Wednesday, May 9, 2012 ICELAND. No news from the Icelandic Revolution?
In Iceland, the people have made the government resign, the primary banks have been nationalized, it was decided to not pay the debt that these created with Great Britain and Holland due to their bad financial politics and a public assembly has been created to rewrite the constitution. And all of this in a peaceful way. A whole revolution against the powers that have created the current global crisis. This is why there hasn't been any publicity during the last two years: What would happen if the rest of the EU citizens took this as an example? What would happen if the US citizens took this as an example..
Top Economists: Iceland Did It Right … And Everyone Else Is Doing It Wrong
“What Iceland did was right. It would have been wrong to burden future generations with the mistakes of the financial system.” -Joe Stiglitz, Nobel prize winning economist
“What [Iceland's recovery] demonstrated was the … case for letting creditors of private banks gone wild eat the losses.” -Paul Krugman, Nobel prize winning economist
This is a summary of the facts:
2008. The main bank of the country is nationalized.
The Krona, the currency of Iceland devaluates and the stock market stops. The country is in bankruptcy.
2008. The citizens protest in front of parliament and manage to get new elections that make the resignation of the prime minister and his whole government.
The country is in bad economic situation.
A law proposes paying back the debt to Great Britain and Holland through the payment of 3,500 million euros, which will be paid by the people of Iceland monthly during the next 15 years, with a 5.5% interest.
2010. The people go out in the streets and demand a referendum. In January 2010 the president denies the approval and announces a popular meeting.
In March the referendum and the denial of payment is voted in by 93%. Meanwhile the government has initiated an investigation to bring to justice those responsible for the crisis, and many high level executives and bankers are arrested. The Interpol dictates an order that make all the implicated parties leave the country.
In this crisis an assembly is elected to rewrite a new Constitution which can include the lessons learned from this, and which will substitute the current one (a copy of the Danish Constitution).
25 citizens are chosen, with no political affiliation, out of the 522 candidates. For candidacy all that was needed was to be an adult and have the support of 30 people. The constitutional assembly starts in February of 2011 to present the ‘carta magna’ from the recommendations given by the different assemblies happening throughout the country. It must be approved by the current Parliament and by the one constituted through the next legislative elections.
So in summary of the Icelandic revolution:
Resignation of the whole government.
Nationalization of the bank.
Referendum so that the people can decide over the economic decisions.
Incarcerating the responsible parties.
Rewriting of the constitution by its people.
This move is what got Julius Ceasar killed in ancient Rome. He reduced the mortgage debt of the population by 50%. This would be a viable solution to the problem. Bank shareholders and holders of mortgage debt instruments would suffer, so your life insurance policy and retirement savings might become worthless, but your house would be clear title.
This is awesome. It shows when the people DO STAND UP they have more power and win against the corrupt bankers and politicians of a country. Iceland is forgiving and erasing the mortgage debt of the population. They are putting the bankers and politicians on the "Bench of the Accused." Which means I assume they are putting them on trial for corruption.
Now the rest of people of the world need to start doing the same thing. We all need to stand up and against all the corruption and fraud of politicians that are puppets of the banks and corporations. The government of Iceland has forgiven the mortgage debt for much of its population.
This nation chose a very different way of stopping the crisis from the rest of European countries. It decided to hear the requests of the population and to put politicians and bankers on the bench of the accused three years after their financial excesses would sank one of the most prosperous economies in 2008.
Have we been informed of this through the media? Has any political program in radio or TV commented on this? No! The Icelandic people have been able to show that there is a way to beat the system and has given a democracy lesson to the world!
FEBRUARY 04, 2013 All Hands on Deck! Iceland’s Revolt Wants to Go Viral
by ANDREW SULLIVAN
Iceland has suffered much like other nations during the global financial crisis, but the Icelanders’ struggle to overcome the disaster has taken on historic dimensions that are relevant to all countries. As the economic collapse began in the fall of 2008, legions of stunned and outraged Icelanders, including a poet and activist named Birgitta Jónsdóttir, started meeting in spontaneous protests and forums. The protests in the capital steadily became larger and more coordinated with kindred groups across the country. Three years before revolutions in the Arab world and mass-protests elsewhere, Birgitta Jónsdóttir and her fellow citizens began to ‘Occupy’ Iceland. The demonstrations were dubbed the ‘Kitchenware Revolution’ because people in the capital banged pots and pans in support of protesters surrounding the Parliament building. Any opposition movement would have been happy with the initial results of the mass-mobilization: the protests essentially blocked the opening of the Parliament in January of 2009, the Prime Minister resigned, his government fell, the Minister of Business Affairs dismissed the head of the Icelandic Financial Supervisory Authority just before submitting his own resignation, a new coalition government was formed, and the new government quickly announced intentions to convene a Constitutional Parliament in order to amend the Constitution. Nevertheless, all of these dramatic events proved to be just the tip of the iceberg. The turmoil has set in motion a period of profound democratic reform in Iceland, and many Icelanders now wish to share their new liberties and innovations with people around the world.
A protracted resistance against an incompetent government and a corrupt financial sector soon evolved into a much broader political awakening. From the beginning of the meltdown, citizens felt betrayed by virtually every social, political, and financial institution they had trusted. In the depths of the crisis, a population that was totally unfamiliar with high unemployment was facing a rate of nearly 10%. Although the mass-demonstrations subsided after the fall of the old government, the dissidents continued to pressure the new government to make deep changes. The previous government had formed a Special Investigative Commission (SIC) to investigate the causes of the financial collapse. The new government supported the SIC in its probe of officials at the highest levels; its findings eventually led to the official condemnation and prosecution of numerous people, including the former Prime Minister. More importantly, however, the new government eventually adopted the public demand that an entirely new Constitution be drafted. In order to drive their agenda forward, the activists decided to give themselves a voice in the new government.
With a shoestring budget, the protesters ran a campaign to elect activists to serve as spokespeople for grassroots movements in the national Parliament. Calling themselves the ‘Citizens Movement,’ four candidates were elected in the spring of 2009. Three members of the original group, including Birgitta Jónsdóttir, eventually broke away to form a separate group, which simply called itself ‘the Movement.’ The activist-politicians announced at the outset that their group would not function as a conventional political party. It would serve, rather, as a nonpartisan parliamentary group, or caucus, with which all Members of Parliament could freely engage. As part of their unique mission, they decided that their political intervention would only continue until the articles of their agenda had been achieved. The body would dissolve itself upon the attainment of its goals. Likewise, if it became clear that it would not be possible to obtain their legislative objectives, the Movement would cease to operate. Almost four years have passed. This spring, new elections will mark the end of the activists’ term in office, and the fate of their agenda remains to be determined.
The road to constitutional reform has been long and full of obstacles from the right-wing Independence Party, which led the previous government. In a recent interview conducted via Skype, MP Birgitta Jónsdóttir provided an insider’s account of the good, the bad, and the ugly concerning the evolution of the current draft of the new Constitution of Iceland. According to the MP, the drafting of a new Constitution “for the people, by the people” of Iceland was one of the four major demands of the “soft, non-violent revolution.” In fact, she says the call was so prevalent that almost every political party initially expressed support. She and her fellow parliamentarians in the Movement were committed to ensuring that the process of re-writing the Constitution would be legitimately democratic and inclusive. She said, “One of the main reasons I am in the Parliament is to give the people the tools so that they can have more responsibility in our democracy.” She has been pleased by the results. Measures have been taken, in spite of repeated opposition from some quarters, to incorporate the direct and substantive participation of ordinary citizens at multiple stages in the process of writing and passing the document. The process, she said, has been “quite beautiful and very much in the spirit of what I hope to see.”
The ongoing process of writing a new Constitution, which started in 2009, has taken much longer than expected. The saga is full of the kind of partisan, judicial wrangling that has plagued numerous elections in the United States in recent years. First, the Parliament formed a parliamentary committee of constitutional experts to review a range of recommendations for reform. The next step was to convene a National Assembly. Around 1,000 citizens were randomly selected from among the population to meet in a stadium for the purpose of discussing what should be in the new Constitution. The conclusions drawn from these dialogues were collected into a database. The next stage of the process was to conduct the election of 25 citizens to serve in a Constitutional Parliament, or Constitutional Assembly. The body was to be charged with drafting the new Constitution, using the findings of the National Assembly as its guideline.
The election of the Constitutional Assembly took place, and all citizens were eligible to run; however, the results were challenged on procedural grounds, with the Independence Party leading the dispute. The accuracy of the results was not in question. MP Jónsdóttir said a special body that included many judges of Iceland’s Supreme Court upheld the utterly unprecedented challenge, thereby invalidating the election. A parliamentary committee on which she served had to address the ruling. As the objections to the election were strictly procedural, the Parliament voted to circumvent the election’s nullification by simply appointing the winners to serve on a Constitutional Council. The new Council would perform the same function as the unrealized Constitutional Assembly.
Following these delays, the Constitutional Council got to work. The open and inclusive nature of the meetings of the Constitutional Council received a lot of international attention and admiration. The body’s meetings were open to the public. Not only were the meetings publicly broadcast. The meetings also received public comments through regular mail, email, and comments on social media accounts. Birgitta Jónsdóttir noted: “No other constitution has been as able to [do] crowd-sourcing as this. Even if it was not 100% crowd-sourcing, it…had [people] deciding which amendments or ideas would be processed.” Through the work of other activists, including colleagues of the Movement, the City of Reykjavík’s government has moved even closer to a more rigorous implementation of crowd-sourcing through its use of an interactive website called ‘Better Reykjavík,’ which is a project of the Citizens Foundation. National and international equivalents of that website are already in development. No one can deny that Iceland’s citizens are gaining rare access and input in the composition of their laws.
Another by-product of the overall reform movement is the expansion of older forms of direct democracy. Once the draft of the new Constitution had been published and submitted to Parliament, six of its proposals were presented to the people in a national referendum. One of the questions even pertained to the future use of national referendums. Before the crisis, Iceland had not held a national referendum since its independence in 1944. Since 2010, three have been held, including two relating to major economic policies. All six proposals in the constitutional referendum were approved by a majority of respondents. Although many found the response unequivocal, members of the Independence Party asserted the results were not truly representative of the majority of citizens. Nevertheless, the draft will now be debated in the legislature.
MP Birgitta Jónsdóttir is very proud of her country’s proposed charter. In her opinion, one of the text’s many virtues is its human language that is very simple for people to understand. She says some of its most beautiful articles relate to freedom of information, access to the internet, and national ownership and guardianship of natural resources. Recalling her experience reading the draft of the new Constitution in the Parliament, she said, “It was so moving. It’s so beautiful to belong to a nation that has this sort of social agreement.”
The freedoms of information, expression, and speech are especially dear to her. She was the main sponsor of a proposal for a parliamentary resolution to pursue a legislative project called the Icelandic Modern Media Initiative (IMMI). Today, she chairs an international organization, the International Modern Media Institute, that evolved out of the IMMI. According to the Institute’s website, the IMMI aims to amend 13 laws to give Iceland the world’s best freedoms of speech and standards of transparency. MP Jónsdóttir hopes her country can become a safe haven for investigative journalists, activists, and whistleblowers from around the globe.
The new Constitution remains imperiled. Jónsdóttir observes: “Now the entire academia and the president…are basically trying to ruin the process.” If the new Constitution is blocked despite the national referendum, she believes there could be another revolution. The articles in the draft that affirm permanent national ownership of natural resources are especially significant for the future of the Icelandic economy. She warned, “this is critical because we are not out of the hands of the IMF or…the financial world.” Therefore, over the next month, she and her fellow citizens will “have to use every available tool, resource, and wit to outsmart the old powers that are trying to destroy this process.”
The stakes remain high in Iceland, as they are high for all the nations that are still reeling from the global financial crisis. Icelanders have every right to say their country has become a historic experiment in modern democracy. They are extending the oldest and most inherently democratic civil liberties to modern communications, and they are exercising democratic rights through new media. In a process marked by an extraordinary degree of participation by common citizens, a new Constitution has been drafted and approved by a national referendum. The draft will now go through the legislature. If it passes, many of the most important articles in the Movement’s agenda will have been accomplished. If it fails, the loss will clearly demonstrate that the Movement’s aims could not be completed within the time frame its members envisioned. Regardless of the outcome, Birgitta Jónsdóttir said the Movement will cease operations. Yet, their work will surely continue. For her part, MP Jónsdóttir will run for re-election as a member of the Icelandic Pirate Party, which she helped to found last fall. Like all Pirate Parties, they are reclaiming rights that are being seized by corporations and governments, such as rights to online privacy and access to the public domain. Given her passionate advocacy of civil liberties, participation in the international movement of Pirate Parties seems like a natural progression of her work. She insists that, contrary to popular belief, Iceland’s struggle to avert financial and political disaster is far from finished. In fact, given the popular democratic ambitions of its people, the modern political transformation of this ancient island nation appears to have just begun.
Iceland, Fervent Prosecutor of Bankers, Sees Meager Returns
Ilvy Njiokiktjien for The New York Times
"Greed is not a crime. But the question is: where does greed lead?" said Olafur Hauksson, a special prosecutor in Reykjavik.
By ANDREW HIGGINS
Published: February 2, 2013
REYKJAVIK, Iceland — As chief of police in a tiny fishing town for 11 years, Olafur Hauksson developed what he thought was a basic understanding of the criminal mind. The typical lawbreaker, he said, recalling his many encounters with small-time criminals, “clearly knows that he crossed the line” and generally sees “the difference between right and wrong.”
Related
Ilvy Njiokiktjien for The New York Times A woman initiates a transaction with Arion bank, formerly Kaupthing, a once high-flying bank that crumbled. Iceland has gone after financiers with far more vigor than the United States and others.
Today, the burly, 48-year-old former policeman is struggling with a very different sort of suspect. Reassigned to Reykjavik, the Icelandic capital, to lead what has become one of the world’s most sweeping investigation into the bankers whose actions contributed to the global financial crisis in 2008, Mr. Hauksson now faces suspects who “are not aware of when they crossed the line” and “defend their actions every step of the way.”
With the global economy still struggling to recover from the financial maelstrom five years ago, governments around the world have been criticized for largely failing to punish the bankers who were responsible for the calamity. But even here in Iceland, a country of just 320,000 that has gone after financiers with far more vigor than the United States and other countries hit by the crisis, obtaining criminal convictions has proved devilishly difficult.
Public hostility toward bankers is so strong in Iceland that “it is easier to say you are dealing drugs than to say you’re a banker,” said Thorvaldur Sigurjonsson, the former head of trading for Kaupthing, a once high-flying bank that crumbled. He has been called in for questioning by Mr. Hauksson’s office but has not been charged with any wrongdoing.
Yet, in the four years since the Icelandic Parliament passed a law ordering the appointment of an unnamed special prosecutor to investigate those blamed for the country’s spectacular meltdown in 2008, only a handful of bankers have been convicted.
Ministers in a left-leaning coalition government elected after the crash agree that the wheels of justice have ground slowly, but they call for patience, explaining that the process must follow the law, not vengeful passions.
“We are not going after people just to satisfy public anger,” said Steingrimur J. Sigfusson, Iceland’s minister of industry, a former finance minister and leader of the Left-Green Movement that is part of the governing coalition.
Hordur Torfa, a popular singer-songwriter who helped organize protests that forced the previous conservative government to resign, acknowledged that “people are getting impatient” but said they needed to accept that “this is not the French Revolution. I don’t believe in taking bankers out and hanging them or shooting them.”
Others are less patient. “The whole process is far too slow,” said Thorarinn Einarsson, a left-wing activist. “It only shows that ‘banksters’ can get away with doing whatever they want.”
Mr. Hauksson, the special prosecutor, said he was frustrated by the slow pace but thought it vital that his office scrupulously follow legal procedure. “Revenge is not something we want as our main driver in this process. Our work must be proper today and be seen as proper in the future,” he said.
Part of the difficulty in prosecuting bankers, he said, is that the law is often unclear on what constitutes a criminal offense in high finance. “Greed is not a crime,” he noted. “But the question is: where does greed lead?”
Mr. Hauksson said it was often easy to show that bankers violated their own internal rules for lending and other activities, but “as in all cases involving theft or fraud, the most difficult thing is proving intent.”
And there are the bankers themselves. Those who have been brought in for questioning often bristle at being asked to account for their actions. “They are not used to being questioned. These people are not used to finding themselves in this situation,” Mr. Hauksson said. They also hire expensive lawyers.
The special prosecutor’s office initially had only five staff members but now has more than 100 investigators, lawyers and financial experts, and it has relocated to a big new office. It has opened about 100 cases, with more than 120 people now under investigation for possible crimes relating to an Icelandic financial sector that grew so big it dwarfed the rest of the economy.
To help ease Mr. Hauksson’s task, legislators amended the law to allow investigators easy access to confidential bank information, something that previously required a court order.
Parliament also voted to put the country’s prime minister at the time of the banking debacle on trial for negligence before a special tribunal. (A proposal to try his cabinet failed.) Mr. Hauksson was not involved in the case against the former leader, Geir H. Haarde, who last year was found guilty of failing to keep ministers properly informed about the 2008 crisis but was acquitted on more serious charges that could have resulted in a prison sentence.
Meanwhile, an investigative commission appointed by Parliament first reported to it in April 2010 and later published a nine-volume account of the financial crash, including a study of what philosophers charged with investigating ethical issues behind the crisis called a “moral void” at the heart of Icelandic finance.
Vilhjalmur Arnason, a philosophy professor at Iceland University who worked on the study, described the exercise as “very important for reasons of justice and for reconciliation” in a society traumatized by a crash so severe that it threatened to capsize the country. But, he added, bankers alone were not responsible, as “the whole society was so intoxicated” by values that put profit ahead of morality, the law and even common sense.
After the crash, the new government pushed to restructure the failed banks, purging their former management and owners and prodding them to write off a big chunk of their loans to homeowners burdened with big mortgages. The government declined to bail out foreign bondholders, who lost about $85 billion. Iceland now has a growing economy.
But it is not entirely clear that Iceland deserves its reputation as a warrior against Wall Street orthodoxy. In time, Iceland won praise from the International Monetary Fund for sharp cuts in spending and tax increases that slashed the government’s deficit and helped put the country back on an even keel.
Certainly Iceland, in contrast to the United States and most other countries, has pursued not only little-known financiers but also many of the country’s biggest names in banking and business. “We have been aiming at the upper levels rather than the lower levels,” Mr. Hauksson said.
His biggest scalp so far is that of Larus Welding, the former chief executive of Glitnir, one of the trio of banks that failed in 2008. Mr. Welding and a second former Glitnir executive were found guilty of fraud over a $70 million loan to a company that owned shares in the bank.
Mr. Welding, who is now standing trial in a second case along with one of the country’s most prominent business tycoons, Jon Asgeir Johannesson, was sentenced in December to nine months in prison, six of which were suspended.
The light sentence enraged many Icelanders, but, Mr. Hauksson said, “the important thing is that we got a conviction.” By contrast in Ireland, which put taxpayers on the hook for tens of billions of dollars owed by failed banks, the former chief of the failed Anglo Irish Bank has been charged with financial irregularities but so far no senior bank executive has yet been found guilty of a crime.
Prosecuting bankers was never going to be easy, particularly in a country like Iceland, which is so small that nearly everybody in the capital has a friend or family member who worked at one time in finance. When Iceland’s Justice Ministry first advertised for applicants for the new post of special prosecutor, nobody responded.
Mr. Hauksson, an outsider with no network of friends and relatives in Reykjavik, was then urged to apply during a second attempt to fill the post and was given the job.
“I thought this was something that had to be looked into,” Mr. Hauksson said. “If we prosecute small cases we also have to look into big cases.” But, he added, this risks “opening up a Pandora’s box” that can escalate even relatively simple cases “into something very big.”
The high stakes have also left some investigators vulnerable to temptation: two former members of Mr. Hauksson’s staff were placed under criminal investigation last year for selling confidential information for 30 million Icelandic krona (around $233,000) to the administrator of a bankrupt company who was trying to locate missing assets.
That episode has not dented Iceland’s heroic image among antibanker campaigners abroad. Mr. Sigfusson, the minister of industry, said he was regularly invited to speak on how Iceland dealt with its banking crisis. Iceland, he said, has “no magic solution” but has managed to push through unpopular cuts in spending in part because it managed to curb public anger by pushing for the prosecution of its bankers.
Today, Iceland’s bankers are both mocked for their recklessness during the boom years and reviled for pushing the country to the brink of economic ruin.
Mr. Sigurjonsson, the former Kaupthing banker, said a “big umbrella of suspicion” has opened up over anybody who worked in finance and unfairly stigmatized “highly educated and very able people who can lend a hand in resurrecting the country.”
He said he was shocked recently when he heard the young daughter of a friend, also a former banker, ask, “Daddy, why are bankers all criminals?”
A version of this article appeared in print on February 3, 2013, on page A6 of the New York edition with the headline: Iceland, Fervent Prosecutor of Bankers, Sees Meager Returns.
A little over ten years ago, we launched MoneyWeek magazine...
MoneyWeek is now the UK's best-selling financial magazine, and serves tens of thousands of subscribers in more than 60 countries.
You may have heard of MoneyWeek because of the work we’ve done over the last several years – helping investors avoid some of the big disasters associated with the credit collapse.
We warned investors to take their money out of Europe in 2009… to avoid buying the euro… to stay away from the big banks in 2008… and steer clear of property investments in 2007.
We even helped our subscribers find opportunities to profit from the ensuing chaos, by stocking up on gold and a number of other assets unpopular at the time.
To our knowledge, no other publication can match our record of correctly anticipating and predicting the financial crisis.
But that's not why we wrote this letter.
We cite our success and experience with the crises of the past because there is an even bigger crisis looming – something that we believe will destabilise the very foundations of Britain.
And that is why we've spent a significant amount of time and money in the past few months preparing this letter... perhaps the most important letter you’ll receive this year.
This looming crisis is related to the financial crisis of 2008... but it will be infinitely more dangerous. As we’ll explain, there is an unsolvable problem at the heart of our financial system. One that dates back over a hundred years.
In that time this problem has eaten away more than ￡10 trillion in public funds. It has been at the root of practically every major political argument in this country, and it affects every aspect of the way we live our lives.
Twenty-five Prime Ministers – from both political parties – have come and gone without ever having come close to solving it.
We believe the outcome of this problem is inevitable… and the recession, joblessness and instability you see right now is only the first stage of it. Many people think the slump we’re in now is as bad as it will get.
But the truth is, it’s only the start.
In fact, you will certainly see the consequences of this deep-rooted problem unfold across the cities, towns and villages of Britain. No one will escape the fallout.
In all recorded history, no country has ever recovered from the financial position we find ourselves in today. No government has ever been able to reverse this trend. No emergency action has ever come close to a solution.
This inescapable problem has only ever had one outcome: financial collapse.
Believe me, we don't make this prediction lightly and we have no interest in trying to scare you. We're simply following our research to its logical conclusion.
We did the same when we anticipated the global credit crisis, the property slide and the collapse of the banks.
That's why, before we go any further, we need to make something clear...
This is the most serious warning we’ve ever made
This is not just about your money. Yes, at its core, money is a big part of the issue. But it goes deeper than that.
What we are going to say is controversial. It will shock many people. In fact, we anticipate an inbox full of angry emails for what we are about to reveal.
And the ideas and solutions we are going to suggest might seem somewhat radical to you at first.
Way back in 2005 – when we began warning about Britain’s dangerous debt burden – very few took us seriously... not at first. Back then, most mainstream commentators – from the Financial Times to the Daily Mail – just ignored the views we published.
People couldn't refute our research... but they weren't ready to accept the enormity of its conclusions either. Our guess is that, reading this, you may say that too. You’ll say: "There's no way this could really happen... not here. Not to me."
But consider this:
No one believed us six years ago when we predicted the oil “super spike” months before it made its 82% climb.
No one believed us five years ago, when we anticipated the slide in the pound, calling our national currency ‘Down and out’. It has since suffered a long decline and will do so for many years to come.
And no one believed us three years ago when we advised our readers to ‘SELL EUROPE’. The eurozone crisis has since devastated stock markets across the continent.
In each case we were right to issue these controversial warnings early.
Those who received our early insights – our regular readers – would have made and saved thousands from these events. They had quite an advantage.
And that brings us to today...
The same financial problems we've been tracking from bank to bank, from company to company for more than five years have now found their way into the heart of our financial system. We’ll explain how this came to be, because what it means is critically important to you and everyone in the country.
The next phase in this crisis could threaten our very way of life.
We predict that everything about your financial life will change: where you bank, how you store your money… when you plan to retire… the way you protect your family and home.
We'll explain why we believe these events are about to happen. You can decide for yourself if we’re full of hot air. As for us, we are more certain about this looming crisis than we have been about anything else in our publication’s history. It makes us worry about the future for our families.
Here at MoneyWeek, we know that debts don't just disappear. We know that bailouts have big consequences. We know that printing mountains of money can only end in disaster. And, unlike most of the pundits on TV and in the mainstream press, our analysts understand what’s really going on, and they have made a habit of getting the majority of these big calls right.
Of course, the most important part of this situation is not what is happening… but rather what you can do about it. In other words, will you be prepared when this crisis becomes a national emergency, as we predict?
We fear that most people will not know what to do if banks fold and they are unable to withdraw their savings. They won't know what to do if the stock exchange suspends trading. They will be clueless if their pension income dries up. And if their home loses 50% of its value.
If the NHS is sold off and benefits are scrapped, the confusion will turn into rage. Media coverage will be, of course, unhelpful.
You can challenge every single one of our facts and we are confident you'll find that we’re right about each allegation we make. Then you can decide for yourself.
Will you act now and take this chance to protect yourself and your family from the catastrophe that’s brewing right now in our financial system?
We hope so. And that’s why weI wrote this letter.
We are going to talk you through exactly what’s happening and what you can do as well. We can’t promise you’ll emerge from this potential crisis completely unharmed – but we sincerely believe you’ll be a lot better off than people who don’t follow the simple steps outlined in this letter.
But we're getting ahead of ourselves a bit.
Let's start at the beginning. Here’s why we are so concerned, and what we believe will happen in the very near future...
The downward slide has begun
Britain is about to be flattened by a tidal wave of debt. It doesn’t matter if you vote Conservative, Liberal, Labour, UKIP – or for no party at all. The facts are the facts.
Let’s take a look at some numbers…
Two and a half years ago, when the Coalition government formed, we were already in a huge amount of debt. In fact, the previous government had left the country sinking under ￡700 billion’s worth. Take a look at the following chart:
Source: ukpublicspending.co.uk
The Coalition has spent the last two years desperately and very publically trying to get our finances in order. We’ve had an “austerity” budget. We’ve had tax hikes. We’ve had “the cuts”.
But for all that, our national debt is still growing at an incredible rate.
Despite David Cameron’s talk of “austerity”, he’s going to add an estimated ￡700 billion to the national debt in just five years. That’s more than Tony Blair and Gordon Brown added to the national debt in eleven years. It’s more than every British government of the past 100 years put together.
The fact is, when you look at our finances as a whole, the Coalition isn’t cutting anything. State spending is going up… our national debt is going up… and our interest payments are going up.
By the next general election in 2015, our national debt is estimated to stand at almost ￡1.4 trillion, as this chart shows:
Source: ukpublicspending.co.uk
It’s clear: our public finances are in an enormous mess. Anyone can see that. And to some extent, some politicians will admit it. But add in our financial, personal and private debts… and an even darker picture emerges…
Compared to the size of our economy, Britain is now one of the most heavily indebted countries in the Western world. That’s official. Our total debts stand at more than FIVE TIMES what our entire economy is worth.
Proportionally, that’s more debt than Italy… Portugal… Spain… and almost twice as much debt as Greece. Those are four countries already in the throes of financial crisis. We’re the odd one out because we haven’t collapsed – yet. But things can’t stay that way for long.
You see, the only countries that have more debt than us are Japan, where the economy has stagnated for 20 years and the stock market has crashed by 75%... and Ireland, where the housing market has crashed 50%, and the government has been forced to accept a bailout.
In fact, our debts tower above almost every other nation’s – here are the figures that prove it:
Source: Haver Analytics; Bank for International Settlements; national central banks; McKinsey Global Institute
That's absolutely incredible, isn't it? Yet you’ve probably never seen this fact reported in The Telegraph or on Sky News.
And the worst part is, even THAT isn’t the full story…
Because when you add in all of Britain’s “unfunded obligations” – promises the Government has made on things like public sector pensions – our debts swell to 900% of our economy.
That’s right – when you add everything up, we owe NINE TIMES what our entire economy is worth.
Our political leaders still like to see Britain as a world power. But let’s not delude ourselves. It’s clear to see: we’re totally broke.
It doesn’t matter which set of figures you use, or which way you look at Britain’s debts. We’re merely talking about different shades of disaster here.
A country can either pay back its debts or it can’t.
And it is very clear to us that Britain can’t.
But how did we get here?
After all, we were once the richest and most powerful nation on earth.
masalah ekonomi di eropah skrg dah mcm wabak. lepas satu2 negara berjangkit.
Ekonomi Britain di ambang maut
Throughout history, when countries are in financial crisis, governments automatically raid the wealth of their citizens. It’s all they can do.
It goes as far back as Ancient Rome. As the Empire crumbled and inflation raged, the Emperors raised taxes over and over, squeezing as much coin as they could from their subjects.
Back to the 20th century… In 1933, President Roosevelt signed executive order 6102, forbidding the man on the street to hold any significant amount of gold. In the midst of the Great Depression, the government basically made it illegal for anyone but them to hoard the precious yellow metal. Refusal to comply with these demands was met with a five year prison sentence. That’s essentially how the US filled Fort Knox – by seizing other people’s gold.
Just last year in Hungary, facing a debt crisis similar to our own, the government nationalised all pensions. In effect, they confiscated people’s savings. Can you imagine waking up one day and being told that the income for the last 30 years of your life hangs on a government promise?
In Greece right now, benefits have been cut to the bone, salaries and pensions have been slashed up to 40% and the retirement age has been hiked to generate more income from the population – the very victims of the crisis.
But you don’t have to look too far from home to find one of the cruellest examples of seizing private wealth. In 1974, the top rate of income tax under Edward Heath was 83%. Imagine how it would feel to be so blatantly fleeced by your own government.
In other words, in times of financial panic, the government will come after the people with money and savings. If you are someone who has worked hard, been responsible, considered the future, thought about your family, planned for your old age, and built up savings and some wealth – you are the prime target
Is this all too alarming? Some of our critics would say so.
Most people think Britain’s debt collapse can’t happen. Of course, it’s hard to picture. Banks look safe until they announce they’re broke. Governments say everything’s under control, until they beg for bailouts.
These events often come as a shock to the public. Many people assume they’ll never happen. But assumptions can be misleading. Especially ones that are widely held.
The Victorians thought the British Empire would last forever. Americans in the 20s thought the stock market boom would never end. And here in the UK, during the 90s and early 2000s, we thought we could keep borrowing and spending forever.
But if you need any convincing of how quickly things can change… of how rapidly order can turn into chaos… history offers us a number of painful reminders.
Let’s take just one of them...
In the early 20th century Argentina was one of the world’s largest economies. Rich in natural resources, a massive industrial sector, so cultured they called Buenos Aires the Paris of South America. In fact, a popular saying 100 years ago was as ‘rich as an Argentine.’
But fast forward to the end of the 20th century, and things looked very different. Argentina’s borrowing spiralled out of control…
As Argentina’s debt accumulated in the late 90s, its financial system buckled. Austerity measures were put in place (sound familiar?), businesses closed, trade fell off a cliff and investment fled the country by the billion…
Come early-2001 the country was in a state of siege, with banks blocking cash withdrawals, rioting in the streets and the total collapse of government. So desperate were villagers for food, they hijacked livestock trucks and slaughtered the animals in the streets.
To give you some idea of how bad things got – and how quickly they escalated… you need to listen to our man in Argentina, Federico Tessore. Federico is one of our private network of analysts. He worked as a Financial Advisor for Citibank in Buenos Aries at the time, experiencing the chaos first hand.
It’s a chilling story… within three or four years the country fell into financial and social anarchy. And what happened next? Well, Argentina wasn’t crossed off the map. It still exists. But twelve years on, it’s barely recovered. Conditions for many honest, hard-working people are simply terrible. They are still trying to understand what happened to their tattered country.
The government has raided public pensions, the stock market is depressed and the global market steers well clear of Argentine bonds. It’s not complicated. Once your country has imploded and trust in systems and institutions has evaporated, investment stays away for decades.
Regular Argentines now hoard gold. Endless government scams and corruption have made them suspicious and distrustful. And a culture of short-termism pervades.
But that’s Argentina, right? A crazy South American country full of impulsive hot-heads and corrupt politicians. That could never happen here in Britain. That could never happen to us.
Really? Last edited by tobby on 15-2-2013 05:18 PM
Duit yang kau pegang, kau cium, kau simpan dalam dompit tu pon adalah gambaran hutang (IOU) kerajaan. Duit yang memangnya kertas ini sah lakunya olih sesebuah Kerajaan dengan nilai sekian...sekian. Kalau kau simpan duit dalam bantal...........tetiba bantal tu terbakar dan duit tu hangus ................. yang rugi ko............Kerajaan tak de hal. Print yang baru untuk ganti yang hilang. Ala cam bila nak raya la ................... sibuk semua nak tukar duit yang dah kerepot dengan duit baru. Duit yang lama, take out from circulation.
Post time 6-2-2013 03:39 AM
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