use.

Morally, the Icelanders were unaware as were the plain peasants of Ireland, up until the guarantee. And Nama. Our president had options also but chose not to exercise them. A colossal pity!

The bankers knew or ought to have known and therefore they should suffer the bulk of the loss. A few banks here and there are sufficient penalty? Is a full guarantee of past debt a quid pro quo? Perhaps. I am against NAMA as it is a waste of capital. Irish banks did not seek money from abroad from punters like pension funds? We still do not have a breakdown of bond holders, but they tend to insure against riskier investments.

The discussion should as always be a practical one. As I believe that we are in a depression, Japan style, we should consider all obligations in light of that. How can we balance our needs with those of our partners who lent to us and may lend again? We should also keep as good a reputation as possible. I believe the decision to create a bad bank is entirely consistent witht the Japanese experience. As there are going to be large capital disruptions soon, this year, apparently by April, we may find the moneys promised to us to be more expensive or missing. The ECB uses banks to fund the initial 54,000,000,000 euro resulting in nearly 100,000,000,000 euro that we will have to repay. Some may not be solvent nor liquid.

We will have been given the opportunity to reconsider NAMA. Let us take it.

This is an option for Icelanders after they reject the deal. No doubt they will receive many scare stories in their media paid for by UK and Netherlands operatives!

For the amounts involved the bankers might want to take great care over their tactics? The measure of ability to repay has been forgotten before and led to the WWII! Bankers are unlike legal incorporated persons, very mortal! What is sovereignty but freedom from debt slavery? I imagine that Icelanders, being 50% Irish genetically, would not take such conditions lying down. Bankers can be traced. Dare I mention Baltic Exchange again?

@E65bn NAMA is a done deal so talking about a refendum is purely academic.

@ Veronica – the referendum in Iceland will ensure that the voters will take responsibility and if they get it wrong they only have themselves to blame.

Referenda may be controvercial in Ireland but they seem to work perfectly well in most other places. Yes, you always get some establishment figures who winge about the result if it does not suit them, but perhaps they should have put more effort into informing the public properly.

@Edgar Morgenroth
There was an unusual occurrence today – an FF minister was grilled relentlessly about a bank inquiry on RTE. He sounded rather shocked. What could have warranted this degree of scutiny and scepticism? I’d say the FF press office lodged a complaint. The minister ducked, dodged and dived but they kept pressing him. He was unable to commit to a date this year.

His big argument was that an inquiry now would prove destabilising. The Watergate inquiry was very destabilising but it went ahead. At the time in America the Cold War was raging, the country was still tied up with Vietnam, the oil crisis happened, the Yom Kippur war, the civil rights struggle….

Of course the inquiry will be destabilising but FF/Developers/Bankers should have thought of that before they destroyed 160,000 jobs. For the unemployed THAT was destabilising. No one should allow them to fob us off anymore. It’s a year and three months since the bank guarantee. It’s time for answers.

How did we all come to the belief that it was bankers rather than politicans who destroyed the country:

“Repeating his view that the banks’ bad practice was “economic treason”, Mr Dempsey said Ireland has been swamped by a global disaster and this was greatly complicated, on the home front, by economic treason.

“In common with people the length and breadth of this country, I welcome the garda action earlier this week. I welcome action against people who have used the Irish economy as their own personal piggy bank,” he said.

The minister said the problem was one of reckless endangerment of a nation.

“That’s not an exaggeration. That’s not over the top. The fact is that a small number of sophisticated money manipulators endangered the economic survival of our people. There’s no parallel in history for the damage they have done to this nation — except perhaps Cromwell.

“And even Cromwell was motivated by reasons other than personal gain,” he added.”

I remarked a while back that Colombo would not have decided to interview Sean Fitzpatrick last of all but Appleby decided to adopt this strange approach from the start. If Sean Fitzpatrick is worse than Cromwell surely it would be worthwhile interviewing him immediately?
All this looks ever more like political cover for FF and less like an investigation.

There will be no jail sentences for €100 Billion of economic damage.
Only in Ireland. It looks like Brendan Keenan was right. The raid on Anglo was a PR stunt.

Further proof, if it were needed, that Iceland is different from Ireland.


They heed the will of the people in Iceland and act swiftly when asked to do so. Compare that to the ducking and diving that’s going on here in relation to the bank inquiry which has already been requested by the Governor of the Central Bank.

Our Prime Minister has already stated publicly that he opposes such an inquiry, the Irish Foreign Minister stated publicly this morning that he opposes such an inquiry and Minister Bat O’Keefe has also publicly opposed the holding of such an inquiry.

There is obviously a cover-up going on, why else would they not want an inquiry.

The leader of the Green Party, Minister Gormley, has said he supports the Governor of the Central Bank’s call for an inquiry.
The time has now come Mr. Gormley to show your true colours, we all thought they shafted you on NAMA, but maybe we were wrong.
Perhaps you will now say “yes we should have an inquiry, but not just yet.”
In that event we will know that the virus of gombeenism has infected all sections of the government.

I used to believe that the Greens were the (relatively) innocent victims of FF spin on NAMA. However, they refused to listen to all independent advice on NAMA before and since their conference.

Eamon Ryan has spoken on how NAMA losses don’t really matter. For him it was always about getting a giant property portfolio to play with for Christmas. It looks like he will have to wait a few months longer but he and Gormley will soon have control of their empire – and it’s not a toy.

I’m backing Iceland. Who couldn’t after hearing that appalling London bond holder on Newstalk this morning? After getting the size of the country’s population wrong (they corrected him) and stating that it was in the EU (they wisely didn’t bother), he more or less sugested that the entire Icelandic population should get a damn good thrashing, for having the temerity to call a referendum. Ireland was to be congratulated for “taking its medicine.”

Many people in Britain are ashamed at the bullying of Iceland by the British government. The UK and Holland have acted disgracefully. They might as well invade. It would be less dishonourable than leaving their boot hovering over Iceland’s windpipe until they agree to sign.
“A report by Sweden’s Riksbank [Central Bank] said Britain and Europe share blame for the fiasco. It said “absurd” EU rules – which cover Iceland indirectly – told states to set up a “guarantee scheme” for banks, but never said taxpayers were liable for losses.

The reports added that the UK “hardly bothered” to inform savers that the schemes were ill-funded. “The conclusion is clear: the EU host countries (UK and Holland) are also to blame for Iceland’s disaster. It would be reasonable that they carry some of the burden. It takes two to tango,” it said.”

@ All: I’m with, E65Bn plus economic costs & NO extra lending!

In our democracies the CITIZEN is sovereign – not our legislators. Our legislators are merely temporary representatives from a specific date/time event.

Most regrettably, legislators are easy prey to Special Interest and Pressure groups … …. … (insert you own specific ones). You should also include the upper levels of the state bureaucracy as a special interest group. Hence, the legislators now no longer represent the citizens and the citizens have both a duty and responsibility to remove them by whatever means are required by the specific circumstances – up to, and including violence.

Sovereign default is the ultimate sanction of the individual citizen against the greed, corruption and incompetent actions of private entities (foreign and national) who succeed in capturing legislators and ‘persuading’ them to act in ‘the best interests’ of those entities.

I have an uneasy feeling that sovereign defaults are being discouraged, as a few may wreak havoc on the entire global financial system and before the boyze can make their retirement ‘nuts’.

B Peter.

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