Today's Stories

May 11, 2009

Andrea Peacock
No Justice for Libby

May 8-10, 2009

Alexander Cockburn
Dead Souls

Jeffrey St. Clair
Echoes of Amchitka: 40 Years After America's Biggest Nuclear Blast, the Damage Continues

Paul Wolf
Obama's Axis of Obedience

Steve Niva
Iraq: The Return of the Suicide Bombers

Neve Gordon
Jailed for Caring

Mike Whitney
Has Bernanke Pulled the Economy Back From the Brink?

Warren Hinckle
DiFi vs. Marilyn Chambers

Serge Halimi
In Praise of Revolutions

Gareth Porter
The Pakistan Conundrum

Sharon Smith
Something Stinks at Whole Foods

Andy Worthington
Obama's New Gitmo Policy: Back to the Bush Era?

Mark Weisbrot
Hillary and Latin America

Rosa Miriam Elizalde Cyber Command and Cyber Dissident: More of the Same?

David Macaray
Recessions and Labor Unions

Missy Beattie
The Real Housewives of War

Ron Jacobs
Mothers and War

Diane Farsetta
About Face on Pentagon Pundits?

Ramzy Baroud
War Without Context

Phelie Maguire
Living Next to Settlers

Robert Fantina
Party of Rush

Kevin Zeese
A Break From the Past in the Drug War?

Margaret Flowers, MD
The Baucus 8: Why We Risked Arrest for Single-Payer

Dave Lindorff
The Joke's on Us

Richard Rhames
Revenge of the Tundra

Ben Sonnenberg
Let the Right One In: A Vampire Visits a Welfare State

Kim Nicolini
Sin Nombre: Giving Faces to People Who Don't Have Names

Stephen Martin
The Riotous Action of the Complete Banker

Charles R. Larson
The Commencement Address You'll Never Hear

David Yearsley
Jean Ferrard, Organist Extraordinary

Lorenzo Wolff
Death Cab for Cutie: Surprisingly Familiar

Poets' Basement
G.S. Heiligschreib and David Farrelly

Website of the Weekend
Zombie Bank

May 7, 2009

Paul Craig Roberts
Criminalizing Criticism of Israel

Chris Floyd
A Full-Court Press for Pakistan War

Andy Worthington
Mixed Messages on Torture

Alan Farago
No Place Like Home: a Stress Test for Land Use, Not Just Banks

Ray McGovern
Deux ex Machina on Torture?

Dave Lindorff
Stain Removal: Impeaching the Torture Judge

Eric Toussaint /
Damien Millet
Why is There Rampant Famine in the 21st Century?

Ana M. Malinow, MD
Why We Need a Single-Payer Health Care System

Jeff Armstrong
Freeing Leonard Peltier: What Would Warren Harding Do?

Norman Solomon
A Green New Deal

Website of the Day
The End of Lake Mead?

May 6, 2009

Doug Peacock
The Fate of the Yellowstone Grizzly

Patrick Cockburn
Afghans to Obama: Get Out, Take Karzai With You

Richard Neville
The Torturer's Apprentice

Manuel Garcia, Jr.
To Power a Nation: Nuclear Bombs or Sunshine?

Winslow T. Wheeler
Of Pork and Baloney: Obama's Defense Budget

Deepak Tripathi
Pakistan in Crisis

Stephen Soldz
A "Natural Reaction": APA Ethics Policy-Maker Endorses Torture

Reuven Kaminer
Nice is Not Enough: Obama vs. Netanyahu and Lieberman

David Macaray
The Chrysler-UAW Deal

Kevin Zeese
Why We Were Arrested at the Senate Finance Committee Hearings

Marjorie Cohn
Stanford Antiwar Alums Call for War Crimes Investigation of Condoleezza Rice

Coalition for an Ethical Psychology
Investigate Psychologist and Health Provider Complicity in Torture

Website of the Day
Who's Behind the Financial Meltdown?

May 5, 2009

William Blum
Torture and Mr. Obama

Uri Avnery
Netanyahu's Plan

Steven Higgs
Autism and Toxic Pollution

Dean Baker
Why Economists Should Learn Arithmetic

Daniel Wolff
The Education of Rachel Carson

Sibel Edmonds
The Broken Congress

Carole King Klein
A New Chance to Save the Northern Rockies

Fidel Castro
Giving One's All

Belén Fernández
Oil and Aguardiente in the Ecuadoran Elections

Dan Bacher
Schwarzenegger's Big Lie About Fish vs. Jobs

Website of the Day
"I Married Isis on the Fifth Day of May"

May 4, 2009

James G. Abourezk
The AIPAC Spy Case

Jeff Leys
Obama's War Budget

Patrick Cockburn
Afghan Ayatollahs Press Marital Rape Law

Andy Worthington
A Start on Guantánamo, But Not Enough

Jaime Avilés
Mexico's Plague-Bringers

David Swanson
An Even Worse Bybee Memo

Paul Craig Roberts
Working with Jack Kemp

P. Sainath
Celeb Crusades and the Death of Politics

Eugenia Tsao
Canada's Obama and the Cult of the Prof

Benjamin Dangl
Protest and Rubber Bullets in Paraquay

Sami Al-Arian
Mourning William Moffitt

Website of the Day
"Soldiers Are Cutting Us Down": Kent State, May 4, 1970

May 1 - 3, 2009

Alexander Cockburn
Game-Changers: Specter Jumps, Souter Quits

Gary Leupp
Dropping the AIPAC Spying Case

Peter Linebaugh
The Key to the Bastille

Jeffrey St. Clair /
Joshua Frank:
Half Life of a Toxic War: Iraq's Wrecked Environment

C. G. Estabrook
Minion of the Long War

Patrick Cockburn
Kabul's New Elite

Mike Whitney
Economy on the Ropes

Pierre Sprey /
Winslow Wheeler
What "Sweeping Overhaul" of the Pentagon?

Andy Worthington
Al-Marri's Plea Deal: Dictatorial Powers Unchallenged

Mairead Maguire
Stand Up to Israeli Apartheid: a Letter to Obama From a Nobel Peace Prize Laureate

Nadia Hijab
The Israel Boycott is Biting

Diane Farsetta
Life, Death and Water Policy

Michael Calderón-Zaks
The Déjà Vu Flu: Why Much of the Discussion About Swine Flu is Racist

Richard Rhames
When Piggies Come Home to Roost: Swine Flu and the Industrial Meat Gulags

Russell Mokhiber
Inside the Beltway Baucus

Ramzy Baroud
Clinton's Unpromising Start

Rannie Amiri
Understanding Lebanon's June Elections

Deb Reich
No Talking, Dammit!

Steven Higgs
Indiana Criminalizes Dissent: Roadblocks on the NAFTA Highway

Brian Cloughley
Malice in Blunderland

David Michael Green
The Party's Over

Farzana Versey
Sex, Swat and Susan Boyle

Jim Goodman
Think Before You Eat: Agriculture and the Environment

Carl Finamore
New Prescription for a Healthy Union Movement

Christopher Brauchli
The Sounds of Silence: the Texas Option

Susie Day
The Real Cause of Unemployment: Employees!

David Yearsley
Nuts Over Beethoven

Lorenzo Wolff
Three Minutes of Perfection

Peter Stone Brown
Dancing with Dylan

Poets' Basement Dominguez, Orloski and Springate

Website of the Weekend
May Day Europe

April 30, 2009

Ellen Cantarow
Obama and "Two States": Seamless Continuity From Bush Time

Dana L. Cloud
The McCarthyism That Horowitz Built

Paul W. Lovinger /
Jeannette Hassberg
A Nation of Laws

Binoy Kampmark
Swine at the Trough: the Business of Pandemics

Brian Downing
The Perils of Modernization in Afghanistan

Frank Snepp
Tortured by the Past

David Swanson
The Wrong Torture Question

Conn Hallinan
The Coming Asian Storm

Ron Jacobs
Not Dead Yet: an Interview with Jerry Gordon on the State of the Antiwar Movement

John Goekler
The Only Path to a Middle East Picnic?

Jasmine L. Tyler /
Anthony Papa
An End to Crack/Powder Cocaine Sentencing Disparity?

Website of the Day
Emergency Petition: Stop Coal Industry Intimidation of Activists

April 29, 2009

Joann Wypijewski
Death at Work in America

Patrick Cockburn
The Taliban's Roads to Kabul

Andy Worthington
Cheney's Twisted World

Chris Floyd
The Specter Diversion

Dave Lindorff
No More Excuses: a Specter is Haunting the Democrats

Jeremy Scahill
The Nuremberg Truth and Reconciliation Commission?

Doug Henwood
Zionist Lobby Targets Another Tenured Professor: an Interview with William Robinson

Michael Hudson
Will Iceland be Handed Over to a New Gang of Kleptocrats?

Russell Mokhiber
My Ron Pollack Problem--And Yours

Eric Toussaint
Ecuador at the Crossroads

Website of the Day
An Interview with Leslie and Andrew Cockburn on "American Casino"

April 28, 2009

Uri Avnery
A Little Red Light: On Israeli Fascism

Jeremy Scahill
Obama's Iraq: the Picture of Dorian Gray

Dean Baker
The Perfect Gift for Wall Street: a Financial Transactions Tax

Michael D. Yates
At the Factory Gate

Conn Hallinan
Georgian Plots? Saakavili's "Order No. 2"

John Stauber
Beyond MoveOn

Tom Barry
The Failed Border Security Initiative

Harvey Wasserman
Who Pays for America's Chernobyl Roulette?

Jeff Nygaard
Pirates, Profits and Propaganda

Frederico Fuentes
Why the U.S. Still Hates Cuba

Website of the Day
The Man Behind the Hood

April 27, 2009

Pam Martens
The Far Right's Plot to Capture New Hampshire

Patrick Cockburn
Torture? It Probably Killed More Americans Than 9/11

Andrew J. Bacevich Guardian of the Status Quo: Obama's Sins of Omission

Mitu Sengupta
The Bloodbath in Sri Lanka

Franklin Lamb
Hillary Does Beirut: The 165-Minute Swoop-In

Firmin DeBrabander
Crimes of Economic Madness

Dave Lindorff
Wide Open to Pandemic?

Russell Mokhiber
How Corrupt is That?

Mike Whitney
Pinter's Message to Obama

Mark Weisbrot
Overhauling the IMF

Rev. José M. Tirado
Iceland's New Dawn: How the Right Got Trounced

Website of the Day
American Casino

April 24-26, 2009

Alexander Cockburn
Putting the Bush Years on Trial

Marjorie Cohn
Torture Used to Try to Link Saddam with 9/11

Andy Worthington
Who Ordered the Torture of Abu Zubaydah?

Jeremy Scahill
Are Leading Democrats Afraid of a Special Prosecutor to Investigate Torture?

Chris Floyd
Top of the Heap: the Democrats' Teachable Moment on Torture

Mike Whitney
A Housing Crash Update

Anthony DiMaggio
Obama and the Housing Crisis

Chris Kromm
Democratic Lobbyists Key to Fight Against Employee Free Choice Act

Saul Landau
Seventeen Months in "the Hole:" an Interview with the Leader of the Cuban Five

Dave Lindorff
Free John Walker Lindh

Greg Moses
The Debt Looters

Joshua Frank
Calling for a Coal Moratorium: an Interview with Ted Nace

Fred Gardner
Collective Farming and the Lynch Case

Manuel Garcia, Jr.
Homework, Testing and Stealth Apartheid in Education

David Michael Green
Of Tea Parties and Teleprompters

Ramzy Baroud
Middle East Spies: a New Front in Gaza's Conflict

Rannie Amiri
Mubarak's Expanding Enemies List

Laura Carlsen
Mr. President, Calderon is Not Mexico

Richard Morse
The Haitian People Need a Lobbyist

Nikolas Kozloff
Protecting the Bald Eagle: a Task Now Falling to ... Hugo Chavez?

Kent Peterson
The Fight to Save Mexico's Mangroves

Robert Bryce
The Ethanol Scammers Rent a General

Niranjan Ramakrishnan The Financial Experts

Ron Jacobs
Torture is More Than Just "Harsh Tactics"

Richard Rhames
Roman Legends, Book Burning and History's Hunt

Stephen Martin
Wherefore Art Thou American Dream?

David Yearsley
Rodgers, Hammerstein, Michener and Nostalgia's Clammy Embrace

Poets' Basement
Khalil and Mankh

Website of the Weekend
Doug and Andrea Peacock on Grizzlies and Edward Abbey

April 23, 2009

Eamonn Fingleton
How the Wall Street Journal and the New York Times Buried the Madoff Scandal for at Least Four Years

Ray McGovern
Obama Plays Hamlet on Torture

Michael Ratner
The Torture Commission Trap

Alan Farago
The Quicksand Economy

Rob Larson
Business Gets Carded

Nadia Hijab
The Real Heroes of Durban

Fawzia Afzal-Khan
Deconstructing the Taliban

Dave Lindorff
Are Members of Congress Being Blackmailed?

Helen Redmond
Selling Out Single-Payer: the "Public Option" Con

Adam Federman
The Battle Over New York's Marcellus Shale

Website of the Day
An Interactive Map of Vanishing Employment Across the Country

April 22, 2009

Chris Floyd
The Fatal Thread: Torture, War and the Imperial Project

Joanne Mariner
Torture Evidence and Terror Blacklists

Vijay Prashad
Obama's Afghan Plan: Fracturing the Antiwar Movement

Gareth Porter
U.S. Lacks Capacity to Win Over Afghans

Dean Baker
The Tyranny of Bad Economics

Peter Morici
Housing Sales and Fixing the Economy

Winslow T. Wheeler
Eliminating Bad Pentagon Habits

Barucha Calamity Peller
The Battle to Take Back the New School

Harvey Wasserman
Chernobyl Could Happen Here

Aisha Brown /
Dedrick Muhammad
White Privilege in the Americas

Teo Ballvé
Obama's Feel Good Meeting with Colombia's Uribe

Website of the Day
Ahmedinejad's Durban Speech: What He Actually Said

April 21, 2009

Randy Rowland
Lindy Blake's Great Escape

Dave Lindorff
Jay Bybee's Conspiracy to Torture

Fidel Castro
The Secret Summit

George McGovern
Pull Out of Iraq This Year

Greg Moses
The Unemployment Channel

Benjamin Dangl
Argentina Remembers

Sonia Nettnin
Saving Lives in Gaza

Frank Barat
The Death of Bassem: a Shooting at the Wall in Bil'n

Binoy Kampmark
Legal Purgatory and John Demjanjuk

John V. Walsh
Code Red for Single Payer

David Macaray
SAG Should be Praised, Not Assailed

Website of the Day
Bonus Man: For Executive Assholes Everywhere

April 20, 2009

Mike Whitney
Housing Bust Comes Roaring Back, Worse Than Ever

Andrea Peacock
Histrionics and Legalisms in Missoula

Henry A. Giroux
Ten Years After Columbine: the Tragedy of Youth Deepens

Liaquat Ali Khan
Drone Attacks on Pakistan's Indigenous Tribes

Fred Gardner
Obama's DoJ Backs Prosecution of Medical Marijuana Providers

Stephen Soldz
Obama, Blair, Panetta and the Torture Memos: Praising Moral Cowards, Ignoring Real Heroes

Nadia Hijab
Obama's Multi-Polar Middle East

Dave Lindorff
The Meeting in Trinidad

P. Sainath
India's Press Nixes "R" Word

Nelson P Valdés
A Modest (Transition) Proposal to Obama

Mark Engler
American Empire Foreclosed?

Belén Fernández
The FARC Can't Dance

Website of the Day
Dear Mr. Buffett...

May 11, 2009

Make Iceland Pay for Incompetent British Bank Deregulation!

Gordon Brown Spills the Beans on the IMF

By MICHAEL HUDSON

Last month the G-20 authorized the International Monetary Fund to increase its loan resources to $1 trillion. It’s not hard to see why. Weakening currencies in the post-Soviet states threaten to raise default rates on foreign-currency mortgages as collapse of the Baltic real estate bubble drags down Swedish banks, while the Hungarian property plunge threatens Austrian banks. It seems reasonable to infer that creditor-nation banks hope to be bailed out. The IMF is expected to lend the Baltic, central European and other debtor-country governments money to pay them. These hapless debtor economies are then to follow IMF “conditionalities” to squeeze enough money out of their populations to pay foreign creditors – and repay the Fund by imposing yet more onerous taxes on their labor and industry, making them even more high-cost and therefore pushing them even further into trade and credit dependency. This is why there have been so many riots recently in Latvia, Lithuania, Estonia and Ukraine, as was the case for so many decades throughout the Latin American countries that introduced the term “IMF riot” to the global vocabulary.

For fifty years the IMF has organized such payouts to creditor nations. Loans are made to debtor-country governments to “promote exchange-rate and price stability.” In practice this means pouring tens of billions of dollars into currency markets to make bad gambles against raiders. This is supposed to avert the beggar-my-neighbor nationalism and financial protectionism that aggravated depression in the 1930s. But the practical effect of IMF lending is to demand that debtor countries impose onerous IMF “conditionalities” that stifle their domestic markets. This is why the IMF was left with almost no customers until last year’s debt crisis deranged the world’s foreign exchange markets.

It is supposed to be merely incidental that the largest IMF shareholders, the United States and Britain, happen to be the major creditor nations and their banks the main beneficiaries of IMF loans. But in a Parliamentary question-and-answer session on May 6, Britain’s Prime Minister Gordon Brown spilled the beans. Under pressure for his notorious “light-touch regulation” as Chancellor of the Exchequer (1997-2007), he undid half a century of rhetorical pretense by announcing that he was pressuring the IMF to bail out Britain in its nasty dispute with the Icelandic owners of a British bank that went under. He was in a position to know the nitty-gritty of who owed what and which nation’s monetary authorities were responsible for which banks. So when he said that he was strong-arming the IMF and other organizations to force Iceland’s government to pay for his own government’s mistakes, he must have known this was breaking the unwritten law of pretending that the IMF is not the servant of creditor nations in bilateral disputes with smaller economies.

Here’s the background. Mr. Brown and his New Labour predecessor Tony Blair have saddled British taxpayers with a generation of payments to pay for their decade of deregulating London’s financial sector. Bad mortgage lending led to the failure first of Northern Rock and then the Royal Bank of Scotland, whose ambitious junk-mortgage program had made it the world’s largest bank. At $3.8 trillion before it collapsed, it was nearly twice the size of Britain’s $2.1 trillion gross domestic product (GDP). (For a review of New Labour’s deregulatory policies see Philip Augar, Chasing Alpha: How Reckless Growth and Unchecked Ambition Ruined the City's Golden Decade [2009].) So one can understand why Mr. Brown was flailing around to blame someone for New Labour’s “Don’t see, don’t ask” policy.

Last autumn one of Iceland’s most reckless banks, Landsbanki, announced that it had made so many bad gambles that its loans and investments could not cover what it owed its depositors. It had drawn many deposits from abroad by setting up foreign branches, including Icesave in Britain. And in a striking variation from normal practice, these branches were not incorporated as separate affiliates, which would have led them to be regulated by local British authorities. As branches of the Icelandic head office, Icesave was regulated only by Icelandic authorities – which were as thoroughly neoliberalized as those of Britain, and didn’t really have a clue as to what was going on.

When Icesave went broke in October, British monetary authorities panicked. Mr. Brown sought above all to prevent its owner, Landsbanki, from doing what Lehman Brothers had just done on Sept. 14 when its New York office emptied out the funds in the account of its London affiliate just before the U.S. firm declared bankruptcy. Trying to grab whatever Icelandic assets he could, Mr. Brown overreacted (hardly a new experience for him). Responding far beyond Icesave itself, he resorted to anti-terrorist legislation passed in 2001 in the wake of the 9/11 attack on New York’s World Trade Center to freeze Icesave’s accounts – and also those of other banks in Britain owned by Iceland. Evidently he thought that classifying his peaceful NATO partner as a terrorist economy would panic its government into paying. But the effect was to cause a run on Iceland’s currency, making payment impossible. The króna entered a period of freefall on foreign exchange markets.

Mr. Brown’s bellicose behavior escalated as Britain’s own currency sank. This set the stage for his explosion last Wednesday when he explained how he intended to make Iceland pay, not only for Icesave but also for Kaupthing S&F, for which the British authorities were responsible in the case of depositors who had lost money. Unlike the unfortunate IceSave (administered as a branch of Iceland’s Landsbanki and hence subject to Icelandic regulatory authority), Kaupthing S&F is incorporated as a distinct British affiliate, and regulated and insured as such. The UK authorities accordingly have not claimed that Iceland’s government has any obligations to reimburse British depositors who have lost money. Yet when asked about the “£6 million that the Christie hospital [in Manchester] stands to lose in the Icelandic bank Kaupthing,” central banker Brown pretended that Kaupthing was not a British bank overseen by domestic deposit insurance authorities. “The fact is that we are not the regulatory authority and that many, many more people had finances in institutions regulated by the Icelandic authorities,” he insisted before Parliament. “The first responsibility is for the Icelandic authorities to pay up, which is why we are in negotiations with the International Monetary Fund and other organisations about the rate at which Iceland can repay the losses that they are responsible for.”

This naturally has prompted Icelanders to ask British authorities just which “other institutions” they may be talking to, and what they may be hoping to gain. The IMF’s representative in Iceland, Franek Rozwadowski, was quick to explain to the Icelandic newspaper Fréttablaðið that it was not the IMF’s role to intervene in “a bilateral matter that needs to be resolved bilaterally.” But fears remain that Iceland’s government will be pressured to squeeze out money from the economy to reimburse foreign speculators on the winning end of the many bad gambles that Iceland’s banks made before being de-privatized.

Such fears are aggravated by the worry that Mr. Brown may have found help from a fifth column within Iceland itself. After the bank crisis last autumn, the Independence Party fell, and its coalition partner for the last six years, the Social Democrats, took charge of the administration. The government divided the failed Icelandic banks into “good” and “bad” parts so as to save what could be salvaged for Icelandic depositors to back their deposits (the “good” bank). The government then commissioned two British accounting firms to survey the loan portfolios of Landsbanki and Kaupthing to evaluate their assets at “fair value.” But much as the U.S. stress test surrendered to the banking system’s insistence on blue-sky optimism regarding what will be left over on high-risk loans and gambles, so the Icelandic contract defined “fair value” as it would exist if the global financial collapse was completely reversed and everything went back to normal as if nothing had happened. Under this assumption the good and bad bank assets would be worth much more than is the case under today’s real-world conditions. This dangerously over-states the net worth of Iceland’s failed banks.

 It was dangerous to retain firms closely associated with major clients – and hence, their source of future business – that include the parties with whom Iceland’s government stands in a potential adversarial relationship. Another problem is political pressure for a cover-up on the part of the vested Icelandic interests that had engaged in reckless behavior, and perhaps crooked self-dealing via foreign transactions.

In any event, the report was not made public on its scheduled date in mid-April, which was supposed to be just prior to the national elections on April 25. When a report on major bankruptcy by political insiders is not released on the promised date before a major election, one naturally suspects political pressure at work. Yet despite the financial crisis that plunged most Icelanders into a debt-strapped condition, the election turned mainly on political factors. The Social Democrats advocated joining the European Union and adopting the euro, hoping that this in itself may lead to domestic economic reform. The Left-Green coalition opposed giving up Icelandic political and economic sovereignty and pressed for domestic reform, as did the centrist Progressive Party. As for the Independence Party, it was swamped by one scandal after another concerning election financing, insider crony dealing and the usual array of dirty neoliberal political practices.

All this occurred in an economy structured to be a creditor paradise – that is, a debtor’s hell. On top of normal mortgage interest, Icelandic personal and real estate debts are subject to indexation of the principal to reflect the consumer price index – which in turn mirrors the fall in the króna’s exchange rate, about 20% over the past year. This means that if someone bought a house for the equivalent of $100,000 a year ago with a 100% mortgage, the debt would now have risen to $120,000. But the collapse of Iceland’s economy has sent unemployment soaring and business crashing, so real estate prices have fallen by about 25%. The former $100,000 house would now have a market value of only $75,000 – just 62% of its re-indexed $120,000 mortgage, some $45,000 in negative equity.

The situation actually is about to get much worse in the near future. The US$ is currently at 125 krónur (IKR), down from 62 at yearend-2007 – a 100% increase. (For the euro, the increase over the same period is 85%.) Iceland’s banks have linked many business loans, as well as auto loans and other debts to a market basket of foreign currencies, on the logic that they themselves have had to obtain money by borrowing yen, euros, sterling or dollars. Although these loans are denominated in krónur, their payment is indexed, so the effect is similar to denominating loans in foreign currency. Many loans are still benefiting from the moratorium placed on re-indexing the principal when the crisis hit last autumn, but many loans are about to be reset. Icelandic debtors who borrowed in the belief that the IKR was as stable as the dollar are now paying the price for their optimism – an optimism fed by the banks’ marketing departments, which depicted these indexing arrangements simply as an accounting formality! Business debts are especially at risk.

This shows how urgently Iceland needs to straighten out its banking mess and restructure the economy to free the population from the unique debt squeeze its laws and a decade of neoliberal mismanagement have created. Now that the banks have been de-privatized and taken back into the public domain, credit needs to be turned back into what it was before – a public utility. But this cannot be organized without knowing how much can be recovered from the failed banks to back domestic depositors. And the reports from the British accounting consultancy firms still have not been made public. Only the major creditors have received copies!

Remarkably, the government said last week that they might not be released at all. The inference is that the crooked dealing has been so damning to vested Icelandic interests that it would cause a new political crisis to resolve the deepening economic crisis. The fear is that a sweetheart deal has been made with the kleptocrats whose reckless behavior (and it seems probable, illegitimate bank maneuverings with offshore accounts) plunged the economy into negative equity in the first place. The better the financial health of the failed banks appears on paper, the more presumably will be left over to pay foreigners – including the offshore accounts of the banks’ former owners in their own dealings with the banks. So from the vantage point of Icelandic depositors and debtors to these banks, a realistic pessimistic estimate of the banks’ position would protect them, while an unrealistic optimism would enable foreigners to siphon off much more money, leaving less for Iceland.

In fact, the IMF has failed to oblige Iceland’s government to conform to the Letter of Intent it signed on November 15, 2008. This letter obliged Iceland to “bring loan values in line with expected market values” (#4), and to “include an assessment of whether or not managers and major shareholders have mismanaged or abused the banks” (#6). No such assessment has been made, and as described above, loan values are exceeding market values by a rising degree as property, businesses and households fall into negative equity status.

The Icelandic government’s agreement with the IMF promised to make the bank assessments public upon their completion “by end-march 2009” (#10). This has not been done – perhaps (one worries) because the next sentence says that the government “will discuss in advance with IMF staff any changes to the adopted strategy.” In view of the secrecy that now shrouds the events that pushed the banks under, one can only wonder at what developments have prompted the government and IMF to change strategy.

What the IMF did demand – as it always does – is that once the government bails out the bankers for their bad loans, the whole privatization process is to start all over again, paving the groundwork for yet new rip-offs. In view of the fact that “the banking crisis will significantly constrain the public sector and burden the public for years to come” as the government pays off bad loans (#12), the agreement pledges (#14) that “A significant reduction in government debt through the sale of the government’s stake in the new banks could help reduce the needed fiscal adjustment over the medium term.”

Belatedly, the population is now up in arms – two weeks after the election! To stabilize the currency, Iceland has agreed to IMF conditionalities that prevent the government from pursuing the counter-cyclical Keynesian fiscal policy that Mr. Obama is leading in the United States. Unless the debt pressure is alleviated, Icelandic homeowners and businesses will be obliged to run down their savings each month until they are depleted – at which time they will lose their homes and forfeit their businesses to foreclosing creditors.

So on Saturday afternoon, May 9, a “pots and pans” protest was conducted outside of Iceland’s Parliament in Reykjavik. The scenario is much like that of the color revolutions staged by U.S. neoliberals throughout the post-Soviet states. But Iceland’s kitchen-utensil revolution is organized as a protest against neoliberal policies. The protesters have picked up the thread where it left off last October a similar set of protests dislodged the Independence Party from power. The National Labor Association has broken from the new Social Democratic coalition government, reflecting the growing anger among Icelanders at their debt squeeze.

Mr. Brown’s statement that he intends to use IMF leverage to deepen Iceland’s debt position by forcing its government to bail out British depositors has rubbed salt in this wound – precisely by demanding for his country what Icelanders are not receiving from their government! Its citizens want to know what pressure the country is responding to if it intends to put the interest of foreigners before their own. This double standard has motivated the population to act in a more confrontational way than would have occurred had the problem been merely domestic. Icelanders want to be told the magnitude of the financial problem – and apparent dishonesty and crony dealings – that the government is keeping secret. The answer may at long last move Iceland out of its post-feudal oligarchy. Its neoliberal privatizations and pro-financial policies may turn out not to be as entrenched and irreversible as the kleptocrats had hoped would be the case.

Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) He can be reached via his website, mh@michael-hudson.com

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