Thom Hartmann: Welcome back, Thom Hartmann here with you, broadcasting live from Reykjavik, Iceland. And with us a commentator, you know our last guest was a reporter. And kind of giving us the news. Let’s get into some commentary, some thoughts on the news. Egill Helgason is with us. He is the moderator of the weekly public affairs program on Icelandic TV and the link to his website and his program is all over there at ThomHartmann.com, you can easily find it. Egill, welcome to the program.

Egill Helgason: Thank you. Pleasure being here.

Thom Hartmann: Thank you so much for being with us. Your take on what caused the crash, how this whole circus happened, how did the banks, how did you end up with a handful of small banks owing, what is it 14 times the gross national product or something like that?

Egill Helgason: It is really a story of collective madness I would say, where everybody sort of got carried away by this bubble mentality. And of course everybody was getting richer in Iceland as well. We were reaping the benefits as a nation, we were buying houses and cars and SUVs and motor sleds and everything and people were, it was a ride, it was a hell of a ride. But of course, somebody should have monitored the bank, the government of course and the institutions of course, failed in that sense because they should have been looking at what was happening. And we in the media, we should have noticed. We were not doing our job well enough. So but it was a hell of a ride, and of course it ended in disaster. In a way it’s turning out better than most would have thought. Three years, now three years after, it’s, we could have had a, we could have gotten, the situation could have gotten worse. We didn’t have the soup kitchens or anything.

Thom Hartmann: Yeah but still you have a situation where you had these banks that were privatized just after the beginning of the 21st century, and then those privatized banks went nuts and started lending like crazy and feeding this whole bubble and then it crashed and then the privatized banks, and correct me at any point if I get any of this wrong, I am trying to super-simplify it. And then the privatized banks got sold to vulture banking institutions, I would refer to them, who said, okay we’ll buy it for 50 cents on the dollar, or 10 cents on the dollar in some cases, and then having bought this distressed asset they went back to the creditors and said, you know, we bought your 100 dollar loan for 25 dollars, but we want you to pay us 100 dollars. And so Icelanders are still, particularly property owners who had recently remortgaged before the crash, are still stuck with this enormous debt.

Egill Helgason: The problem is we really, we didn’t pay the, the government, we didn’t pay the banks. So the banks just fell into the hands of the creditors who could do anything. They could sell to then anybody. And somebody who came knocking and said I’ll give you 5%. Maybe at one stage this looked like a good offer. So at the moment we don’t really know who owns the banks. And it has been a disaster.

Thom Hartmann: You don’t know who owns the banks now?

Egill Helgason: No. Vulture funds, anybody…

Thom Hartmann: Could it be American funds?

Egill Helgason: Could be American funds, could be German, could be anybody, could be the old Icelandic financiers who were coming in through the back door.

Thom Hartmann: Holy cow.

Egill Helgason: These are two of the banks. The third one is actually government owned still. So we don’t really know. But…

Thom Hartmann: How is it not transparent?

Egill Helgason: Well it’s, this is just thinks, these are bank bonds, these are just things that are being bought and sold somewhere abroad. And we can’t monitor that. So it’s, and if you look at the state of the homes, the indebtedness of the homes and the companies this is not a good situation because they, we have this system of indexation of loans. So the loans really spiraled out of control after the crash and stricter measures would have been called for, would have been necessary.

Thom Hartmann: So there’s still a very real problem here.

Egill Helgason: There’s a very real problem.

Thom Hartmann: But yet at the same time, as you pointed out, Iceland is doing better than, for example, Spain or Italy. Why is that?

Egill Helgason: The government finances are in better shape. I think we got a fairly good deal from the IMF. The IMF did not ask us to cut the budgets as much as they are used to. They gave the government a bit of a leeway to save the welfare system.

Thom Hartmann: Could that be because the Icelandic people voted no in two referendums?

Egill Helgason: No, I think that in a way it’s because the IMF might have learned a hard lesson for Argentina from ACI and I think they’re just, they’re just different. The IMF is differently managed. And it has, so we got a better deal and the government and we have had a three years period of austerity but the government finances are in much better shape than they were. There have been cuts. But the problem is that the wages are very far behind from what is happening in Europe and in for example Norway and Sweden. So people are emigrating to Norway. The doctors are moving away, the technicians are moving away. Everybody who can find a job in Norway is moving away. And the people are left with these huge debts which spiraled sort of out of control during the crash. So that is the real problem, the wages have gone down and the debts have gone up.

Thom Hartmann: Right.

Egill Helgason: And we’re stuck with that.

Thom Hartmann: And yet you’re in better shape than Italy.

Egill Helgason: Yes I think we are in better shape than Italy because the government finances are better and we have more, for example Greece. I know Greece well, I travel to Greece. The Greek’s have nothing to export. We can export our fish, we can export our products, energy, and stuff, so we have, we are, and we have better ways of coping with the problems than many of the Mediterranean countries.

Thom Hartmann: You know, Adam Smith in his book “Wealth of Nations," 1776, laid out this what is now absolutely kind of accepted conventional wisdom that wealth is the product of human labor added to natural materials, to raw materials. That if you have a stick on the ground it has no value, no intrinsic value. If you add labor and carve it into an axe handle, it now has value that might last for generations.

Egill Helgason: Yes.

Thom Hartmann: And so what I think I just heard you say is that Greece doesn’t have the ability to actually create wealth. They don’t make anything, they don’t export anything. Which increasingly is…

Egill Helgason: No, it does not. I despair for the Greeks, I love the Greeks, I even speak some Greek. I go there every year, I despair for them because they have very little means of getting out from and the only way they seem to have is tourism and tourism does not prosper in a situation like we have in Greece now.

Thom Hartmann: Right. We find ourselves in the United States in a situation where we don’t make anything anymore. Our major export right now is gasoline and it’s, gasoline that we’re exporting to South America from you know imported oil from the Middle East and it’s very profitable for the transnational corporations and they’ve organized it so they don’t even have to pay U.S. taxes on it and we get the cancer from the refining process. It’s insane.

Egill Helgason: And of course the rich people they are utilizing this international system to move their assets away from the, from areas like Greece. And of course they’ve moved their assets away from Iceland and they still haven’t brought them back. So everywhere we have the same problems. It just manifests itself differently.

Thom Hartmann: What, you’ve been around the world and you’re a well known commentator, we’re talking with Egill Helgason who has a weekly television program here in Iceland, in Reykjavik. What advice would you have for Americans. I mean our banking system sort of collapsed, it’s certainly consolidated, arguably there’s hundreds of trillions of dollars in gray and black markets that are not on the books with CDOs and things that are still out there. A lot of us are of the opinion that this thing is still going to come crashing down and probably a lot harder in the next few years. What have you learned here in Iceland that we need to know?

Egill Helgason: Well I have just come from America, I was in the States, I go there a lot and I have the comparison. What I find frightening about America is how the class differences are being aggravated all the time. And I…

Thom Hartmann: By aggravated what do you mean?

Egill Helgason: How they are getting greater, the class differences and the way, walking the street in America and seeing all these homeless people, it frightens me. I always get this feeling of shock. And I feel that America is, it is losing its way. The financiers have taken over the society and we have this, for America it’s maybe a cliché, but we have this, we have to remember Dwight Eisenhower’s speech from 19, was it in 1960, about the military industrial complex taking over the society?

Thom Hartmann: Yes, 1961.

Egill Helgason: And now we have a cartel of financiers, big companies, who have taken over the country, have taken over American democracy. We look at the candidates for the republican nomination…

Thom Hartmann: Oh Mitt Romney is a financier.

Egill Helgason: And well the Obama government is controlled by financiers.

Thom Hartmann: That too.

Egill Helgason: And this is just, when you come from Europe… I love America. I find the place so fascinating, it is so dynamic and I find the people so wonderful. I went to a basketball game, with the Boston Celtics. It was fascinating. The people were so, the spirit of friendliness and sort of wellbeing there. I love being there. And I went to concerts. And it’s a fabulous society. But please, try to get rid of these horrible class differences that are undermining it. They’re poisoning it.

Thom Hartmann: Well they seem to have been exacerbated ever since Ronald Reagan dropped our top income tax rate from 74% to 28%. What’s the, what’s the average income tax rate here in Iceland?

Egill Helgason: It’s 37, I think, 38.

Thom Hartmann: For the average wage earner.

Egill Helgason: For the average.

Thom Hartmann: For the very rich?

Egill Helgason: Yeah it’s higher.

Thom Hartmann: How much higher?

Egill Helgason: Oh I’m not sure. We’re not as high as Scandinavia. Scandinavia is higher. But the Scandinavians, some people say that the key to the Scandinavian model is that people pay their taxes and they’re happy about it.

Thom Hartmann: Yeah.

Egill Helgason: And I, we’re sort of drifting away in the Atlantic. We’re not quite have the Scandinavian model. But you have to remember that we do not have to pay millions to put our children to school and we do not have to pay millions to insure ourselves and we do not have to pay millions to get medical attention.

Thom Hartmann: Right. So your social security system, your education system…

Egill Helgason: I think the Americans, they are paying more.

Thom Hartmann: Oh yeah, we are. And getting less.

Egill Helgason: They are paying more and getting less when it all adds up, you are paying more. I think we are paying less with this tax rate.

Thom Hartmann: Yeah, it’s remarkable. Thank you so much, Egill Helgason and the link is at thomhartmann.com. Thank you.

Transcribed by Suzanne Roberts, Portland Psychology Clinic.