I’m afraid I can’t really apologise for defending Iceland because like many small nations (or small companies, or small communities) they can get hurt in the playground when the bigger boys/girls move in; and being supported, underwritten, bailed out or bought out – even if it is charitably meant – can be a very difficult thing for human beings to accept and live with. So I wasn’t aiming to vent my spleen, but trying to look at things from the perspective of the Icelandic people. Mea culpa for being English and backing the underdog, it seems. :

So let’s see. Your first rant was complaining about lack of European cooperation to help the Icelanders, and now that Europe is stepping in to do something you complain about the Icelanders being bullied by foreign interests. That, sadly, is typical of the ignorant, selfish ranting I’m seeing way too much of right now. I certainly won’t waste my time trying to explain things politely to you any more. It is pretty clear that all you want to do is vent your spleen on someone who isn’t you.

It is nice to think that environmental concerns won’t take a back seat after all though.

Must admit I know nothing about Iceland and its economics.

Iceland has a longstanding association with the Baltic and Russia. When I visited there several years ago, a lot of the farm machinery and vehicles were second hand from Russia. It also has to be said that when the (Western) Allied Forces set up a base of operations in Iceland in World War II, the Icelanders felt they were pretty much ‘under Occupation’, just as the Channel Islands where I live were under German Occupation during that war.

Icelanders suffered very badly from the Cod Wars and the anti-whaling measures, it cost a lot of their people their livelihoods and made life extremely hard, and is still a moot point to this day I think.

Outside investors were all too happy to take advantage of Icelandic financial services when it suited them. But now things have gone a bit wobbly, the wolves are at the door again. And being bought out by foreign banks may not be much more consolation than being bullied by a grumpy UK PM (more like £20bn in investments I think, Cheryl). Were I an Icelander, I think I’d be more than tempted to shove an impolite gesture at the greedy abusive world and look to the welfare of my own people.

Sorry, glenda, that turned into a bit of a rant. :

Read here:
http://www.slate.com/id/2202051/

My main concern is that in hard times environmental concerns get relegated to the bottom of the pile, when they are actually more important than anything else. Unfortunately so few people believe that. I will get very little satisfaction from being right, I’m afraid.

Firstly ordinary accounts with two of the collapsed Icelandic banks have been purchased by ING and have therefore been saved. ING is a Dutch company so deposits there are presumably being guaranteed by the Dutch government (although ING doesn’t appear to be in difficulties at the moment).

That leaves Icesave, an online bank holding some $8bn from British customers. The Icelandic government had guaranteed individual deposits up to $16k, but had tried to walk away from that promise. They now appear to have been persuaded to honor the promise. The UK government will be topping up protection to the current UK guarantee level of $100k, so if any individual savers from the UK had more than $16k in an Icesave account the UK will take the hit for that.

Finally there remains the question of institutional investors. Various British organizations, including local councils, the police, London Transport and charities such as The Samaritans and the Cats Protection League also had money invested with Icesave. As they are not ordinary citizens their money is not guaranteed. Negotiations continue.

I'm not sure where to start because I'm not sure what it is you don't understand, but I'll give it a go. Let's try a personal illustration.

I have bank accounts in three countries (UK, USA, Australia). That's a result of having had different jobs around the world. I have a few thousand dollars spread between those banks, not all of which is mine because I will have to pay some of it in taxes (I'm self-employed).

Now, the money I have in the US is in a bank called Washington Mutual (WaMu). It is one of the banks that got into trouble, and it has since been sold to Chase. Back in the 1930s, WaMu would have gone bust, and I would have lost every cent I had in the bank. But in response to what happened in the 1930s governments set up insurance schemes. The American one is called FDIC. It has two effects.

Firstly the US government guarantees my money, up to a total of $100k (and I think they raised that to $250k as part of the bailout bill). Secondly it was the FDIC people who stepped in and forced WaMu to sell to Chase before it actually went bust.

So the US government has protected my savings, even though I'm not a US citizen or even a US resident. The UK government runs similar guarantee schemes, and I'm pretty sure Australia does too. Ireland and Germany recently announced that they would guarantee all savings in banks in their countries, regardless of how large the sum was.

Iceland, however, is not playing ball. A bunch of Icelandic banks have gone bust, and the people who put money into those banks appear to have lost it. The Icelandic government appears to be trying to shrug and walk away. I don't know what they are doing for Icelanders, but foreign investors are being left in the lurch. For them it is just like the 1930s again.

I don't know the exact details as I don't have money an Icelandic bank. It could be that the government never guaranteed the banks, or it could be that there was a guarantee and they've torn it up. However, I do know that governments all around the world are moving to reassure people that their money in ordinary commercial banks is safe (investment banks are another matter, but the "man in the street" doesn't bank with them). Iceland is an exception, and people are annoyed with them.

You have a point that Gordon is blustering. Much of that is probably grandstanding for the benefit of the British public who are understandably angry. I think there's something like $2bn of British money in those Icelandic banks. But I'm sure that a lot of diplomacy will be going on behind the scenes. Because…

Glenda – you are right, the Russians have offered to help prop up the Icelandic economy. I'm sure that Mr. Putin will want something in return, however. Use of a naval base, perhaps.