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A 500 króna bill

Here is a prime example of what happens when money, greed and government mis-management are the sole administrative bodies of a country. The affects can and will be devastating as can be attested to by the small Atlantic Ocean country of Iceland.

The Republic of Iceland is a European island country located in the North Atlantic Ocean. It has a population of about 320,000 and a total area of 103,000 km². Its capital and largest city is Reykjavík, whose surrounding area is home to approximately two thirds of the national population. On 29th September 2008, Glitnir, Iceland's third-largest bank, collapsed and was bailed out by the Icelandic government for £466m (British Pounds or approximately $600 million US Dollars.)

Five weeks later on 6th October 2008, the value of Iceland's currency, the krona, falls 30%. Geir Haarde, Iceland’s then prime minister, appeared on television to say the government was taking control of the banks and would pass emergency legislation to save the economy from total collapse. In the weeks that followed, Icelander’s emotions spilled over into civil unrest, but of a very particular kind. The people, whether out of pain or it's indifference, did not complain.

The next day, Landsbanki, was nationalized and placed in receivership and the British Treasury froze its assets, along with Kaupthing Bank, for the protection of British customers and clients. The same day, Kaupthing, the last of Iceland's big banks, went into protection. On October 8th, Iceland's Central Bank raised the interest rates by 6%, from 12% to 18%. Five weeks later on November 17, 2008 the Icelandic government agreed to repay British clients and customers Landsbanki's internet arm "Icesave".

Note: The "Icesave" dispute is a diplomatic dispute that began in 2008 between Iceland on the one hand and the United Kingdom, the Netherlands and Germany on the other. The dispute is centered around the retail creditors of the Icelandic banks Landsbanki (which offered online savings accounts under the "Icesave" brand) and Kaupthing, which were placed into receivership by the Icelandic Financial Supervisory Authority (FME) on 7 and 8 October 2008 respectively. As a result, the more than 400,000 depositors with Icesave accounts in the UK and the Netherlands were unable to access their money for at least 6–8 weeks, while deposits in Iceland were guaranteed by the Icelandic government and generally available (subject to certain withdrawal limits). Some 30,000 German account holders with Kaupthing Edge, the online brand of Kaupthing, were similarly affected.

Four days later, the IMF (International Monetary Fund) and several European countries, including Britain, loaned £8.5bn to Iceland to help stabilize, bolster its economy and indemnify their financial consumers.

At the turn of the new year, Iceland planed to sue the British Government for freezing their bank assets, saying this action contributed to Iceland's financial crisis. 2,000 demonstrators protested outside parliament on January 20th, calling for the prime minister's resignation. On that same day, the Icelandic Finance Ministry predicted that the country's economy would shrink by 9.5% in 2009. On hearing such devastating news, protesters threw eggs and assorted foods at Prime Minister Geir Haarde's car. Haarde, leader of the Independence Party, announced early elections for May 9th, 2009, saying, he had throat cancer and would not be standing for re-election and resigned on January 27th announcing the failure of talks between the Social Democratic Alliance and the coalition partners.

Jóhanna Sigurdardóttirwas elected on April 26 on a mandate to apply for full membership of the European Union and the eventual abandonment of the Icelandic krona in favour of the Euro. Sigurdardóttir became the first female Icelandic Prime Minister. After drawn-out wrangling, a narrow vote in July saw Iceland embark on the EU membership process. At the end of August, the new government voted to approve a revised deal that would see Iceland pay more than €3.8bn over time to the British and Dutch governments to compensate them for the cost of bailing out savers who lost money in the "Icesave" online account run by the failed Landsbanki. The deal would pave the way for Iceland to embark on a debt-laden trudge towards full EU membership and to receive billions of Euros in aid from other Nordic countries and the International Monetary Fund.

It is not only in Iceland that frustration was mounting. There was a widespread feeling among foreign government officials and banks that were trying to recoup some of the tens of billions lost in the failed Icelandic financial institutions. It was felt that governments around the world were deliberately forestalling and that there was neither the ability nor the foresight to address these issues and resolve the growing global financial crisis. The State Prosecutor for Iceland at this point in time had not brought a single charge down. All the while, in other countries, charges had been laid and those found guilty brought to justice. This lack of prosecution infuriated many Icelanders.

Quoting Robert Jackson, "The country finds itself at a crossroads. One route sees a debt-burdened nation embrace Europe, adopt the Euro and gain the greater financial security that EU membership would provide. The other is a One Nation path: a country isolated, weakened and vulnerable, and yet imbued with a belief in its talent, fortitude and ability to work through its problems. If it rejects the European path, there is a real concern that Iceland will turn in on itself, making real Laxness’s fictional Bjartur – a lonely figure stumbling battered, bewildered and yet stubbornly defiant into the arctic wilderness. For many Icelanders that would be the desirable alternative." (Iceland after a year of financial crisis. By Robert Jackson, October 9 2009.)

This has to stop. Here is my point. The American Dollar should not be the binding value of a country's' standard. The world should embrace the gold standard. This would reflect it's actual value and worth in "real time". Notwithstanding a country's' economic value through it's resources resulting in their Gross Domestic Products. Personally, the most valuable commodity would be fresh water and not oil.

Your comments are welcomed.