Events took place in Iceland earlier this year that directly put the country's citizenry in direct opposition to their elected officials in regards to the liability incurred for the failure of the Icelandic Bank. In the aftermath, it is most exigent that the story, conspicuously dropped from the designated headlines of what is newsworthy, and therefore presented to the general public, be re-opened. The citizens of that country created a referendum by acquiring the requisite number of signatures, which was then voted upon by them. By an overwhelming majority vote they have prohibited their government to bailout the Icelandic Bank in order to repay the people or associations (many of which were local councils in the UK, such as the Norwich City Council) who had invested large sums in high yield 'financial products' on offer at various Icelandic financial institutions.
One of these products involved investment in derivatives on the futures markets for fish, something in abundance in the waters around Iceland, which were first monetised then securitised, while not yet caught but, arguably, an available asset - swimming about in the North Atlantic.
Why should the Icelandic citizens have to pay? They do not own the bank, as it is like most banks, a privately owned company; nor did they tell the investors to put their savings in them. This places the government in a terrible bind as they cannot possibly obey both 'the will of the people´ and the demands of the international financial establishment. While the people have clearly spoken, government is unable to hear. Will little Iceland be added to the Axis of Evil? Jeremy Paxton has made statements on British television indicating that the people of Iceland are violating the peace and security of British citizens. So much for a free and independent media!
What took place at the Icelandic Bank was certainly not an anomaly and as we are all aware has been replicated in nearly every major bank around the world. In addition to the wildly lucrative derivatives market, were the practices that precipitated the collapse of the sub-prime housing market in the US, as well as the failure of the home equity market based upon inflated 'values' against which endless new loans were made, pumping more and more new money into the market at the expense of the existing currency already in circulation.
That the system of usury-capitalism has collapsed upon itself cannot be viewed as a shock, as it has visibly been spiralling out of control for decades. What can be seen as shocking is that a perfidious world media is so obdurate in its attempt to persuade us not only that it can be, but that it is being patched-up as we speak.
There is, clear across the world, a total failure of the political class who are no more than mannequins dressed up as people in power. Ideological differences fade away with communist China as the number one supplier of the capitalist world's supermarkets, and the Arab leaders of what is referred to as the 'Oil Rich Gulf States' rush like lemmings head-long over the cliff of disaster as they continue to follow those they so obsequiously strive to imitate. Dubai World, much to the delight of the banking fraternity, needed to be rescued from the very brink of bankruptcy. The political class, in actuality, have no power, as has been made abundantly clear by their servile adherence to the dictates of financial institutions. This is the world we live in today.
But what about little Iceland, now overshadowed and all but forgotten as Greece takes centre stage, to be followed, we are told, by Portugal and most likely Spain?
Let's back-up a little before seeing if we can pick up the thread of Iceland's current malaise. According to Gudn Adalsteinsson, managing director of Kaupthing Treasury Department in Reykjavik, Shares in HBOS and Barclays plummeted in value following the collapse of Lehman Brothers investment bank in New York. This prompted many investors, many of which were other banks, to move their funds to the banks of Iceland, believing that they could, for the moment, avert disaster.
As of January 2010 there are literally hundreds of cases lodged in Iceland's high court on the legality of forced liability for the collapse of the 'old Icelandic banks'. Meanwhile, droves of British taxpayers are up in arms insisting that the money lost in the Icelandic banks be reimbursed to the British Government that had to step in to cover the losses of British banks that were left exposed by the failure of the banks in Iceland that now will have to be covered by the UK taxpayers. Meanwhile the 'new' Icelandic banks, nearly entirely owned by European banks such as the Royal Bank of Scotland and several of Germany's largest banks are, according to a July report, faced with yet another looming crisis.
Financial authorities in Reykjavik have been scrambling for the past two weeks to work out the implications of a landmark Supreme Court judgment outlawing car loans indexed to foreign exchange rates.
Gunnar Andersen, director of the Financial Supervisory Authority, told the Financial Times that Icelandic banks faced "deep trouble" if the verdict was applied to all forms of consumer and corporate credit linked to foreign currencies. The court decision has been described as one of the most important events in Iceland since the 2008 bank crash, potentially reducing the repayment burden on thousands of households holding foreign-indexed debt while threatening the financial system with renewed turmoil.
The court ruled that car loans paid out and collected in Icelandic krónur but indexed to foreign currencies violated laws designed to protect borrowers from exchange rate risks.
Recalling that we began with a massively supported referendum vote by the Icelandic electorate, its first national referendum since 1944, in the attempt to block their government from subjecting the people of Iceland to the burden of debt incurred by private banks, only to discover that the voice of the people fell onto deaf ears, now their judiciary is attempting to make a stand against the oligarchs of world banking.
What is now abundantly clear is that the system of modern liberal democracy was put in place to serve the requirements of the financial sector. Both have failed, both are disgraced.
Since the current disaster emanated from the epicentre of the failed New York investment houses, it is appropriate to go back to that nation's founding 'framers' of what is referred to as the world's greatest democracy.
"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a moneyed aristocracy that has set the government at defiance. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
"If the American people ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered." (Thomas Jefferson)
Needless to say, Jefferson's warnings could not be heeded, as the very premise upon which US constitutional law was founded opened the door, whether wittingly or unwittingly, to what became the inevitable outcome: that the banks would take over. This is a case for the prosecution that can never go to trial, and while the turmoil we are witnessing is exceedingly alarming, it may very well be only the tip of the iceberg.
Robert Luongo is a lecturer of Shakespeare & Rhetoric at Dallas College in Cape Town. He is the author of The Gold Thread – Ezra Pound's Principles of Good Government & Sound Money (1995) and The Power Template – Shakespeare's Political Plays, scheduled for release in January 2011.
