UK councils have 'hundreds of millions of pounds' in Icelandic banks

XPE

XPE

Soldato
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9 Jul 2005
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5,419
Why the hell does the Kent County Council have £50 million of british tax payers money in a Icelandic bank !?!?!?!?!?

Shouldnt that be spent on i dont know local sevices !!!!!!!!!!
 
Soldato
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My local council was already low on funds before this happened. Don't know if they had any money in an Icelandic bank though.
 
Caporegime
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Why the hell does the Kent County Council have £50 million of british tax payers money in a Icelandic bank !?!?!?!?!?

Shouldnt that be spent on i dont know local sevices !!!!!!!!!!

They get a grant from central government once per year, which they have to spend during the whole year. Of course they're going to have money in banks.
 
Soldato
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Sealed in my Sarcophagus.
Because they were advised that they had AA credit rating, and at the time were offering [stupidly]high interest rates.


Exactly. They have a duty to maximise the value of your tax money, and the lcelandic banks were rated as tripple AAA investments and safe as houses ( untill about a month ago>? ). Most of the investments it seems were 3 or 6 month term ones so once the poop hit the fan they couldnt get the money anyway.

If the councils were sat on money earning little or no interest they would be accused of not maximising the value for the tax payer. They cant win either way.
 
Associate
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Some where, out there
The thing I find really anoying about this is that the BBC did a report in March warning about the fact that the Icelandic banks had loans out that exceeded Iceland's GDP by quite a few times over, this was then raised in the house of lords in July, yet here we are, in October, and the effected councils are going to start bleating about wanting government protection, then they should be prosecuted for financial mismanagement! The funds may have been given a AAA credit rating, but surely common sense says that if a countries banking system has loans out that exceed that country's GDP, then that can't be a good thing.

The even more annoying thing about it is that it's the taxpayer who will windup paying for all this, one way or another. There isn't any accountability for the people who made these dire decisions in the first place.
 
Soldato
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The even more annoying thing about it is that it's the taxpayer who will windup paying for all this, one way or another. There isn't any accountability for the people who made these dire decisions in the first place.

Advisor - like consultant.. 99% of them know nothing.

What people fail to realise is that the only 'wealth' the country has is is material assets. The remainder is built into the shuffling of debt around.

Inshort regardless of what the country do, there national economy has a big anchor pulling it down to davey jone's locker. The government assets in the form of gold etc will not cover it, hence the UK government has to remortgate the family jewels to raise the cash to cover the economic debt..
*if* someone will lend them the money.

Therefore banks are guilty. However without the banks doing this you would not get *any* loan and you'd have to save the capital first.. that includes your car, house, holiday or any other business loan too.
 
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Man of Honour
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The financial directors should have known better, they should all be sacked.

Why should they have known better? This current issue is not something that was to be expected or predicted, certainly not in the scale and spread of the problems.

What you had was a AAA rated bank offering high interest rates, without much history of risky lending (the Icelandic banks were not involved in sub prime to any real degree). The issue has been that their economy in that sector relies on a fairly constant flow of capital to them, which has previously never been an issue due to their high rates. The sudden, almost total, seizing of the credit markets has stopped that flow, and that's where the problem really started.

The only thing they may have been able to do was pull the money out a few months ago, when the signs of the potential trouble ahead became apparent, but you don't know the details of the accounts to know whether that was possible, nor where else they could put the cash that would have been safe, given the general turmoil in the system...

I know it's a very British thing to try and fix the blame, a better approach is always to start looking at fixing the problem first.
 
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