A new Icelandic ‘drop the debt’ campaign?

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Debtonation ¬ª Blog Archive ¬ª A new Icelandic ‘drop the debt’ campaign? .

My Green New Deal colleague, Ann Pettifor blogs regularly. She's written in the last day or so about the debt crisis in Iceland. Ann has, of course, considerable credibility on this issue, having run Jubillee 2000 and having foretold the current world debt crisis.

She says:

About one quarter of Iceland’s voters - 56,000 people - recently signed a petition which urges President Olaf Ragnar Grimsson to ‘drop the debt’ owed to the British and Dutch governments. This petition reflects the view of 70% of Icelanders, according to a poll taken in August.

This debt - which amounts to 12,000 Euros per Icelandic citizen - is the result of reckless lending by an unregulated, private bank - and reckless, unregulated borrowing by British and Dutch depositors that earned very high rates of interest on their risky deposits. For political reasons, these depositors were bailed out by the British and Dutch governments - at a cost of about 50 Euros per citizen.

A country with a population the size of the city of Leicester - 317,000 - is now asked to bear the full burden of losses incurred by a private bank, and by private citizens in two countries with a joint population of 76 million.

The Icelanders are right in their instincts that have given rise to their opposition: this debt is unpayable. More than that, it is not their fault. It was undoubtedly an Icelandic bank that failed. But the system in which it worked was not Icelandic. And the people of Iceland were not responsible for its failure. It is pointless to now ask them to pay.

There is, however, very good reason why they should expect the auditors of that bank to pay. They had responsibility for making sure it could pay. They had to assess that it was a going concern and failed to do so. For that they do have liability, and they should bear the cost.

But the people of Iceland should not.

It's a simple choice: failed auditors or innocent people? Which would you choose?