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crunch. icesave, default. credit, Iceland

Iceland freezes Kuwait burns

    Last week, Iceland said no. The country’s president, Ólafur Ragnar Grimsson , refused to ratify a bill to pay Britain and Holland the £3.6 bn cost of guaranteeing Icesave accounts after Landisbanki uk went bust in 2008. Faced with paying around £12,000 per head – about £40,000 per family – the Icelanders have decided that, on balance, they’d rather not. At least not now. 

Shock horror – send a gunboat. But the Icelanders have a point. Icesave, was the UK subsidiary of a private bank that went bust. Very few Icelanders had any knowledge of what was going on and even fewer benefited financially, so why should they be liable now? The interest on the debt alone is equal to the cost of Iceland’s health care system. It was the British government’s decision to bail out Icesave along with the other insolvent banks. If banks don’t have to pay their debts why should Iceland? 

Perhaps the Nordic state should ask to become part of the government’s asset protection scheme, like RBS. Alternatively, the Treasury could pay a call to the former owners of Landisbanki many of whom live in London enjoying tax-free non-dom status. Landisbanki had assets of well over £3 billion. As usual, the profits have been privatised but the losses are socialised. Perhaps we should all set ourselves up as banks and get our debts paid. This isn’t quite as daft as it sounds.

Over in Kuwait, the National Assembly has passed a bill for the government to take all the debts run up by its citizens during the boom years – around $24bn. Under the scheme, the Kuwait government would buy the loans from its three million citizens, wipe out interest payments and pay capital back gradually over ten years. It’s the ultimate getoutofjailfreecard for a country used to living the high life without actually having to pay for it. Just, er, like Britain

British citizens have debts of £1.5 trillion. Perhaps the government should just add this to the trillion of liabilities of the British banks. Well, in for a penny in for a pound. If the City of London’s debts can be put in cold storage, why not ours? Then everyone could just go out and spend again like it was 2007. Actually, we’re already doing that. The high street stores have been astonished by the continued spending power of the British consumer, who is, by any reasonable standards, are drowning in debt. 

And of course we can pay for it all just by printing more money. In fact, why not give British consumers a bonus for handling their finances so irresponsibly, just like the banks? Then there’d be even more funny money to spend on cheap tat. Really, Gordon is slipping up here. This could be an election winner.

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About iain2macwhirter

Writer and journalist.

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