Quote:
Originally Posted by pegasus
@ Spank, Thanks for your response, you have provided clarity regarding the banking collapse, however If I am not mistaken, the IMF have injected bailout payments equalling the loan repayments which are due (without austerity measures or profit making), which in essences means that The IMF are actually paying the deficit not Iceland?
Great Thread!!!
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Your not mistaken in thinking the IMF have injected money to Iceland however the injected money is intended to be loans which should be paid back by the government, the idea is simply to give them time to pay and not to take more money out of a country already on the verge of bankruptcy in the middle of a financial meltdown but instead to take it out of a future stronger country. In actual fact using the current Icelandic method the majority of the money is being paid out of the assets of the collapsed banks as they're wound up instead of straight out of government or public money.
The reason we don't keep hold of the nationalised and part nationalised banks is that they were bought (or saved) with loaned money and the government needs to pay that money back, current trends mean we're quite likely to break even or make a profit on that as well so In the end no government or people should be out of pocket due to the rescues.
Whether these IMF bail outs do eventually get paid back remains to be seen but since the UK still has Napoleonic war debts outstanding I wouldn't hold your breath if the interest rates on them are low, I certainly think it's unlikely they'll be written off unless they're simply taken over and disposed of by a much more centralised EU in the future.