first majestic silver

Iceland Beckons As America Reckons

January 2, 2010

"I consider it to be a reasonable demand that the economic burden placed on the current and future generations of Icelanders, in the form of a state guarantee for Icesave payments to the UK and Dutch governments, be subject to a national referendum,"

Wording of petition to Iceland's President
Fact 1: In late 2008 three of Iceland's major banks collapsed leaving UK and Dutch depositors in the so-called Icesave on-line accounts without access to their funds.
Fact 2: In December 2009 Iceland's Parliament votes by 33 votes to 30 to approve a bill allowing the Government to guarantee payment of $5.5 billion that would be borrowed from the UK and the Netherlands to enable repayment of depositors in those countries.
Fact 3: A total of 23% of voters have signed the above petition asking the president of Iceland to allow for the matter to be determined by a national referendum.
Fact 4: Iceland's population is 317,593 as of December 1, 2009.
Fact 5: The per capita amount of the debt to be guaranteed is $17,317.
Fact 6: The equivalent in US terms would be a debt of $5.28 trillion based on a population of 305 million.
Fact 7: The foreign holdings of U.S.Treasury Securities as of October 2009 total $3.498 trillion.

I am not inciting any nation, let alone Iceland, to be a rogue nation which disregards its obligations. The size of this demand however, on a people who are too few to meet it within the framework of sensible fiscal rectitude, is nothing more than a brute demand served with the etiquette of Viking diplomacy.

Iceland does not have nuclear weapons, nor does it have the world's reserve currency with a Chairman that can print it and deliver it by helicopter. Admittedly, it did de-regulate its banking sector in the 1990's and the low interest rate environment was conducive to an escalation of borrowing and spending. This combined with securitization led to a replay of what has been witnessed in the USA. When the contraction set in, the cards turned on Iceland.

Because it does not control a reserve currency it cannot guarantee repayment of deposits like the FDIC can with illusory money supplied courtesy of the Treasury.

Iceland is between a rock and a hard place as it sails between Scylla and Charybdis. What will the U.K. do? Will it re-impose anti-terror laws as it previously did? Will it stand in the way of IMF assistance being delivered to Iceland? Will it thwart Iceland's efforts to join the EU?

This is the same British Government which has indulged in sizeable quantitative easing. It is also the government which in 2008 secretly delivered behind the back of its people the princely sum of $100 billion dollars in aid to the Royal Bank of Scotland and HBOS and who divulged it 12 months later. And now it hounds a handful of people for a transfusion beyond the collective blood flowing in this small nation's veins.

The snivelling Prime Minister and Finance Minister of Iceland are making all the polite noises following approval of the bill by a slender parliamentary majority. Most leaders do so if position means more than the servitude of their people.

Iceland must pay, but not in the manner envisaged by the bill. The vast proportion of the so called "debt" must be put in abeyance. A smaller debt with a shorter time frame must be imposed. If this is successfully met, the future will dictate further payments or arrangements.

Above all, Iceland must pursue its right to challenge the agreement as envisaged under the Bill passed by its Parliament and which condition was apparently also accepted by the UK and Netherlands.

In the meantime, the US must ask itself whether what has happened to Iceland might not one day happen to it as well. The trigger may be pulled by a China that no longer feels that any advantage accrues to it by breastfeeding the USA with more debt. It may also be pulled however by the USA when it realizes that the current trajectory of continuously weakening finances will only lead it to its own collapse. At that point it may well be that it will unilaterally default on its obligations to China.

The day will come when quantitative easing may be recognized for what it is - COUNTERFEITING. Worse still, will the mushrooming purchases of Treasury debt by unidentified "Other Investors" be revealed to be the bastard child of the Federal Government and the Federal Reserve? This at least seems to be the conclusion if you read Eric Sprott's and David Franklin's superb piece "Is it all just a Ponzi Scheme?" It can be read at

Whatever the case, the horizon is not clear for any holder of a bank account or paper promise issued by any private or public institution. You may be tired of me and others saying it, but apart from not carrying debt, Au and Ag are your only real insurance.

The USA is currently acting out the greatest economic bluff of all time by selling unprecedented amounts of debt, based on its historically powerful financial and military ego. It is this ego that is brow beating the world into accepting rubber checks. With humans, death is the only sure fire cure for ego and I suspect that economic death may do the same to a nation.

America, your time is running out and the world can ill afford to have you crumble. No one can outrun history in the long run, so it is best to not repeat it. Iceland is but the ghost of Christmas yet to come.

18 karat gold is 75% pure gold.
Top 5 Best Gold IRA Companies

Gold Eagle twitter                Like Gold Eagle on Facebook