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. Crisis Lessons “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. Fresh Demands 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. Legal Aftermath 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 valdimarsson@bloomberg.net. To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net

Vatic Note: I have no idea what is going on here with Bruecke's blog posting. I went to the worksheet and what you are seeing in huge letters is no where on our work sheet so its been put on by someone on the inside. I hope this does not mean that Google is allowing the cyber warriors access to our sites to mess with us, I guess they want us to think something or they would not have put that up.. I will be contacting them to find out what the heck is going on. I can't take this off, but I will pursue it tomorrow so it doesn't happen again. Thanks for your patience on this.

Oh, I get it,  they are frustrated because we have not become violent and they want us violent so they can do their martial law.  TOO BAD, SO SAD.  Those who did this will have to break the law first and then we can and will respond accordingly, but legally.  Should you do martial law illegally and in violation of our governing document, then its legal for us to respond accordingly.   So this ploy won't work.

http://www.chicagotribune.com/news/sns-rt-us-usa-security-lawsuitbre84f1hs-20120516,0,2381226.story

By: Basil Katz
Date: 2012-05-16

A judge on Wednesday blocked enforcement of a recently enacted law's provision that authorizes indefinite military detention for those deemed to have "substantially supported" al Qaeda, the Taliban or "associated forces."

District Judge Katherine Forrest in Manhattan ruled in favor of a group of civilian activists and journalists who said they feared being detained under a section of the law, which was signed by President Barack Obama in December 2011.

"In the face of what could be indeterminate military detention, due process requires more," the judge said.

She added that it was in the public interest to reconsider the law so that "ordinary citizens are able to understand the scope of conduct that could subject them to indefinite military detention."

By issuing a preliminary injunction, the judge prevents the U.S. government from enforcing section 1021 of the National Defense Authorization Act's "Homeland Battlefield" provisions.

A spokeswoman for the Manhattan U.S. Attorney's office, which represents the government in this case, declined to comment on the ruling.

During day-long oral arguments in March, Forrest heard lawyers for former New York Times war correspondent and Pulitzer Prize winner Chris Hedges and others argue that the law would have a "chilling effect" on their work.

"Can Hedges and others be detained for contacting al Qaeda or the Taliban as reporters?" Forrest asked the government at the hearing.

The judge said she worried at the government's reluctance at the March hearing to specify whether examples  of the plaintiffs' activities - such as aiding the anti-secrecy website WikiLeaks in the case of Brigitta Jonsdottir, a member of parliament in Iceland - would fall under the scope of the provision.

"Failure to be able to make such a representation... requires the court to assume that, in fact, the government takes the position that a wide swath of expressive and associational conduct is in fact encompassed by 1021," the judge wrote.

Hedges called the ruling "courageous" but said the judge "did what she was supposed to do" given that "the law is so clearly unconstitutional."

The government argued that section 1021 could not be singled out as being a new part of the 2011 law. Section 1021 should instead be considered "an affirmation" of the resolution passed in 2001 authorizing the use of force following the September 11, 2001 attacks.

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