Iceland is going to pay back its debt! Hurrah! This week the Icelandic government will be signing an agreement. The four billion euros (3,4 billion pounds) the Dutch and British governments loaned to pay back the duped savers in Icesave, will now be reimbursed from the pockets of the common Icelander. Great! Or no?
I think not. There happen to be three hundred thousand Icelanders. Who have to pay... four billion divided by three hundred thousand... that's thirteen and a half thousand per person. Or a bit more than forty thousand per family. That's quite a lot. Especially since it's not the only debt the Icelander must face.
Icelanders with high education, who do not feel like joining in the repayment schedule, have already started emigrating. Understandable. But it also means that those who cannot pay must pay even more. I wonder how much can really be paid back, without literally selling Iceland to either the Russians or powerful bank J.P. Morgan.
Sourest may be that the debt is not even the fault of the average Icelander. They never promised to repay the money now lost. Maybe some did borrow too much money for a car or house. Maybe some did try to live above their station. But what they borrowed they also have to pay back. Over and above the aforementioned forty thousand per family. And added to both is interest. Come to think of it, I don't have to think at all whether it's possible. With the current Icelandic economy it's not possible in any case.
Iceland promised to pay back in fifteen years, with interest. To start in 2016. With an interest rate of five percent they will have to muster another 50 to 100%. That's between six and eight billion euros in total, or between sixty thousand and eighty thousand per Icelandic family. That's half a house.
Actually most Icelanders are just as guilty of the Icesave losses as we are in the Netherlands, Brittain, or the rest of Europe. Namely: entirely not.
We could also share the loss. If we add the population of the Netherlands and the UK to the Icelanders, then we are with eighty million people. Four billion divided by eighty million is... fifty euros per person. Let's say one hundred fifty per family.
If we spread the cost over three years, at five percent interest, then it will cost us... less than five euros per family per month. Less than the national lottery or a mobile phone insurance. Four point six billion will be raised this way. The debt is then paid for. In three years. And we'll pay two to four billion interest less to the banks. This way they at least will not profit from the very misery they helped bring about.
If we share costs among all Europeans, the amount of money per person is ridiculously low. Then it's four billion divided by four hundred sixty million people. That's less than ten euros per person. Say thirty euros per family in total.
As compensation for our effort we can then demand that Iceland joins the European Union, and will use euros from now on. That's better for trade. And we will gain a huge nature reservation for Europe this way: Iceland itself. With huge clean energy reserves, from geothermic sources and electricity gained from waterfalls. Of which they have plenty.
donderdag 22 oktober 2009
maandag 5 oktober 2009
Bonus
There is one thing everyone seems to agree upon since the first credit crisis this century. The rewards for top bankers and top executives have been unjust. They were exorbitantly high, exorbitantly manyfold, and most of all without any meaningful results. Shame.
Therefor these rewards, salaries and bonuses must be pruned down. Not only because our prime minister Balkenende would then earn less than the rest. It's really not just for his ego. He is one of the pack even if his name is not on top in the Quote 500. Just give it a maximum. All top bankers should earn the same. You'd expect that this proposal would be unanimously voted in. Even internationally.
But no. Many negotiators for the USA and Britain at the latest G20 thought it a bad idea. Leave the bonuses as is. They would disappear underground otherwise. You'd get illegal bonus dealers, bonus smuggle, bonus addicts and an endless war on bonuses.
Would it really make a difference, if you could forbid these exorbitant rewards? Except morally, that is? How many human beings might actually be paid from such a bonus? Let's count. A one million bonus could pay for ten typical managers, or you could hire forty secretaries for a year, or maybe you could keep eighty mothers on welfare. For ten million you could buy ten times as many people. If there are a thousand bankers who each get a million too much, they misdeal eighty thousand welfare mothers. And for the three hundred million ING held in reserve for rewards one could indeed avoid three to five thousand layoffs.
The top five of bankers in the US of A divided ninety million dollars among themselves, last year. That is seven thousand welfare mothers. Would all these mothers fit in their five pleasure estates with pool?
But of course that's not how it works. Not exactly anyway. If all went well the top earners would also pay a hefty tax on their bonuses. If that would be a fifty percent income tax, then fifty percent of mentioned mothers on welfare would also profit. Or at least the civil servants who would be paid from that tax. Bonus catchers would be a welcome help in fattening the treasury. Each on his or her own would actually add an exordinate amount to our common wealth.
It's another matter that the tax will seldom come close to fifty percent in practice. Indeed, most of the moneys probably disappear in tax havens and secret back pockets. That's slightly unfortunate.
But what interests me much more, is that there are obviously parties who are prepared to pay these bonuses in the first place. And the rewards are also paid when businesses go entirely to waste, because of the deals made. If you were a cynic, you might think that this was exactly the purpose of the whole exercise. Who pays these rewards? And if they are willing to shell out such sums, how much profit do they make for themselves? Who are these people?
Suppose that top executives merely made a deal amongst themselves, and hollowed out businesses and economy to reward just each other. Wouldn't that be a simple case of theft? And if there really are others who pay them consciously, aren't then these others eluding justice? Should we not regard as a crime exactly the destruction, plunder and sucking dry of our economic livelihood, instead of the bonus you might receive for accomplishing these things?
Therefor these rewards, salaries and bonuses must be pruned down. Not only because our prime minister Balkenende would then earn less than the rest. It's really not just for his ego. He is one of the pack even if his name is not on top in the Quote 500. Just give it a maximum. All top bankers should earn the same. You'd expect that this proposal would be unanimously voted in. Even internationally.
But no. Many negotiators for the USA and Britain at the latest G20 thought it a bad idea. Leave the bonuses as is. They would disappear underground otherwise. You'd get illegal bonus dealers, bonus smuggle, bonus addicts and an endless war on bonuses.
Would it really make a difference, if you could forbid these exorbitant rewards? Except morally, that is? How many human beings might actually be paid from such a bonus? Let's count. A one million bonus could pay for ten typical managers, or you could hire forty secretaries for a year, or maybe you could keep eighty mothers on welfare. For ten million you could buy ten times as many people. If there are a thousand bankers who each get a million too much, they misdeal eighty thousand welfare mothers. And for the three hundred million ING held in reserve for rewards one could indeed avoid three to five thousand layoffs.
The top five of bankers in the US of A divided ninety million dollars among themselves, last year. That is seven thousand welfare mothers. Would all these mothers fit in their five pleasure estates with pool?
But of course that's not how it works. Not exactly anyway. If all went well the top earners would also pay a hefty tax on their bonuses. If that would be a fifty percent income tax, then fifty percent of mentioned mothers on welfare would also profit. Or at least the civil servants who would be paid from that tax. Bonus catchers would be a welcome help in fattening the treasury. Each on his or her own would actually add an exordinate amount to our common wealth.
It's another matter that the tax will seldom come close to fifty percent in practice. Indeed, most of the moneys probably disappear in tax havens and secret back pockets. That's slightly unfortunate.
But what interests me much more, is that there are obviously parties who are prepared to pay these bonuses in the first place. And the rewards are also paid when businesses go entirely to waste, because of the deals made. If you were a cynic, you might think that this was exactly the purpose of the whole exercise. Who pays these rewards? And if they are willing to shell out such sums, how much profit do they make for themselves? Who are these people?
Suppose that top executives merely made a deal amongst themselves, and hollowed out businesses and economy to reward just each other. Wouldn't that be a simple case of theft? And if there really are others who pay them consciously, aren't then these others eluding justice? Should we not regard as a crime exactly the destruction, plunder and sucking dry of our economic livelihood, instead of the bonus you might receive for accomplishing these things?
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