As much as a sympathise with them, it's obvious that if they default on their debt then almost no one will lend them any more money unless they pay huge rates of interest. What would be even worse is if no one will accept their currency for payments.

I think this should be heavily impressed on them. No one would trust them. No one would want to deal with them and everything they wanted would cost 10x. In this way they would pay.

I hope they vote no.

It would serve the government right. They paid the debt, without asking any questions, then told Iceland that they have to pay the UK what the UK gave out... They should have sorted out that side of it, before forking out the cash.

What are the Icelandic laws? Here, only the first 35.000€ are covered, anything over that per account is the investors risk... If the UK paid back more than what is legally required under Icelandic law, they only have themselves to blame.

The Icelandic government agreed to pay back the money.

Ah well, bigger fools Iceland. Both the UK and the Netherlands have promised to block Iceland's entry to the European Union if they vote no, looks like Iceland won't achieve its aim of entering the EU and joining the Euro.

Of course that's not even considering the other consequences for Iceland - no help from the IMF for example.

France defaulted on its debt regularly in the past. Iceland were treated appallingly by the British government when they used Anti Terror legislation to shut the banks. If the banks could not be closed with banking legislation then that is the UK governments fault. It is also a failure of the UK regulator who until a the day it collapsed did not warn depositors. In fact many councils lost millions on the day of the collapse. I also hope that the Icelanders do not have to pay. There are as many faults here and in the Netherlands that were responsible for the banks failure.

That's a different kind of debt. If the Iceland government issues bonds and then defaults on those, then Iceland has a problem raising funds in the future (similar to that which Argentina has now).

If they don't pay off this one, then a question mark is raised regarding the ability of the Icelandic regulators and economy to support multinational retail banking in the future. Do they really want that industry any more? Perhaps they are better off making aluminium for a living.

After the events of the last 18 months, does anyone? We're stuck with it as we've effectively deprecated our manufacturing industry in favour of the financial industry and that particular decision has proved pretty disastrous for our economy. Can you honestly imagine anyone else wanting to take on that particular timebomb after what it's done to us?

I go back to a quote I heard from... I think the German finance minister a few years ago who when it was suggested to him that the British economy, which was at the time on the crest of the up curve due to the dealing in the city, was a model that Germany might be well advised to emulate. His reply was something along the lines of 'No thank you. I think we will keep our economy diversified if you don't mind'.

Germany still has a decent manufacturing sector - along with a financial sector and service sector and all the other parts an economy actually needs. We don't. To use another quote, this time from a rather well made piece of animation I saw - 'If you overspecialise you breed in weakness. It's slow death'.

I have to agree with that. We need to shrink our finance sector. The same goes for Insurance and Real Estate. They drive up prices and do not actually create wealth. The export of their insurances does aid the UK economy but that has not be going well. It may also be getting to the point where it is too big for the UK economy.

We need to have other industries that can either export goods or replace imports. Either will be good. Though the government have boxed themselves in with the attitude that trades are bad and you need graduates. If we had encouraged our non academically inclined youth to opt out of education and into a trade then they would have supplanted the swarms of East Europeans who came over and did the trade jobs. Too many kids look at manufacturing as a dirty and badly paid job. That needs to change.

We have a large and relatively buoyant manufacturing sector (fifth or sixth largest in the world last I knew), you just don't notice it much because we don't have household name electronics brands. If you want to compete with the people who manufacture those items, then feel free to award yourself a 90% pay cut because that's how you will have to do it. Alternatively the rest of us will have to subsidise you up the wazoo so you can do something that creates little value to the economy (as we do to keep our hopeless arms industry afloat). Meanwhile, the useful manufacturers will continue to make high value goods that can't simply be made more cheaply in some nasty far eastern hell factory (Satellites, racing cars, aero engines, pharmaceuticals etc.).

The British always whinge about the City and it's opaque products. But it is the City that has lead British growth since the 1860s. If you think we were ever a large scale exporter of manufactured good you are sorely mistaken - Britain is the original high labour cost economy, and international financial services is a very good way to generate the wealth that is required to keep us all in such luxurious circumstances.

+1


http://news.bbc.co.uk/1/hi/business/8553979.stm

good, maybe the UK Govt will rethink the massive interest it was charging Iceland for the outstanding money that the 'banks' lost …

Well lets hope your local council didn't loose its nest egg or you are in trouble

my 'so called' council lost 5 mil (not including other overseas 'so called' investments) but that is not the problem … but …
why has my council and others used 'taxpayers' money for overseas investments when the tax was paid to provide services to that council for that area, yours, mine or anybody's tax money is used for your services in that council area

there is a massive amount of local 'taxpayers' money invested overseas that has been paid to the local (council) via council tax for the use of ...
but invested overseas, why ? ...

for just £2 a month you can adopt a pothole [smile] …

if they wish to provide money (interest on investments) for 'their' pension/bonus funds, then i suggest that 'they' pay for it themselves, not me …

Do you think that we can get some African children to sponsor a pot hole in Westminster or Nantwich?

The problem is the government / councils doesn't have money of its own. It all starts as your money so its your money they have lost ...........