Bloomberg article flagged by "lost in space"

Posted 05/03/2010 - 19:11 by Brabander

I agree with Lost in Space, the article by Matthew Lynn is ill researched and does not reflect the facts and therefore requires a retort.
I have sent Matthew Lynn the following e-mail:

You article is based on fundamentally flawed premises.

As a member of the European Economic Area (EEA) Iceland had the right to participate in the EU internal market subject to applying all relevant Community Legislation. This included establishing a minimum Deposit Guarantee Scheme in conformance with the EU DGS Directive. The Icelandic authorities enacted such a scheme and Icelandic Banks were therefore permitted to establish deposit taking banks in the EU.

When Icesave failed the UK and Dutch governments decided to compensate the "private" depositors with this bank in full and naturally expected the Icelandic Authorities to compensate them up to the level guranteed in the EEA DGS. The British and Dutch government are clearly legally entitled to this compensation from the Icelandic authorities under the EEA rules and, I believe, the Icelandic government/President does not dispute this right! The argument is solely about when this debt is repaid, whether it is a sovereign debt and how much interest should be paid.
As I see it, the Icelandic authorities (certainly their despicable president!) want to put this debt on the "long finger" ie they probably have no intention to ever fully repay it and they certainly want to pay no or a minimal level of interest on this debt. The UK and NL governments have shown that they are willing to be flexible on the level of interest charged but they want the debt to be fully recognized by the Icelandic government as sovereign debt.
Ironically, whilst the Icelandic Authorities deny any responsibility for the foreign depositors in their banks they have FULLY compensated their own domestic depositors!!!

In my specific case the situation is even worse as I banked with a bank in the Isle of Man (Singer & Friedlander) which was purchased by Kaupthing.
At that time we were given a letter by Kaupthing hf in Iceland that they would guarantee our deposits in full. We have now been told by the authorities in Iceland that they will not honour this guarantee!
As the IOM is not part of the EEA we were only entitled to the compensation offered by the IOM DGS. In my case the level of compensation offered by this scheme was only a very small % of my total deposit with the bank. If I had banked with Kaupthing in Iceland, UK, Netherlands, Germany, Belgium, Norway etc I would by now have received all my money back. Because I banked in the IOM I have, so far, only received 40% and it is extremely unlikely that I will ever receive 100%. In the mean time I will have lost access to my money for many years and I have lost substantial interest income which was important to me as I am retired.

These are the facts. I expect you to acknowledge that your article was flawed and I would appreciate if you would publish a truer account in the near future.

By the way I have called the president of Iceland despicable as he was finance minister in the government which enabled and encouraged the insane growth of the Icelandic Banking system and he still is an active member of the party which presided over this debacle. By vetoeing the fair deal negotiated by the three governments he was just playing party politics.
Fairness and accepting responsibility for his actions is obviously not under consideration, all he has shown to be interested in is rabble rousing (everybody loves a small nation standing up to a biggger one) and trying to bring down the present government.

Mike A (full name in e-mail)
Innocent depositor!"

I will not hold my breathe regarding any correction by him. After all when did the facts stop any journalist from penning what he believes should be the facts?
A few more e-mails to Mr Lynn might possibly not go amiss.

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