Friday, October 10, 2008

Iain Dale's Dire-y: Labour Minister Says Icelandic Investors Are Protected

Iain Dale has thoroughly misreported an exchange at Westminster under the headline: Labour Minister Says Icelandic Investors Are Legally Entitled to Their Money. Although he has annotated by footnote this with a correction from Unity of Ministry of Truth the headline and the text stand.

The word "investors" is problematic in this context. It's "savers" surely? Investors take risks! Savers are safe! And as Unity demonstrates the Minister in question - Kitty Ussher who visited our constituency meeting as Financial Secretary to the Treasury only last Thursday - was clearly speaking of retail savers.

July was by no means the first time the reputations of these banks began to creak. The following letter appeared in today's Guardian and those that follow, including outing a Ruth Lea U-Turn are also of value:

Chilly response to bail-out proposals

It was no secret that keeping your money in an Iceland bank was a risky activity (Council losses, October 9). By the end of last March, credit default swap rates for the three large Icelandic banks were among the highest in the world, reflecting the market's belief that there was a real chance of default. At the start of April, Fitch placed the Icelandic banks on negative watch. With assets and liabilities that were nine times the size of the Icelandic GDP, a bail-out in the event of a crisis could hardly have been counted on.

It was solely because of their perilous situation that Icelandic banks were forced to offer depositors high rates of return. That the government should force more prudent taxpayers to help bail out systemically unimportant savers who chose to speculate in a risky foreign investment is outrageous. It is perhaps even more outrageous that our government itself, in the form of local authorities, chose to invest millions of pounds of taxpayers' money in such a dodgy venture.
Professor Willem Buiter, London School of Economics
Professor Anne Sibert, Birkbeck, University of London

Our regional cancer hospital, The Christie, has just revealed deposits of £7.5M in Iceland. Credit raters who were less prescient than Fitch deserve opprobium.

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