Wednesday, 8 October 2008

Good riddance to Icelandic rubbish

From the nation that gave us Bjork and acted like pirates in trying to exclude British trawlers during the Cod Wars of the '70s came news that they have no intention of protecting British savers' money in their banks. The Chancellor has frozen all Icelandic bank deposits in the UK as a result - and no doubt will use whatever's there to meet his commitment to preserve British money.

Those Icelandic banks, offering interest rates of 7% or so on savings always seemed to me at least in part to be running some sort of pyramid scam - using new depositors' money to pay interest on existing balances. Perhaps I'm wrong, but I never trusted them.

Good riddance to the Icelandic financial sector.

8 comments:

Blue Eyes said...

People will be very wary of investing in overseas savings accounts from now on. That might be a good thing!

Sabretache said...

"Those Icelandic banks, offering interest rates of 7% or so on savings always seemed to me at least in part to be running some sort of pyramid scam"

Righteous indignation is comical - and usually ill founded.

The entire fractional reserve banking system is a pyramid scam. It's just a matter of degrees of greed, that's all. Within limits, the differential (positive or negative) between interest paid on deposits and charged on loans is a relatively minor part of the banking model as it has evolved these past 15 years or so - with UK banks among the most predatory and reckless in terms of overall leverage.

In view of our (and the US/Europe) declining to even consider their requests for help a couple of weeks ago its little wonder they have taken the view they have and accepted help from Russia instead. In light of Russian resurgence, it'll be interesting to see what happens when we feel the need to reactivate early warning and snooping radars there. Maybe they'll decide to provide bases to Russia instead.

Nick von Mises said...

Oh come on sabretooth, Icelandic banks were blatantly trying to steal a carry trade and relying on the FSCS safety net to cover the risk. Moral hazard the whole way and I for one am pleased that retail credit whores from the UK are getting a well earned fleecing.

Sabretache said...

Nick Von M.

With a Handle like that how can I not agree? - because of course that's exactly what we are in need of - a little 'Austrian School' medicine.

But its the selective indignant jingoistic anti-Iceland (or Baddie du jour) sentiments that I object to, that's all. We really do think and behave as though we are God's gift ('If only those bloody foreigners would see things our way all would be well with the world - and all that) - don't you think?

Well, for reasons obvious to anyone with his head anywhere but up his own backside, they won't and it won't and it's high time we exited cloud-cuckoo land and got used to it.

All IMHO of course

OK - a bit hard on poor old R too, but he did ask for it and I do like a good rant

Raedwald said...

No problems, S - I know full well that in my chest beats the heart of a jingoistic old zenophobe, so can hardly complain when others point it out ;-)

Nick von Mises said...

"But its the selective indignant jingoistic anti-Iceland (or Baddie du jour) sentiments that I object to, that's all."

I'll second that. But I do think the eskimos were especially taking the piss.

Guthrum said...

Agree with the thrust, but Icelanders are not terrorists, so why was the anti terrorist laws used to seize control of Singer and Friedlander, and flog it to ING. See Guido and the report in the FT.

What chance any of us holding on to out posessions if the Government can just declare any organisation or person terrorist, sign a statutory instrument and seize your assets. IN 24 HOURS !

Nick von Mises said...

Guthrum,

That's why it's a very good idea to have all your assets in cash, instant access, and an offshore bank account set up to transfer them to.