ICELAND AHEAD OF THE GAME

Iceland’s government has announced that it will be writing off up to 24,000 euros ($32,600) of every household’s mortgage, fulfilling its election promise, despite overwhelming criticism from international financial institutions.

The measure was introduced by the country’s prime minister, Sigmundur David Gunnlaugsson, the leader of the Progressive Party which won the late-April elections on a promise of household debt relief. According to the government’s website the household debt will be reduced by 13% on average. 
Citizens of Iceland have been suffering from debt since the 2008 financial crisis, which led to high borrowing costs after the collapse of the krona against other currencies.  

If you are an Irish person reading this, what are you thinking?  As the Irish debt crisis continues to escalate with no let-up in sight anytime soon, surely a measure such as this by the Irish government would be on everyone’s Christmas wish list.  The mortgage crisis and household debt problem in Ireland is reaching critical stage with more than 100,000 mortgages in 3 months arrears or more.  The banks have been ordered by Central bank to deal with the issue as opposed to their approach to date with kicking the can down the road.  Are they actually dealing with it now – well the jury is out on that one?

Former President Bill Clinton said on a visit to Ireland on October 2011, that the country will not recover until there is debt forgiveness.  I whisper that quietly for fear of arrest as those two words are forbidden in Ireland – why? Because the banks says so.  It’s very clear now that the banks are ruling the roost, and continue to drag their heals over any kind of reform.  With the recent publication of the Tomlinson report, where it highlights the practises of RBS/Ulster Bank in the past couple of years, and the other stories coming out of banks across the globe – I don’t hold out much hope that as far as banks go, anything will change regarding how they conduct their business.

It is the government of each country that makes the laws and at the end of the day is responsible for the overall well being of any nation?  You cannot help but admire the courage and foresight of the Icelandic government with this debt forgiveness move for its people – looking around the world right now, it would appear that they are the only set of rulers who actually have the balls to help the people who elected them into power.  Well done Iceland!

Conor Devine MRICS