Why Iceland Voted “No” to Repay Icesaves Debt to Holland, and the UK?
The difference in what ordinary people think is right, and their governments can often create a paradox. This was the case when ordinary Icelanders voted a firm “No” to paying the cost themselves, of the huge four billion euro debt left by Icesave- a private bank based in Iceland. Why did the majority of Icelanders reject taking on this debt themselves?
One of the more controversial decisions of many governments was to take on the debts left by the private banks in their countries. This decision left countries like Ireland, facing financial ruination, whilst the United States & Britain sacrificed public services in return for ‘honoring” this debt.
Ordinary Icelanders already faced with higher taxes, and billions in debts, were the first victims of the 2008 financial meltdown. In a second referendum, they said “no” to any bailouts of Icesave. Leaving political leaders in the UK, and the Netherlands angered.
Were the Voters Right?
In a system where government ownership is frowned upon, whilst private ownership, and entrepreneurship is encouraged, people are expected to be responsible for their own financial failings. This was the continued message of European, and American governments before 2008, and the main message of free marketers.
Then the financial crisis came, and suddenly large banking corporations seemed to be immune from this responsibility, as trillions of dollars of debts were passed on to the taxpayer through bailouts. The cost of this has been cutbacks in basic services like education, and the lack of investment in any planned economic growth.
Ordinary Icelanders may of seen the reality of these costly bailouts, and the consequences felt by many ordinary people affected by taking on this debt, also they may of witnessed the immunity in which most leaders in the banking sector were granted after these huge bailouts. Three years later many of these failed financial leaders are advising our governments, living on golden handshakes or still running the banks they ruined.
It was this immunity, which won over the ethical right of both the British and Dutch governments in retrieving these funds, that has led to this rejection of a 4 billion euro bailout. A decision which has angered depositors and governments alike, who see this as a rejection of responsibility.
One problem the UK government may have in persuading these ordinary people to vote “yes,” could of been why they never investigated the directors of Icesave, who reside in London, whilst one of the directors became a special government adviser, after he had lost billions.
We can conclude that if today, we could vote on whether to bail out a bank or corporation, the majority of people would vote “no,” and perhaps insist on the directors take on the responsibility themselves. This ridicules assumptions by our leaders that whatever financial failings large corporations have, they can be passed on to the taxpayer. Perhaps this is one reason ordinary people in Greece, Ireland, Portugal and the United States openly question the fairness of these bailouts.