People in Iceland are not happy about being stuck with the bill for bank liabilities and in particular for Internet bank Icesave whose depositors were reimbursed by the UK and Netherlands governments, who now want Iceland to reimburse them. It’s an ongoing saga, though one without the heroics of sagas past –
The bill, covering repayment of a $5.3 billion loan, which would saddle each citizen with $16,400 in debt equivalent to 45 percent of 2009 economic output, sought to cover U.K. and Dutch depositor claims after the 2008 failure of Landsbanki Islands hf, which set up the Icesave accounts, and unfreeze the international bailout.
But now look at the most egregious aspects of what the Irish government announced today (and we’ll generously leave AIB, the bank whose name kept coming up in the Tribunals, out of the picture).
Another 18 billion for Anglo on top of the 4 billion they have already, and nearly 3 billion for Irish Nationwide. And that’s not counting the NAMA loan purchases, since at least in that case there are some actual assets apparently receiving diligent valuation.
So that’s 25 billion euro going into insolvent financial institutions, institutions whose business model is gone with the wind. Expressed in other ways, 15 percent of GDP, or €5680 for every man, woman, and child in the country — not to buy anything, not to loan to anybody, but to keep up past commitments made by these two institutions.
Incidentally, in the USA, the AIG bailout became the most politically damaging for the government when it was revealed that a key part of the bailout involved keeping whole the returns of the counterparties to whom AIG had offered insurance on debt obligations. The public eventually was told the identities of these counterparty beneficiaries, and that type of bailout wouldn’t happen any more.
In Ireland, we still don’t know who is being protected by the Anglo and Irish Nationwide cash infusions, and there is still no special windup regime for such institutions. Maybe we’re not like Iceland and so we won’t put this latest commitment to a referendum. But could we at least get the names of the people on whose behalf each of us just took on nearly €6000 in debt?