I haven’t been posting too much over the past several months as things in our country continue to deteriorate at the usual pace, fast and un challenged!
The economy is fragile and the ‘medicine’ that Ben Bernanke is giving the ‘system’ will soon become the poison–it is inevitable. This is not just me spouting off at the mouth but several very good economists with pretty darn good track records as well.
Take a look at this article, read it and weep for what once was and what is coming soon.
Major Bank, Economists Agree: Market Collapse Will Strike in 2013
Wednesday, 09 Jan 2013 10:22 AM
By Christian Hill
According to a major bank, a pair of noted economists, and one controversial billionaire, 2013 will be a “year of terrible reckoning” for the stock market.
JPMorgan just released its outlook for the first quarter. Surprisingly, this regularly bullish company has reversed course and revealed an ominous chart that every investor needs to be alerted to.
As you can clearly see, stocks have retraced the pattern from the last two big market rallies (averaging over 100%), and now face a massive decline in 2013 (of over 50%).
JPMorgan isn’t alone in its stark predictions.
Economist and NYU professor Nouriel Roubini has said in recent interviews that there is a chance that an economic “perfect storm” will devastate global markets in 2013. He points to a worsening eurozone crisis, a hard landing for the Chinese economy, and a war in the Middle East that could push oil prices above $200 a barrel.
Agreeing with Roubini’s worrisome outlook is billionaire Jim Rogers. In a recent interview with Yahoo Finance, Rogers says regarding 2013, “You should be very worried, and you should prepare yourself.”
Rogers referenced a little-known economic cycle that proves the United States experiences a slowdown every four to six years (and 2013 marks four years since our last slowdown).
Perhaps most alarming of all are the predictions made by economist Robert Wiedemer.
In a recent interview for his New York Times best-seller Aftershock, Wiedemer says, “The data is clear, 50% unemployment, a 90% stock market drop, and 100% annual inflation . . . starting in 2013.”
Editor’s Note: Watch the disturbing interview with Wiedemer. click here to view
Now before you dismiss Wiedemer’s claims as impossible or unrealistic, consider that he and his team of economists correctly foresaw the real estate collapse in 2006, the stock market crash of 2008, and the federal debt bubble plaguing America now.
And bear in mind, Sam Stovall of Standard & Poor’s has stated that Wiedemer “makes a compelling argument for a chilling conclusion,” and MarketWatch’s Paul Farrell called Wiedemer’s work “your bible.”
When the interview host questioned Wiedemer’s latest data, the author unapologetically displayed shocking charts backing up his allegations, and then ended his argument with, “You see, the medicine will become the poison.”
The interview has become a wake-up call for those unprepared (or unwilling) to acknowledge an ugly truth: The country’s financial “rescue” devised in Washington has failed miserably.
Wiedemer says blame lies squarely on those whose job it was to avoid the exact situation we find ourselves in, including current Federal Reserve Chairman Ben Bernanke and former Chairman Alan Greenspan, tasked with preventing financial meltdowns and keeping the nation’s economy strong through monetary and credit policies.
Shocking Footage: See the eerie chart that exposes the ‘unthinkable.’
At one point, Wiedemer even calls out Bernanke, saying that his “money from heaven will be the path to hell.”
But it’s not just the grim predictions that are causing the sensation; rather, it’s the comprehensive blueprint for economic survival that’s really commanding global attention.
Now viewed over 50 million times, the interview offers realistic, step-by-step solutions that the average hard-working American can easily follow.
The overwhelming amount of feedback to publicize the interview, initially screened for a private audience, came with consequences as various online networks repeatedly shut it down and affiliates refused to house the content.
Bernanke and Greenspan were not about to support Wiedemer publicly, nor were the mainstream media.
“People were sitting up and taking notice, and they begged us to make the interview public so they could easily share it,” said Newsmax Financial Publisher Aaron DeHoog, “but unfortunately, it kept getting pulled.”
“Our real concern,” DeHoog added, “is what if only half of Wiedemer’s predictions come true?
“That’s a scary thought for sure. But we want the average American to be prepared, and that is why we will continue to push this video to as many outlets as we can. We want the word to spread.”
I urge you to take the necessary precautions as things could get rather weird in the coming days and months ahead! No one knows the exact moment, but many will point back in time and pick some arbitrary event that ’caused it all’. Ben Bernanke will most likely avoid ridicule. Many have been, are and will be responsible for our economy and none will be made responsible.
The demise of our global economy is not an event that will go in a straight line to the bottom. It will be up and down with lots of posturing on behalf of the ‘leaders’ of the ‘developed’ countries.
Today is yet another example of this political posturing as the European Central Banker came out and said he would do whatever necessary to preserve the Euro and the EC! Pray tell what that would be sir!
The only weapon that these guys have is the ability to print money into infinity. As we all know, infinite money chasing limited supply of products, goods and services means prices will eventually rise to the point where these prices can change on an daily if not hourly basis. Hyper inflation this is called. Something that we in this country have never witnessed.
We will see in the coming days more of the same as Greece exits the Euro and the EC, yields will go higher on the sovereign debts of the EC members that are in the most trouble which will result in the European Central Bank to print more money to buy their bonds to try and lower yields. At some point this type of strategy will simply cease to function as needed and collapse will follow, but not in a straight line.
Be very careful if you are in the markets now. I personally am and have been out for quite some time…Closed my account at PFG just in time! Stick to food, water, shelter, gold and silver if I were you…And pray for better days to come!
Since my last posting on this subject,not a whole lot has changed. Well, except the fact that this situation is getting worse, as we all knew it would, and the markets are noticing.
The stock markets have fallen in 3 of the last 4 days and most of the MSM is placing the blame on the European Financial crisis. Our corporate earnings are getting hit, with more to come many think, and the prices are diving.
It was just the other day that one of the ‘doomsday’ guys, that have good track records by the way, was saying we have fallen off the financial precipice. I don’t think he is far from wrong.
Common sense indicates that the world wide economy, including our own, has yet to see the worst. That is coming on a daily basis. Please don’t believe these talking heads when they tell you that they are ‘fixing’ the problem. I am not sure they, nor anyone else, know what the problem really is!
When you don’t know the problem, you certainly can’t fix it, even if they could and I for one don’t believe that the efforts (read money they are printing) undertaken will do any good at all.
The entire system is crumbling as I write. Since the Lehman debacle we have seen far too many financial houses succumb tot he economic pressures and of course sheer greed and fraud.
Look at PFG, the future clearing house that went broke and dang few of these people will ever see any money. Given the fragile state of affairs, why would anyone want to put their money in such a clearing house, just to take more risk to make money that, due to the risk of bankruptcy of the futures firm, they might never see again!
Folks, this financial crisis will slowly unravel the fundamentals of our economy. I suggest you get prepared…take a look at where your money is and how easy or difficult it will be to access it in the event of some financial catastrophe. Do you own any gold or silver? How easy is that to get to? I am all for the Boy Scout Motto here “Be Prepared”!
As the financial disaster in Europe continues, the German Chancellor Merkel tells Spain to think again on a bond issue backed by the European Community. Spain’s borrowing costs have sky rocketed and are close to 7%. To put that in perspective that is a historical high! For a sovereign country to pay more than a corporation is somewhat indicative of the financial disaster that most of these countries are experiencing.
The problem is that the private companies are really going to get hit hard as the ‘ripple’ of the economic woes spread outward, even to the shores of our country. As we all know we don’t need any more economic pain, enough already!
Merkel Rebuffs Rajoy Plea, Shuts Door to Euro Area Bonds
By Tony Czuczka and Patrick Donahue – Jun 27, 2012 7:14 AM MT
German Chancellor Angela Merkel shut the door to joint euro-area bonds as a means of lowering Spain’s borrowing costs, saying they are the “wrong way” to achieve the greater European integration needed to stem the debt crisis.
Speaking three hours after Spanish Prime Minister Mariano Rajoy made a plea for help from tomorrow’s European summit, Merkel said that euro bonds, euro bills and debt redemption funds are unconstitutional in Germany and economically “wrong and counterproductive.”
“I fear that at the summit there will be much too much talk about mutual liability and far too little about improved oversight and structural measures,” Merkel told lower-house lawmakers in Berlin today. “Oversight and liability have to go hand in hand. There can only be joint liability when adequate oversight is ensured.”
Merkel is under growing pressure from her European and global counterparts to soften her opposition to debt sharing in the euro area and do more to cut borrowing costs for Spain and Italy. Rajoy, outlining his goals for the two-day European Union summit beginning in Brussels tomorrow, said that Spain can’t go on financing itself at current borrowing rates for long.
“The most important thing today is being able to finance ourselves in the markets, that’s the main issue,” Rajoy said in Parliament in Madrid. “And on that point Spain, Italy and other countries are going to push for reasonable decisions to be made,” using the “available instruments.”
Spanish 10-year bond yields were little changed at 6.86 percent after jumping 24 basis points yesterday, nudging the 7 percent level that forced Greece, Ireland and Portugal to call for sovereign bailouts. Equivalent German bonds yielded about 1.54 percent.
German Finance Minister Wolfgang Schaeuble, speaking at a separate event in Berlin, said his country’s borrowing costs are “unnaturally” low and shouldn’t continue. “It’s more an expression of anxiety than stability” in financial markets, he told reporters.
EU leaders meeting in Brussels are due to discuss a plan for closer European integration spearheaded by EU President Herman Van Rompuy that centers on common banking supervision and deposit insurance, along with a “criteria-based and phased” move toward joint debt issuance. The blueprint also suggests that the EU could impose upper limits on annual budgets and debt levels of nations that use the euro.
While Merkel said that she welcomed the Van Rompuy proposals and agreed with his four building blocks toward integration, she rebuffed any notion Germany shoulder the cost.
“I decisively reject the presumption in this report that the principle of collectivization takes priority,” she said. Rather, individual countries must “keep to agreed rules” and raise their competitiveness through structural reforms, using the best in Europe as the standard “rather than mediocrity.”
“The sovereign debt crisis shows us daily that deficiencies in one euro-zone country can cause difficulties in the entire euro zone,” Merkel told lawmakers. “It also shows us that national answers aren’t enough to secure the euro area’s stability.”
Merkel is increasingly isolated as Rajoy, French President Francois Hollande and Italian Prime Minister Mario Monti unite to push for quicker action to ease the crisis that emerged in Greece in late 2009. The three leaders back the creation of euro bonds and are pushing for measures to spur growth. Merkel is due in Paris later today for talks with Hollande, and will travel to Rome to meet with Monti on July 4.
“The key negotiators, including the German chancellor, do not really understand the timeframe we’re working under,” Niall Ferguson, a professor of economic history at Harvard University, said at a conference in London. “The timeframe for financial crises is days. The timeframe for structural reforms is years.”
Spain formally requested a European bailout for its banks on June 25 and discussions continue as to what conditions lenders will have to meet and whether the loan of as much as 100 billion euros ($125 billion) would take precedence over other debts in the event of default.
Rajoy said he will fight so that rescue loans “aren’t superior to the rights of other creditors of public debt.” Germany, Finland and the Netherlands want official loans to Spain to be repaid first in the event of default, undermining the interests of existing bondholders, two European officials said this week.
Rajoy also backs a so-called banking union, which he says includes joint deposit-guarantee funds and would allow Europe’s rescue funds to recapitalize banks directly without going via the government. German officials have rejected those proposals.
“It all hinges on her,” said Ferguson of Merkel. “She has to realize the cost of disintegration to Germany would be mindblowing.” Whatever happens, “Germany pays,” he said. “Do they pay through massive defaults or fiscal transfers?”
I continue to buy silver and think gold is also a great buy in here. I also continue to get prepared with more storable food and water. My son is buying guns and ammo as well.
As the dominoes continue to fall worldwide, Stockton CA could be the most recent entry into ‘reorganization’, read bankruptcy. This would be a big blow to all the MSM hype that we are in an economic recovery, although the administration has backed off on making these claims, at least on a daily basis.
If you haven’t already questioned the economic recovery, now might be a good time to start. There will be more of these type municipal bankruptcies as time goes on and the tax base shrinks more and more.
I think that we are moving farther into an economic recession and more pain is yet to come.
The city of Stockton, Calif., on Tuesday verged on filing to reorganize under the bankruptcy laws, media reports say. The move would make the city, located in central California, the largest U.S. city to file under Chapter 9 of the federal bankruptcy laws. The city completed 90 days of required mediation with its creditors on Monday night into Tuesday, reports say. Reports say that the city borrowed hundreds of millions of dollars to build projects in the mid-2000s. Now, the city has a $26 million budget deficit, after the economic turndown prompted many property foreclosures and sharp unemployment, reports say. The City Council meets Tuesday evening, and media reports say that the council members will take up and vote on a budget that will guide the city during bankruptcy proceedings. California cities must adopt balanced budgets by July 1 each year, reports say.
These folks are in for a world of hurt. Services will be cut and lawlessness could become the standard. I remember the words of a judge in a midwestern state as the sheriff’s department was cut in half…my suggestion is that the citizens arm themselves.
As if the European issues weren’t bad enough…Moodys is set to downgrade the Spanish bonds to junk status. This after downgrading all the Spanish banks by several notches. I suspect that this will not end well as Germany, the ‘giver’ of cash becomes more and more reluctant to dish it out to everyone that comes begging.
We still wait to see how all this will affect Italy and France while poor Portugal remains in the dumpster. All the ‘southern’ european countries are in big trouble, led of course by Greece!
Just wait there will be more news coming. Consider what might happen if there is some major catastrophe to add to the woes!
Spain Poised for Downgrade to Junk as Default Swaps Near Records
Spain is poised for a downgrade to junk by Moody’s Investors Service, according to investors who sent the cost of default insurance for the nation’s biggest banks and companies close to record highs.
Enlarge image Spain Poised for a Cut to Junk as Default Swaps Near Records (
Credit-default swaps on Banco Santander SA (SAN), the country’s biggest bank, jumped 23 percent this quarter to 454 basis points, compared with an all-time high of 474 in November. Banco Bilbao Vizcaya Argentaria SA (BBVA) rose 26 percent to 477, approaching May’s record 516, while phone company Telefonica SA (TEF) surged 70 percent to a record 540 basis points.
Moody’s downgraded 28 Spanish banks yesterday including a two-step cut for Banco Santander and a three-level reduction for BBVA, a week after it lowered Spain’s rating to Baa3, on the cusp of junk. The country remains on review for another cut by New York-based Moody’s after it sought a 100 billion-euro ($125 billion) international bailout for its banks and on speculation losses from its real estate industry will worsen.
“There’s more to come if Moody’s downgrades the sovereign as we expect in the next few weeks,” said Suki Mann, a credit analyst at Societe Generale SA in London. “A one-notch move to Ba1 will likely see all the country’s banking system in junk territory, with the possible exception of Santander.”
Spanish bank bonds are the worst performing among European financial companies this month, losing 0.75 percent on average, according to Bank of America Merrill Lynch’s Euro Corporates Banking index of 742 securities. Debt tracked by the gauge returned 0.53 percent overall, with Italian bank bonds earning 0.27 percent and German securities making 0.19 percent.
Santander’s credit-default swaps declined two basis points to 451 basis points today, and BBVA’s fell three basis points to 478 basis points.
Bond spreads are widening, signaling potentially higher borrowing cost for the country’s largest lenders. Santander’s 1 billion euros of 4 percent notes due 2017 are quoted at 559 basis points above the safest government bonds compared with a 553 basis-point spread yesterday, according to Bloomberg Bond Trader bid prices. BBVA’s 500 million euros of 4.875 percent bonds due 2016 are quoted at 578 basis points from 567 basis points yesterday.
The yield premium on Spanish bank bonds jumped to 648 basis points, or 6.48 percentage points, relative to German government debt, from 433 basis points at the end of the March, the Bank of America Merrill Lynch data show. That compares with 291 basis points on average for debt tracked by the bank bond index.
Moody’s cut at least a dozen Spanish lenders to junk status, and in all cases the ratings remained under review for further downgrades, the ratings company said yesterday in a statement. Junk debt is graded below Baa3 by Moody’s and BBB- by Standard & Poor’s and Fitch Ratings.
The latest downgrades reflect the government’s reduced creditworthiness, which lessens its ability to support the lenders, as well as Moody’s expectation that losses linked to commercial property will keep rising, according to yesterday’s statement.
“We suspect that the sovereign will itself require a bailout, not just the Spanish banks,” said Olly Burrows, a London-based credit analyst at Rabobank International.
To contact the reporter on this story: Esteban Duarte in Madrid at email@example.com
Now we have the beginnings of the ‘Perfect Storm’ economically speaking if you ask me. What can you do to Prepare for the ‘new’ economy that might unfold?
Just a day after Greece voted to ‘stay in’ the EC, Spain’s bond yields hit Euro record highs, saying the markets are not at all convinced that this crisis is over-not by a long shot!
We will continue to see deterioration in the public markets as yields in Europe rise predicting more bailouts, read more money/liquidity injected into markets. I think this will eventually hit the U.S., may take a few more months but same result.
Europe’s economic crisis will not go away easily. The heads of the various countries there appear to be completely confounded as to a workable solution. The austerity programs that Germany wants to impose are really hurting the domestic markets where imposed and the people are not going to go along with these measures for long.
Spain, even without the terrible measures imposed on Greece, already has 50% unemployment in the under 35 age group. Where there is no hope there will always be unrest. Just look at the Mid East, unemployment and poor economies have created an explosive situation in many countries.
Already we are seeing the signs of unrest, first in Greece (which of course main stream media didn’t cover) with all the rioting that has been going on and now we begin to see these confrontations cropping out all over Europe.
Are we headed for a complete and total meltdown, the arrival of anarchy? Is there a way to be prepared for the arrival of this event?
Oanda, which offers ‘after market’ trading will not accept trades this Sunday due to the potential for wild volatility as Greece election results come in. The ‘Forex’ market will open as usual Monday morning.
This is huge folks. I can’t remember a single instance of this occurring and I have been in the business since 1985. There are also rumors that the Central Banks will be doing something very big soon. Perhaps as early as this weekend depending on the way things go in Greece.
I suspect that if Greece votes to exit the European Community that there will be complete and total havoc in the markets, all of them-stocks, bonds, currencies, gold you name it and there will be some volatility. Only the very strongest will survive such swings in the market.
If we do see this sort of volatility I think you will see the Central Banks in Europe and the U.S. act ‘in concert’ to try and avert a major meltdown in the markets. Greece adopted capital controls last week to limit the amount of money the citizens can withdraw. I suspect that we will see this in Spain next, that is if we get to Tuesday without some catastrophic events occurring on Monday!
Be vigilant here, this could be a major swing point…in my opinion.
With Greece wanting out of the EC and further economic woes hitting all the ‘PIGGS’, some are reporting that the Euro has collapsed, at least unofficially.
A bit of background: MSM has reported that there have been huge capital outflows from Greece, in the billions per day and now Spain. It isn’t like this is just falling from the sky unannounced. Remember Ireland, Italy and Portugal all have been in the news with bailouts of some sort over the past year or two. The press has played this well, sort of like the frog in water who slowly dies as the water begins to heat up and boil.
Now it appears we might have hit critical mass with the problems in the EC. The Bailouts will continue to happen as we see more and more capital outflows, they will continue to get larger and larger as the liquidity issues mount. Much like the U.S. the ‘quantative easing(printing money) will be to infinity.
Which brings me to the point of this piece, as more money is printed and less and less economic activity there to back it up we will begin to see inflation hit the goods and services that we use on a daily basis. Moreover, the typical assets like real estate will most likely not enjoy such price inflation as no one will have the buying power to afford such purchases and without buyers prices will not rise as will prices in basic commodities, such as food and gas.
The governments are trying to fill the financial hole created by the banks and their insane lending and ‘betting'(read derivative) practices which have still not come to full force. We have been given a small insight into the destructive power of these instruments in the recent JP Morgan debacle, losing 2 billion in one 3 month period. There are trillion upon trillions of these dangerous bets floating around the world. When the music stops, we will all pay!
How can you prepare for this catastrophe should it come to pass (again many are saying that it is coming to pass right now!)?
I for one own some gold and silver, probably not enough but some. Many survivalists disagree with this strategy saying you can’t eat or drink the metals. I agree there but also see them as a short term solution to the things that I might need but haven’t seen that need yet. I do own quite a bit of storable foods, all organic, non-GMO foods that are high in nutrition. I urge everyone to educate themselves on the value of nutrition versus calories. Both are necessary but good nutrition is critical. Water is another necessity and I am fortunate enough to live very close to a river and own a gravity filter system to clean it up.
I hope everyone is somewhat prepared, if not physically mentally for what appears to be coming over the horizon. Stay Strong!
As I have said many times in the past, Iceland stands out among all countries as the model for dealing with an economic/debt/housing crisis. At the very core it appears that their government, after a few crucial changes at the top, moved on behalf of their citizens and not with their core banks.
They nationalized them, a necessary step to rid the system of the wolves that were ready to eat their own children if necessary to make money, and then forgive a ton of debt of the citizens, especially those that had mortgages on homes that were out of balance with prices.
The results are a growing economy, 10 times the growth of the EU, and in general a satisfied populace, they know that they have the power to change the system now and will not forget it soon. Something that should have come out of the Occupy Wall Street movement.
Why Greece doesn’t do something similar, something that would fit into their particular situation is beyond me. Seems as if their government is all about becoming better serfs to the system and dragging all their citizens along with them.
Icelandic Anger Brings Debt Forgiveness
By Omar R. Valdimarsson – Feb 19, 2012 5:01 PM MT
Icelanders who pelted parliament with rocks in 2009 demanding their leaders and bankers answer for the country’s economic and financial collapse are reaping the benefits of their anger.
Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association.
“You could safely say that Iceland holds the world record in household debt relief,” said Lars Christensen, chief emerging markets economist at Danske Bank A/S in Copenhagen. “Iceland followed the textbook example of what is required in a crisis. Any economist would agree with that.”
The island’s steps to resurrect itself since 2008, when its banks defaulted on $85 billion, are proving effective. Iceland’s economy will this year outgrow the euro area and the developed world on average, the Organization for Economic Cooperation and Development estimates. It costs about the same to insure against an Icelandic default as it does to guard against a credit event in Belgium. Most polls now show Icelanders don’t want to join the European Union, where the debt crisis is in its third year.
The island’s households were helped by an agreement between the government and the banks, which are still partly controlled by the state, to forgive debt exceeding 110 percent of home values. On top of that, a Supreme Court ruling in June 2010 found loans indexed to foreign currencies were illegal, meaning households no longer need to cover krona losses.
“The lesson to be learned from Iceland’s crisis is that if other countries think it’s necessary to write down debts, they should look at how successful the 110 percent agreement was here,” said Thorolfur Matthiasson, an economics professor at the University of Iceland in Reykjavik, in an interview. “It’s the broadest agreement that’s been undertaken.”
Without the relief, homeowners would have buckled under the weight of their loans after the ratio of debt to incomes surged to 240 percent in 2008, Matthiasson said.
Iceland’s $13 billion economy, which shrank 6.7 percent in 2009, grew 2.9 percent last year and will expand 2.4 percent this year and next, the Paris-based OECD estimates. The euro area will grow 0.2 percent this year and the OECD area will expand 1.6 percent, according to November estimates.
Housing, measured as a subcomponent in the consumer price index, is now only about 3 percent below values in September 2008, just before the collapse. Fitch Ratings last week raised Iceland to investment grade, with a stable outlook, and said the island’s “unorthodox crisis policy response has succeeded.”
People Vs Markets
Iceland’s approach to dealing with the meltdown has put the needs of its population ahead of the markets at every turn.
Once it became clear back in October 2008 that the island’s banks were beyond saving, the government stepped in, ring-fenced the domestic accounts, and left international creditors in the lurch. The central bank imposed capital controls to halt the ensuing sell-off of the krona and new state-controlled banks were created from the remnants of the lenders that failed.
Activists say the banks should go even further in their debt relief. Andrea J. Olafsdottir, chairman of the Icelandic Homes Coalition, said she doubts the numbers provided by the banks are reliable.
“There are indications that some of the financial institutions in question haven’t lost a penny with the measures that they’ve undertaken,” she said.
According to Kristjan Kristjansson, a spokesman for Landsbankinn hf, the amount written off by the banks is probably larger than the 196.4 billion kronur ($1.6 billion) that the Financial Services Association estimates, since that figure only includes debt relief required by the courts or the government.
“There are still a lot of people facing difficulties; at the same time there are a lot of people doing fine,” Kristjansson said. “It’s nearly impossible to say when enough is enough; alongside every measure that is taken, there are fresh demands for further action.”
As a precursor to the global Occupy Wall Street movement and austerity protests across Europe, Icelanders took to the streets after the economic collapse in 2008. Protests escalated in early 2009, forcing police to use teargas to disperse crowds throwing rocks at parliament and the offices of then Prime Minister Geir Haarde. Parliament is still deciding whether to press ahead with an indictment that was brought against him in September 2009 for his role in the crisis.
A new coalition, led by Social Democrat Prime Minister Johanna Sigurdardottir, was voted into office in early 2009. The authorities are now investigating most of the main protagonists of the banking meltdown.
Iceland’s special prosecutor has said it may indict as many as 90 people, while more than 200, including the former chief executives at the three biggest banks, face criminal charges.
Larus Welding, the former CEO of Glitnir Bank hf, once Iceland’s second biggest, was indicted in December for granting illegal loans and is now waiting to stand trial. The former CEO of Landsbanki Islands hf, Sigurjon Arnason, has endured stints of solitary confinement as his criminal investigation continues.
That compares with the U.S., where no top bank executives have faced criminal prosecution for their roles in the subprime mortgage meltdown. The Securities and Exchange Commission said last year it had sanctioned 39 senior officers for conduct related to the housing market meltdown.
The U.S. subprime crisis sent home prices plunging 33 percent from a 2006 peak. While households there don’t face the same degree of debt relief as that pushed through in Iceland, President Barack Obama this month proposed plans to expand loan modifications, including some principal reductions.
According to Christensen at Danske Bank, “the bottom line is that if households are insolvent, then the banks just have to go along with it, regardless of the interests of the banks.”
To contact the reporter on this story: Omar R. Valdimarsson in Reykjavik firstname.lastname@example.org.
I applaud the citizens of Iceland. They have shown the world what can be done when the people come together. Of course, they have the advantage of a relatively homogenous population that can agree on a single basic goal, criminal activity should never be rewarded and the good of the people trumps the ‘good’ of the corporate banksters.