The Credit Crunch

[Coffeehouse]

Seems Europe is going to struggle more than first expected. I wonder what will come of the G7 meeting today.

Actually the Icelandic economy is one of the most open markets in the world. They've really borrowed heavily from the laissez-faire ideal of the United States, and now their paying a price for some extremely irresponsible high-risk taking. Iceland has basically been surfing too high and too fast. Glitnir and Kaupthing have been aggressively pursuing foreign markets, giving out advice all over the place. Now it's really hitting them back. It's too bad the Icelandic people have to suffer for this though.

[Ilfirin]

Another bad day in financial markets all around. And it's expected not to get better any soon.

U.S Govt has still got the option of taking control of the banks, like in Europe, if further rate cuts wont help.

Dont know if any of you guys do a bit of trading in your respective mkts, but, looking at one's portfolio value going down almost everyday definitely gives a heartburn . Being a science guy, it's not so hard to believe that markets more or less being controlled by the sentiments, is such an irrational phenomenon.

Sad but true, it aint a perfect world.

Ilfirin

[sisterandcousinandaunt]

Originally Posted by Jonathan

"God bless Iceland", said by Icelandic prime minister Geir Haarde, who also likened the financial crisis to an economic natural disaster.

A Meltdown in Iceland

I've kept basically all of my savings in an account at Kaupthing, the biggest bank in Iceland. So naturally I have kept an eye on Iceland throughout this economic crisis.

The past few days have given me the hiccups as not just the banks, but Iceland itself has slipped closer to a national bankruptcy. The island nation is a tiny one, with only 300,000 inhabitants. Most of the national GDP used to consist of the money flow through the large and internationally powerful Icelandic banks. So it is understandable that the financial crisis has hit Iceland particularly hard, in a whole other way than the crisis has affected other countries. The total debts of the banks are now more than ten times the country's GDP!

A couple of days ago I decided to transfer my savings to another bank. I knew the deposits were guaranteed already, but wasn't sure whether it was Iceland or Sweden that stood for the guarantees and I didn't want any trouble.
However one third of my savings were bound and unwithdrawable and NOT subjected to any guarantees! Hence, I've been somewhat stressed about the Icelandic situation
But happy happy! Today the bank contacted me and said that it has just been nationalised and will terminate every account held in Sweden and return the money (plus interest!) to the account holders. I can sleep tight tonight

I wish the Icelanders could say the same thing...

Originally Posted by Coffeehouse

Yeah, for sure. The Norwegian Kaupthing (which oddly isn't a daughter branch of the Icelandic one.., but affiliated nonetheless) has already been given assurances from the Norwegian gov't, so whomever has an account there can sleep safe now.

We've offered the Icelandic gov't possibilities of loan if they want it. They'll have to ask though.

Last I heard there are planned demonstrations in Reykjavik today, people calling for the Icelandic Central Bank Chairman's head on a plate. Understandable!

Originally Posted by Eärniel

I was actually quite surprised to see an Icelandic bank having so many foreign costumers. I had pegged them down as more isolationist.

Over here our political quagmire and lack of decent government are not helping the financial crisis one bit. France and the Netherlands are faring far better in protecting their interest, while we may end up footing another bill because of that.

While my savings should at the moment be garanteed almost entirely by the government as they're with one of the struggling banks that secured a deal, I had been considering to move them to another bank that gave higher interest before the whole crisis broke lose. Now I have to wait and sit things out because the bank I wanted to move to does not have the same saving-garantee and is -thanks to the (politically inspired) badly-timed comment from the National Bank Director- now being drawn into the crisis as well. Gah!

Guys. I hate to say I TOLD YOU SO!!!!!!!

When banks are nationalized, or the contents secured/guaranteed by the government, it's another form of borrowing. In this case, they're either borrowing from the international market, or they're borrowing from the taxpayers.

None of this money exists. It is no longer sitting in gold bars in Fort Knox (or similar repositories). It's a collective estimate of the value of work and assets.

But, from a tax point of view, here's the problem. Householder Johnson has a house that the government plans to collect on, in the form of property taxes. The property taxes are a percentage of the value of his home and land, based on some antiquated amount, assessed 20 years ago. However, he's used to paying a certain amount, despite the rise in housing values in his area. Say that amount is $1000. That's what's in his budget.

The only way the government can pay the interest on their debt, or give you your money from the atm is to get that money from Householder Johnson (as taxes) or print more money. When they do that, it's called inflation.

Now, Householder Johnson doesn't have any "extra" money this year. He's kinda strapped. And he's not going to be sympathetic to any explanation of the fact that he's had "a rise in property value" that he borrowed against to buy himself an i-book and a Prius...despite the fact that he hasn't done anything to that house but mow the lawn. He thinks that's "his" money. The government can't have any.

So nationalizing doesn't fix the problem. It just keeps the shell game going.

[Coffeehouse]

Originally Posted by sisterandcousinandaunt

Guys. I hate to say I TOLD YOU SO!!!!!!!

When banks are nationalized, or the contents secured/guaranteed by the government, it's another form of borrowing. In this case, they're either borrowing from the international market, or they're borrowing from the taxpayers.

What does taxation of the everyday citizen have to do with nationalization of banks?

[sisterandcousinandaunt]

Originally Posted by Coffeehouse

What does taxation of the everyday citizen have to do with nationalization of banks?

Um, everything.

When the banks are owned by the government their risk is assumed by all the taxpayers, instead of just the people who privately own them, as stockholders. The government guarantee means that defaulted loans will be paid as taxes.


Taxes are the source of government money.

[Coffeehouse]

Originally Posted by sisterandcousinandaunt

Um, everything.

When the banks are owned by the government their risk is assumed by all the taxpayers, instead of just the people who privately own them, as stockholders. The government guarantee means that defaulted loans will be paid as taxes.


Taxes are the source of government money.

Sis, 101 of nationalization banks:

When the Gov't takes over a bank it, while in the short-term saving a bank that is the cause of its own misery, will usually purge the leadership of said bank, and by default loses nothing because the liquidity of the bank is already at its lowest point. The Gov't uses taxpayer money, yes, to rescue the shreds of said bank, but we are here talking about the largest banks (in the case of Iceland f.ex.) in a country, whom have tens of thousands of customers whoms in many cases life savings are at risk.
The money spent, taxpayers money, on avoiding the death of said bank is dwarfed by the sums of money saved that all the thousands of customers have. And we're not just talking about private customers, but about Gov't customers such as counties, whom have millions in value put in said bank.
What nationalization does is at first a painful injection of capital, i.e. taxpayer money, but the short-term and long-term effects for the taxpayers savings, an avoiding of a complete breakdown in the everyday economy of the layman, far outweigh the former.

[Earniel]

Originally Posted by sisterandcousinandaunt

Guys. I hate to say I TOLD YOU SO!!!!!!!

[...]

So nationalizing doesn't fix the problem. It just keeps the shell game going.

Um, when did you tell us so? Actually, if there had been complete nationalizing of one of the banks in trouble, then there would be one less problem. Instead of that, the government took the bank out of market funds to split and sell, leaving all the share holders suddenly holding worthless stocks in a worthless fund.

[sisterandcousinandaunt]

Originally Posted by Eärniel

Um, when did you tell us so? Actually, if there had been complete nationalizing of one of the banks in trouble, then there would be one less problem. Instead of that, the government took the bank out of market funds to split and sell, leaving all the share holders suddenly holding worthless stocks in a worthless fund.

Lol...you're right, I had to look back to find that was one of the posts I deleted. So I didn't tell anyone so, but, on the other hand, I remained polite.

Ya can't have everything.

Coffeehouse, what ARE you going on about? Do you have a way to demonstrate that government money is not tax money? Because that seems to be what you're quarreling about. If you're suggesting another source of income for governments like our own (other than taxes) go ahead and name it.

I haven't attempted to pass on the wisdom or unwisdom of bailouts and nationalized banks in my explanatory post. However, as a grown-up full time taxpayer, (and part-time tax collector) I know where the money will be coming from. Taxes or inflation, that's what we got.

[Coffeehouse]

Originally Posted by sisterandcousinandaunt

Lol...you're right, I had to look back to find that was one of the posts I deleted.

I guess I'll take your word for it!

Originally Posted by sisterandcousinandaunt

Coffeehouse, what ARE you going on about? Do you have a way to demonstrate that government money is not tax money? Because that seems to be what you're quarreling about.

Perhaps paying attention to the content of what I wrote would ease you of that misunderstanding Sis! I did not argue that the government money is not tax money. I actually repeated that it was taxpayer money three times. Really, how did you miss it?

1st time... "The Gov't uses taxpayer money, yes, to rescue the shreds of said bank"
and 2nd time... "The money spent, taxpayers money [...]"
and 3rd time... "What nationalization does is at first a painful injection of capital, i.e. taxpayer money"

Had you read what I wrote () you would realise that I did not agree with your argument that nationalization was against the interests of the taxpayers simply because taxpayer money was spent. I argue that although it is taxpayer money (I repeated this 3 times), I believe the consequences of not saving said large, nationwide banks would be a lot worse.

[sisterandcousinandaunt]

Well, you're talking to yourself again, then.

I didn't say (or imply) that "nationalization was against the interests of the taxpayers". You made that up, yourself.

I said, "nationalizing doesn't fix the problem."

It doesn't fix the problem, because it doesn't create wealth. It just "Keeps the shell game going."

I'm a lot closer to the lessons of the Great Depression than you are, Coffeehouse. I don't want the economy to collapse, and I actually have money evaporating in the current debacle.

We can shore up the banks, and we'll have to. But until and unless we can create more wealth, we're just shifting pockets with it.

Statistically, in the US, average people get poorer and rich people richer during every Republican administration. I'll have to see if I can find an on-line chart. It completely baffles me why people wouldn't understand that, and I can tell you, they don't. But I know, that in order to keep anyone's payroll paid, or the neighborhoods full, I'm going to be paying for the Coach bags and offshore accounts of people who will do everything possible to keep their theft the law of the land.

That pisses me off. I'll do it, but I don't have to like it.

[Coffeehouse]

Originally Posted by sisterandcousinandaunt

Well, you're talking to yourself again, then.

I didn't say (or imply) that "nationalization was against the interests of the taxpayers". You made that up, yourself.

I said, "nationalizing doesn't fix the problem."

It doesn't fix the problem, because it doesn't create wealth. It just "Keeps the shell game going."

I'm a lot closer to the lessons of the Great Depression than you are, Coffeehouse. I don't want the economy to collapse, and I actually have money evaporating in the current debacle.

Well you know when you write that it doesn't fix the problem, it keeps the "shell game" going, in addition to writing "He thinks that's "his" money. The government can't have any." you'll have to forgive me for translating that into a meaning of it being against the interest of the taxpayers that the Gov't goes ahead an spends the money anyways. Not really talking to myself there..

I see what you read, but I disagree. I think you are mixing some things up here. You write that "we should shore up the banks". We agree here.
But then you write that "But until and unless we can create more wealth, we're just shifting pockets with it." Here's my disagreement. Because here are you are moving from the issue of nationalization of banks to a whole new ballgame. Nobody expects the natz. of banks to help create any substantial short-term wealth. Obviously natz. of bank does not create wealth in the short-term! The natz. (nationalization) of banks is only meant to save the shreds of what is left of larger banking infrastructures (In f.ex. the USA, Iceland) and setting up a buffer of guarantee for the customers who have money in said banks. That's the core of natz. of banks.
The natz. of banks, from experience in Finland, Norway, Sweden, in the 1990s (I provided a article for this) shows the immediate short-term benefits.

You argue that it doesn't fix the problem but do you expect the natz. of banks, which is merely a bail-out, a rescue, a required action of neccessity, to deal with the fundamentals of wealth? Creation of wealth is the entire economy; capital, unemployment levels, efficiency, growth, exports, inflation levels, you name it. Expecting the natz. of banks to deal with all those fundamentals is unrealistic. And although the money now spent on AIG and Lehman Brothers is in every respect taxpayer money that you yourself have paid, this, you probably don't need me telling, isn't future money but taxes you've already paid. Lots of Americans are cash-strapped, and that is why tax reductions for, in Obama's words, 95% of the population, is being proposed. And yes, it is greatly unfair that people whom really have done everything right, and been responsible, fiscally intelligent taxpayers, should now have to see tax money that they have paid to be spent on the rescue and natz. of banks. It's unfair, but I think it's absolutely neccessary. It's unfair, and yes, the Gov't is continually spending tax money, adding to a ever-growing deficit, and this isn't what taxpayer Joe signed up on (we agree here). But basically this is apples and oranges. Creation of wealth is vital, but the natz. of banks isn't the solution to that. It's a solution to an entirely different problem, the saving of what wealth is left, not the creation of new wealth.
Of course you could argue this: F.ex. a substantial immediate consequence I can think of is the availability of capital in said banks to small and medium-sized companies whom are entirely dependent on this, which would come about by the natz. of banks and ensuring that their line of credit doesn't evaporate instantly. That is relevant.

Eärniel is right tho:

Originally Posted by Eärniel

Um, when did you tell us so? Actually, if there had been complete nationalizing of one of the banks in trouble, then there would be one less problem. Instead of that, the government took the bank out of market funds to split and sell, leaving all the share holders suddenly holding worthless stocks in a worthless fund.

Performing a complete nationalization of the banks is a lot better than the current American half-way approach of buying up bad assets but essentially giving little in return to the taxpayer in the form of ownership.
Like she says, "There would be one less problem", because what in effect happens when you fully nationalize said banks is that the Gov't, while injecting capital into the banks in the form of taxpayers money, in return gets ownership of the bank. But the Gov't wouldn't then run the bank, but should let it run as a commercial bank. What you get is taxpayers having a share in each of these large banks, profitting from the eventual rise in value of said banks. It's a profitable way to go, but it requires some radical overhaul of the notion that a (short-term) nationalization of banks is somehow damaging. It isn't. But the half-way approach in the US could very well become counter-productive.

In the end the immediate consequence of banks obtaining higher liquidity again (i.e. cash!) is that on the local level credit becomes available again, for the private customer, for the small and medium-sized banks, for the everday running of the economy. This is why it is so important.

[sisterandcousinandaunt]

Originally Posted by Coffeehouse

Well you know when you write that it doesn't fix the problem, it keeps the "shell game" going, in addition to writing "He thinks that's "his" money. The government can't have any." you'll have to forgive me for translating that into a meaning of it being against the interest of the taxpayers that the Gov't goes ahead an spends the money anyways. Not really talking to myself there..

I forgive you, but you're making it up. I'm reflecting how the taxpayer feels about it, since you don't seem to get that. Someone who doesn't pay ANY of these taxes lecturing the American taxpayer about how grateful he/she should be about the bailout is...well, hubristic and callow are two words that spring to mind. I assumed that explaining would help. Silly me.

I see what you read, but I disagree. I think you are mixing some things up here. You write that "we should shore up the banks". We agree here.
But then you write that "But until and unless we can create more wealth, we're just shifting pockets with it." Here's my disagreement. Because here are you are moving from the issue of nationalization of banks to a whole new ballgame. Nobody expects the natz. of banks to help create any substantial short-term wealth.

Here, you're making up an entirely new category of straw man. "Create substantial short-term wealth" I said, "create wealth" "Create wealth" refers back to the causes of this situation, which I've suggested are primus the notion that we own the land, followed by secundus the cost to families of their health care under our current system. If you eliminated the second, a major precipitating cause of financial instability for the average citizen would be eliminated. Even in a stable economy, one major illness is the difference in solvency, because our system is so broken. But unless or until we eliminated the first, the community's increase in wealth would always wind up in private pockets, and speculation will make sense.

The natz. of banks, from experience in Finland, Norway, Sweden, in the 1990s (I provided a article for this) shows the immediate short-term benefits.

We're dealing with a much different situation, here. We've tested your remedy on mice, but I'd like to see a few more studies before I apply it in the dosage you suggest.

You argue that it doesn't fix the problem but do you expect the natz. of banks, which is merely a bail-out, a rescue, a required action of neccessity, to deal with the fundamentals of wealth? Creation of wealth is the entire economy; capital, unemployment levels, efficiency, growth, exports, inflation levels, you name it. Expecting the natz. of banks to deal with all those fundamentals is unrealistic.

Too true, that's why I don't expect it to. That's why it doesn't "solve" the problem. And that's exactly what I said.

And although the money now spent on AIG and Lehman Brothers is in every respect taxpayer money that you yourself have paid, this, you probably don't need me telling, isn't future money but taxes you've already paid.

No, it totally isn't. If we HAD any money left in the kitty, it might conceivably be money I'd already paid. But since we're in deficit, it's money we're borrowing, and promising to pay back. With my future taxes. .

[Coffeehouse]

Originally Posted by sisterandcousinandaunt

I'm reflecting how the taxpayer feels about it, since you don't seem to get that. Someone who doesn't pay ANY of these taxes lecturing the American taxpayer about how grateful he/she should be about the bailout is....

Sis, you need to take the foot off the pedal for a second, come off auto-pilot and look at what I've written. Seriously. It's odd because I've pointed out the anger of the taxpayer and reasons behind it so many times in this thread, including in these last posts and yet your telling me that I think they should be grateful(????????). I want you to point out to me where I wrote that. I'm also surprised that your unable to understand that I'm not pretending to be an American taxpayer, neither am I pretending to know all the solutions to the financial meltdown in the USA.
That's my next point..

Originally Posted by sisterandcousinandaunt

Here, you're making up an entirely new category of straw man. "Create substantial short-term wealth" I said, "create wealth" "Create wealth" refers back to the causes of this situation, which I've suggested are primus the notion that we own the land, followed by secundus the cost to families of their health care under our current system. If you eliminated the second, a major precipitating cause of financial instability for the average citizen would be eliminated. Even in a stable economy, one major illness is the difference in solvency, because our system is so broken. But unless or until we eliminated the first, the community's increase in wealth would always wind up in private pockets, and speculation will make sense.

..Which is that your setting up a firing squad on the wrong victim. You state again and again that nationalization won't solve these things, and that there are many aspects of the everyday person's economic life that remain sorrowly unchanged and that, again, the nationalization of banks won't remedy this.
But nationalization of banks isn't supposed to do any of those things. It's only one small step in a very long costly process that yes, definitely, will cost the ordinary citizen future taxmoney, definitely will involve some seriously major reform.
Nobody in this thread has stated that nationalization will fix the reasons behind and the effects of the financial meltdown, but in discussing a starting point you have start somewhere and that's why we've been talking about Gov't intervention in the way of nationalization of banks.
So when you state that nationalization doesn't fix it, that's pretty obvious isn't it. But you have to start somewhere. They're doing it in Iceland, they're doing it in England, they're doing it in Belgium and they're doing it in the US, but time will tell whether each and every Gov't has the stomach to make the tough choices instead of opting for half-way solutions.

Originally Posted by sisterandcousinandaunt

No, it totally isn't. If we HAD any money left in the kitty, it might conceivably be money I'd already paid. But since we're in deficit, it's money we're borrowing, and promising to pay back. With my future taxes.

The USA Gov't is running an annual deficit of trillions yes, and yes the bail-out package that was passed just now is taxpayer money, but the US Treasury does have money in its national chest. And there definitely will be future costs, and that will be future taxpayer money, no doubt about it.

[Coffeehouse]

Latest is that a plan is being fleshed out in Europe:

"The leaders, who spent three hours thrashing out details of their package, are to announce the size of their promised bailout today. Some leaders, including Yves Leterme of Belgium, wanted a figure attached to the package before markets opened in Asia last night, but Mr Sarkozy insisted that another 24 hours was needed for governments to organise their actions.

“What we need now is for each country to fix the sum that it wants to put aside. This should happen by Wednesday,” Didier Reynders, the Belgian Finance Minister, said. EU leaders are expected to endorse the package in Brussels on Wednesday.

The agreement stops well short of a central EU rescue fund that was floated by France ten days ago. but the accord on broad pan-European guarantees marks a shift from Germany’s insistence a week ago that each nation should take care of its own crisis.

“People have come a long way to reach this accord,” said Mr Sarkozy. “The crisis has over the past days entered into a phase that makes it intolerable to opt for procrastination and a go-it-alone approach.” The leaders pledged to help or directly subscribe to debt-raising by banks for periods of up to five years to complement efforts by the European Central Bank to unfreeze interbank lending markets."

..and in the Eastern Hemisphere, New Zealand and Australia have basically issued a 'carte blanche' of guarentees for all bank deposits in their respective nations.

The big question mark I have is how China will fare in the bigger picture?

[Jonathan]

The global markets have certainly reacted positively to the moves by European leaders to inject more funds into the bank system. The Dow Jones made a record gain in a single day.

Markets bounce on trillion-dollar bailout

[Jonathan]

Originally Posted by Coffeehouse

The big question mark I have is how China will fare in the bigger picture?

I think China will probably fare relatively well, since the domestic market is somewhat cut-off from the global economy.

That can't be said about Russia. The recent roller-coaster rides of Moscow's index has shown how vulnerable the Russian economy is to global instability. Maybe this insight will make the government realise that Russia is not the global power it tries to be and perhaps Russia will now relax its muscles a bit.
But I doubt it.

[The Gaffer]

Hmm. In times of stress and hardship, countries don't generally chill out.

The only bright side I can see is that our Tories are looking like a bunch of lightweight poshboy PR men, which they are.

[Coffeehouse]

Originally Posted by Jonathan

I think China will probably fare relatively well, since the domestic market is somewhat cut-off from the global economy.

That can't be said about Russia. The recent roller-coaster rides of Moscow's index has shown how vulnerable the Russian economy is to global instability. Maybe this insight will make the government realise that Russia is not the global power it tries to be and perhaps Russia will now relax its muscles a bit.
But I doubt it.

Some are writing that because China has gone down from 10% to ca. 8-9% annual growth and is scheduled for a similar slump in 2009, that this represents a sign that China is not as insulated as one would think, and that their economy is not really that robust.
But I'm thinking, hey come on, this is at minimum 8% we're talking here, growth figures which any Western country can only dream about. So it's relative and I think the Chinese really have a lot less to worry about than most countries in the world.
Keeping that in mind this fall of 1-2 percentage points will certainly affect the poorest of the poor in China, i.e. the farmers whom already have enough troubles scraping together a living (we're talking about more farmers than the population of the United States by the way).
A promising sign is that the Chinese Gov't just a few days ago launched a plan of economic reform that is major. It aims to improve the food security of the country and to reduce the gap between poor and rich. The plan gives farmers the right to trade and mortgage land rights, in itself a step that would have been wildly futuristic and un-Chinese in the first years of the 21st century. It's an important move and it shows that the Chinese can be positively practical on the important issues instead of pandering to ideological beliefs and anti-societal interests.

Originally Posted by The Gaffer

Hmm. In times of stress and hardship, countries don't generally chill out.

The only bright side I can see is that our Tories are looking like a bunch of lightweight poshboy PR men, which they are.

I would go as far to say that of all the nations in the world right now, and of all the leaders, it is Gordon Brown's England who are taking the lead. I think this is an area where Labour has more credibility than the Tories. It's healthy, because when England decides to take a leadership role in the EU it usually brings about results and we're seeing it in the quick response by the major EU countries. What is true also though is of course that England is the most savagely hit of the major powers in Europe so you would expect some affirmative action. Look at France, for all the things one could say about their bizarre way of doing things they have understood that giving out credit on a loose line in the housing market and whatnot is a recipe for disaster

[Coffeehouse]

Latest in the crisis on Iceland is that a Professor of Economics in Iceland, Thórólfur Matthiasson, now wants the country to shift to the Norwegian Krone (There is the Icelandic, Norwegian, Swedish and Danish Krone, which means Crown like they used in Great Britain in the past) because the Icelandic Central Bank has now given up on stabilizing the Icelandic Krone which is fluctuating like mad and is basically becoming worthless. For example, none of the Norwegian banks now want to touch it, which is probably the same story across the globe for the poor Icelanders

Although I don't deny it being tempting to let the Icelandic people use our Krone, they are our little brothers after all!, which would put their currency activity and policies under Norwegian supervision, it would be very difficult to implement since inflation would need to be curbed first, the national debt in Iceland would have to be significantly lowered, and since Iceland is in the EEC (which is the economic cooperative sister of the EU that consists of the non-EU members Norway, Iceland, Liechenstein and Switzerland) it would have to adhere to some strict EU regulations before it could viably adopt our currency.
Now the professor's argument is sound since he thinks, with good reason, that for the foreseeable future the Icelandic Krone will be next to worthless and the trust in the Icelandic economy will likewise sink like a rock (more than it already has).
An example of it being done in the world is Brunei's adoption of the Singapore currency, giving it the chance to print its own money, but under Singapore supervision, and that is in many ways similar to this situation where you have a very sound economy, the Norwegian, against a very small and fragile economy, Iceland.

[Jonathan]

Perhaps adopting the euro instead of Norwegian currency would be a better option? That's what an economic and financial spokesperson of the Swedish government suggested today, stating that Iceland would benefit greatly from an EU membership (with more responsible financial policies than those currently displayed by the Icelandic leaders and central bank).