Icelanders reject bank deal, spark row

Iceland have rejected a government-approved deal to repay Britain and the Netherlands $5-billion (U.S.) for their citizens' deposits in the failed online bank Icesave, referendum results showed Sunday.

With about 90 per cent of the votes counted, the “no” side had 59.1 per cent of the votes and the “yes” side 40.9 per cent. The result reflects Icelanders' anger at having to pay for the excesses of their bankers, and complicates the country's recovery from its 2008 economic collapse.

Prime Minister Jóhanna Sigurðardóttir said the results were disappointing but she would try to prevent political and economic chaos ensuing. She said the repayment dispute would now be settled by a European trade court - which could impose harsher terms on Iceland than those rejected in Saturday's vote. Britain and the Netherlands said they would fight to get their money back.

A tiny North Atlantic nation with a population of just 320,000, Iceland went from economic wunderkind to financial basket case almost overnight when the credit crunch took hold. Its major banks collapsed within a week in October 2008, its krona currency plummeted and protests toppled the government.

Stephen Lendman: Icelanders Vote on Predatory Bailout: Nei

ZeroHedge: With Its Economy On The Mend, Iceland Stuffs Bankers For Second Time - In a shining example of how it can be done, Iceland, for the second time in as many years, by popular vote refused to provide up to $5 billion to Britain and Netherlands banks. The just completed referendum once again rejected a $5 billion Icesave debt deal, pushed on Iceland by its European banking brethren. "The debt was incurred when Britain and the Netherlands compensated their nationals who lost savings in online "Icesave" accounts owned by Landsbanki, one of three Icelandic banks that collapsed in late 2008." And while Iceland PM Johanna Sigurdardottir did a brief Mutual Assured Destruction tour claiming "economic and political chaos could follow" we can't help but think we are witnessing the early stages of Europe's most flourishing economy over the next decade, while all other countries in Europe fail one after another due to their inability, unwillingness and cowardice to force bankers to experience, gasp, losses for fear of "reprisals." As for the "isolation" that Iceland is threatened with experiencing should it give banksters the finger, we are certain it is just a matter of a few months before some enterprising hedge funds, scrambling for yield career risk offsets, decide to take on the role of the IMF or of repeatedly insolvent Dexia, and lend directly to Iceland.