Iceland, Reckless Banks, and the HST
By Peter Ewart
Thursday, April 14, 2011 03:44 AM
A hysteria has been created throughout the world that, unless countries agree to banking and corporate bailouts, handouts and tax cuts, financial calamity will result. As in the old Nordic sagas, flocks of demonic Valkyries will descend upon any country that dares to challenge the dogma that the interests of the financial and corporate oligarchy must always come first.
We saw this in the U.S. back in 2008 when, despite massive public opposition, the Republicans and Democrats collaborated to bail out reckless Wall Street financial institutions and big corporations with trillions of public dollars. Since then, under the slogan of “privatizing profits and socializing debt”, many countries in Europe and throughout the world have followed suit.
Ireland is a recent example. Under huge pressure from the European Union bureaucrats, IMF, and others, the Irish government has agreed to “underwrite the entire banking industry – including tens of billions of euros of loans made by foreign investors” and shift this debt onto the backs of the Irish people. As Irish MP, Stephen Donnelly has said, “the entire Irish people were made collateral for the banking system” (4). This, in effect, has bankrupted the country.
A similar story has played out, with similar disastrous results, in Greece, Portugal and other countries which have taken “reckless private sector bank debts onto the public balance sheet” (1). These countries are now doomed to at least a generation of health and social service cuts, increased user fees and taxes, deflation of savings and wages, and forced emigration of labor “to pay for the failed neoliberal experiment that has dragged down so many other European economies” (1).
Yet it seems that the same CEOs and financiers, whose activities triggered one of the worst financial crises in history, keep getting richer. And the people pay, and pay, and pay.
In Canada, over the last several years, the federal government also helped prop up the financial sector, as well as engaging in a massive “stimulus program” which included substantial handouts to big corporations. But lately where it has been creating a lot of hysteria is around the necessity for continued “corporate tax cuts”, including the imposition of the Harmonized Sales Tax (HST) in British Columbia. In effect, the HST is a tax cut for certain sections of big business, as it will shift taxes from corporations onto the backs of the people of BC. Like the bank bailouts in Ireland and other countries, not to do so will cause “huge problems” for the BC economy – or at least that is what the neo-liberal dogma claims.
So we have our own forms of blackmail and pressure from big business and the financial oligarchy in Canada and British Columbia. However, not everyone in this wide world is giving in to the hysteria that the interests of reckless banks and big corporations must come first in the setting of economic policy.
Take, for example, Iceland. In an April 9th referendum, Icelanders voted no to a proposal from their Social Democrat – Green government to pay $5.2 billion to some British and Dutch bank insurance agencies as “compensation” for the collapse of several private Icelandic banks back in 2008.
For the decade leading up to the 2008 financial crisis, Iceland was “a kind of controlled experiment, an extreme test of neo-liberal free-market ideology” (2). Following the advice of foreign advisors and financial institutions, government-run banks and other public infrastructure were auctioned off to the private sector, which then proceeded to run them into the ground through kleptocratic, neo-liberal practices and outright theft. The result was the complete collapse of the banking system in Iceland in 2008 with the “total debt of Iceland’s three privatised banks [amounting] to almost 10 times the GDP” (3).
Extreme pressure was then put on Iceland to bail out the private bankers and foreign investors. But as Peter Geoghagen has noted, “Vast swaths of the Icelandic public remain wholly opposed, not unreasonably, to the notion that their government should be responsible for the debts of private banks in global markets” (3). The result has been that in two referendums now, the Icelandic people have said a decisive “no” to taking on the debts of the banking oligarchs and fraudsters.
According to neo-liberal dogma, Iceland should now be in economic “hell” for defying the international bankers. But, interestingly enough, that is not the case. As various commentators have noted, “the evidence seems to point the opposite way: Iceland has come through in better condition than anyone in 2008 dared hope” (4). Indeed, “the worst of its recession is over” and the unemployment rate of 7.5% is half that of Ireland’s (13.6%). While Ireland has plunged into a pit of debt that will take many years to climb out of, Iceland is picking itself up, dusting off its clothing and getting back to work. And telling the foreign bankers where to go.
Of course, Iceland still faces difficult times as a result of the neo-liberal “experiment” of previous governments. The British and Netherlands governments plan to launch legal action against Iceland in the European court and may block its entry into the EU. But the Icelanders appear to be saying “So what?” and are getting on with life.
In British Columbia, 700,000 people have signed a petition that they do not want the HST. In June, British Columbians will be voting in a referendum about whether or not to get rid of this tax, cooked up by the financial elite and dumped on them by the Campbell Liberal government.
To their credit, Icelanders have resisted all the pressure from their government and voted against neo-liberal dogma. On June 24th, we, in British Columbia, should also take a stand against neo-liberal dogma and vote “yes” to extinguish, once and for all, this hated HST.
Notes
(1) Hudson, Michael. “Why Iceland Voted ‘No’ to the Diktats of the Creditor Banks”. April 11, 2011. Global Research.
(2) Hudson, Michael. “Why Iceland and Latvia Won’t (and Can’t) Pay for the Kleptocrats’ Ripoffs”. August 18, 2009.
(3) Geoghagen, Peter. “Iceland’s no vote on Icesave was a public display of anger”. April 11, 2011. The Guardian.
(4) Chakrabortty, Aditya. “Iceland broke the rules and got away with it.” April 11, 2011. The Guardian.
Peter Ewart is a columnist and writer based in Prince George, British Columbia. He can be reached at: peter.ewart@shaw.ca
Previous Story - Next Story
Email
Print
Facebook
Twitter
Digg
Del.icio.usReturn to Home
Posted by: Sine Nomine on April 14 2011 7:07 AM
As we gaze out at the popular fervor in the streets, one question to ask ourselves is this: When will it come to America? In important ways, our own country has become like one of these distant, troubled places.
Alexis de Tocqueville once described what he saw as a chief part of the peculiar genius of American society—something he called “self-interest properly understood.” The last two words were the key. Everyone possesses self-interest in a narrow sense: I want what’s good for me right now! Self-interest “properly understood” is different. It means appreciating that paying attention to everyone else’s self-interest—in other words, the common welfare—is in fact a precondition for one’s own ultimate well-being. Tocqueville was not suggesting that there was anything noble or idealistic about this outlook—in fact, he was suggesting the opposite. It was a mark of American pragmatism. Those canny Americans understood a basic fact: looking out for the other guy isn’t just good for the soul—it’s good for business.
The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn. Too late."
http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?currentPage=all