Wither Greece

Only a referendum can commit the Greek government to repay new debts imposed under austerity. Only a referendum can prevent property that is privatized from being re-nationalized. Such a transfer is not legitimate under commonly accepted ideas of political and economic democracy. And in any event, a rent-tax can recapture for the Greek economy what the financial aggressors are trying to seize.

History is rife with instructive examples. Local oligarchies in the region invited Rome to attack Sparta, and it overthrew the kings and their successor Nabis (who may himself have been royal). The sequel is that Rome headed an oligarchic empire, using violence at home to murder democratic reformers such as the Gracchi brothers after 133 BC, plunging the republic into a century of civil war. The creditor interests ended up fully in control, and their own banal self-seeking plunged the Western half of the Roman Empire into an economic and social Dark Age

Will Greece Allow Central Bankers To Destroy Sovereignty?

ECB intransigence leaves little alternative to breakup. Europe’s payments-surplus nations are waging financial war against the deficit countries. Without a common union based on mutual support within a mixed economy – one capable of checking financial aggression – the European Central Bank replaced the military high command. Its bold gamble is whether the Greeks will be as stupid as the Irish, not as smart as the Icelanders

Iceland: Welcome back to the 1950s

The global crisis has brought many countries to their knees, none more so than the small island of Iceland whose losses amount to seven times its GDP. Yet while Iceland’s recovery has in many ways been remarkable, this column argues that the country’s capital controls stand in the way of further progress

Breakup of the euro?

The creditors know that the game is up. All they can do is take as much as they can, as long as they can, pay themselves bonuses that are “free” from recapture by public prosecutors, and run to their offshore banking centers

Should Irish Voters Follow the Example Set by Icelandic Voters?

Voters in Iceland have rejected their government’s attempt to foist on them the costs of bailing out foreign creditors. Should voters in Ireland too

Simon Johnson: U.S. Banks Need More Capital

The Vickers report came out in Britain identifying areas where Britain’s banking system needed to alter its regulatory structure. Simon Johnson talked to Bloomberg about this report and banking regulation in general. His view is that first and foremost large globe-spanning banks are too large. Johnson believes a 25% equity financing level is the right amount. That would give banks four-to-one leverage (discounting the embedded leverage of derivatives, of course).

Why Iceland Voted “No”

The vote reflected widespread belief that government negotiators had not been vigorous in pleading Iceland’s legal case. The situation is reminiscent of World War I’s Inter-Ally war debt tangle. Lloyd George described the negotiations between U.S. Treasury Secretary Andrew Mellon and Stanley Baldwin regarding Britain’s arms debt as “a negotiation between a weasel and its quarry. The result was a bargain which has brought international debt collection into disrepute … the Treasury officials were not exactly bluffing, but they put forward their full demand as a start in the conversations, and to their surprise Dr. Baldwin said he thought the terms were fair, and accepted them. … this crude job, jocularly called a ‘settlement,’ was to have a disastrous effect upon the whole further course of negotiations …”

And so it was with Iceland’s negotiation with Britain. True, they got a longer payment period for the Icesave payout. But how is Iceland to obtain the pounds sterling and Euros in the face of its shrinking economy. This is the major payment risk that is still unaddressed. It threatens to plunge the krona’s exchange rate.

Will Iceland Vote ‘No’ on April 9 or commit financial suicide?

A year ago, in March 2010, Iceland’s economy was so small that it did not warrant much attention when 93% of its voters rejected the Social Democratic-Green government’s surrender to demands by Gordon Brown and the Dutch, the European Union (EU) bureaucracy and IMF that the island nation impose austerity. Britain and the Netherlands wanted to be reimbursed for having paid out more than $5 billion to some 340,000 of their own depositors – whom their own bank oversight agencies had failed to warn about the looting that was going on.

Iceland’s taxpayers were told to bear the cost, as virtual tribute. In effect, it was to be penance for believing the neoliberal fairy tales about how bank deregulation and “free markets” would make it the richest, happiest country in the world. Indeed it seemed to be, according to United Nations data. But the dream was dashed after the Icesave electronic Internet bank branches abroad were emptied out by their proprietors.

Too Big To Regulate

Systemically Dangerous Institutions – the U.S., Iceland, and Ireland by William K. Black This column was prompted by Thomas Hoenig’s December 1, 2010 op ed in the New York Times (“Too Big to Succeed”) warning that we must end banks that are “too big to fail.” Mr. Hoenig is the President of the Federal Reserve

Quick Thoughts on the Irish Bailout

I am still in catch-up mode this morning but I wanted to highlight a few points on the Irish bailout. The first has to do with the European stress tests. If you recall, the two Irish banks tested were Bank of Ireland and Allied Irish Bank.  Both passed the tests. These paragraphs from the BBC

Are Iceland’s Banks About To Go Bust Once Again?

It seems so if you read the latest from the Financial Times (hat tip Marshall Auerback): Iceland’s banking sector is facing a fresh wave of losses after a court ruling raised doubts over the legality of billions of dollars of loans. But here’s the thing. The Supreme Court outlawed loans tied to foreign exchange rates

Links: 2010-04-16 Capital flight and amazing pictures of New York and Iceland

Links of the day Greek wealth finds a home in London | The Guardian Wary of a Bubble at Home, Chinese Diversify by Buying in Singapore – NYTimes.com DIRTY, DANGEROUS & DESTITUTE | NEW YORK IN THE 70s – ALLAN TANNENBAUM « The Selvedge Yard Iceland’s disruptive volcano – The Big Picture – Boston.com