Iceland Thumbs Nose At International Opposition To Advance $1.2 Billion Debt Relief Plan

More sane moves in a land where most people believe in elves. I keep telling people: believing in funny money ponzi schemes and the monopoly money institutions (whose leaders should rightly be jailed or at least straight-jacketed), while not believing in faeries, elves or Nature Spirits seems increasingly bizarre to me. Iceland continues to kick bankster butt, and the nation also honors privacy and land use far better than the “rational” cultures do. Perhaps they’ve learned to appreciate “Respect, Not Control.” In respecting Nature and the Unseens, perhaps Icelanders have also learned to respect themselves.

(Thanks for the link, G!)

Iceland Thumbs Nose At International Opposition To Advance $1.2 Billion Debt Relief Plan

 A general view of houses in the town of Vik in southern Iceland.(Reuters/ Ingolfur Juliusson)

A general view of houses in the town of Vik in southern Iceland.(Reuters/ Ingolfur Juliusson)

RT December 1 2013

Iceland’s government has announced that it will be writing off up to 24,000 euros ($32,600) of every household’s mortgage, fulfilling its election promise, despite overwhelming criticism from international financial institutions.

The measure was introduced by the country’s prime minister, Sigmundur David Gunnlaugsson, the leader of the Progressive Party which won the late-April elections on a promise of household debt relief.

According to the government’s website the household debt will be reduced by 13 percent on average.

Citizens of Iceland have been suffering from debt since the 2008 financial crisis, which led to high borrowing costs after the collapse of the krona against other currencies.

“Currently, household debt is equivalent to 108 percent of GDP, which is high by international comparison,” highlighted a government statement, according to AFP. “The action will boost household disposable income and encourage savings.”

The government said that the debt relief will begin by mid-2014 and according to estimates the measure is set to cost $1.2 billion in total. It will be spread out over four years.

The financing plan for the program has not yet been laid out. However, Gunnlaugsson has promised that public finances will not be put at risk. It was initially proposed that the foreign creditors of Icelandic banks would pay for the measure.

International organizations have confronted the idea with criticism. The International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD) have advised against it, citing economic concerns.

Iceland has “little fiscal space for additional household debt relief” according to the IMF, while the OECD stated that Iceland should limit its mortgage relief to low-income households.

In the meantime, ratings service, Standard & Poor’s, cut back on its outlook for Iceland’s long-term credit rating to negative from stable, stating that the economic measure could affect the confidence of foreign investors if it ends up being paid for by the existing creditors of Icelandic banks.

[Hear about even more sanity from Iceland here.]

One response to this post.

  1. Reblogged this on Spirit In Action and commented:
    Thank you Laura. I had not made that connection the most fey lands are leading the way (Iceland, Ireland, India, Hungary). Artemis Fowl would not be surprised:-)



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