Hard-pressed Irish homeowners will find cold comfort in the news that Iceland is to write off €24,000 from every household’s mortgage.

Voters here are used to pre-election party pledges evaporating into the fog of fantasy but, in the land of frost and fire, politicians have proven they can be true to their word.

In April’s elections, prime minister Sigmundur David Gunnlaugsson said he would introduce sweeping measures to ease the burden of household debt.

And now he has put the country’s krona where his mouth is. The writeoff of €24,000 per mortgage will reduce household debt by 13% according to the government’s website.

According to RT.com, the government said the debt relief will begin by mid-2014. According to estimates, the measure will cost almost €900m.

That may seem like a slush-fund compared with the oceans of debt faced by many European nations, but bear in mind Iceland’s population is just over 320,000.

The population has been weighed down by debt since the financial crisis five years ago. The krona’s collapse drove borrowing costs much higher.

“Currently, household debt is equivalent to 108% of GDP, which is high by international comparison,” the government said in a statement.

“The action will boost household disposable income and encourage savings,” it said.

According to AFP, the debt relief promise has been met with scepticism, with the IMF, and the Organisation for Economic Co-operation and Development warning against it.

The IMF had previously said Iceland has “little fiscal space for additional household debt relief”, while the OECD had called for the mortgage relief efforts to target only low-income households.

What does this mean?
Are they taking money from the banks?
Are they using central banking measures?
Are they going to steal it through taxes?
Something else?
How have they performed this wondrous magic?

Reptired wrote: There's no reason something similar couldn't be done in Britain.

Admittedly, it would be a considerably larger sum of money involved due to the much greater population of the UK. But considering all the billions that are pissed up the wall on military-industrial endeavours and transferring public services to corporations, certainly something like this on a large scale could be done.

For example, British banks, mainly HBOS, received £37 billion of bailout money in 2008:

news.bbc.co.uk/1/hi/business/7666570.stm

I worked out when I wrote my book that this works out at just under £1,200 per taxpayer. One year before that HBOS made a profit of nearly £6 billion, and stated:

www.scotsman.com/business/finance/163-5-...ive-economy-1-683962

“Profit is not a dirty word. It is the fuel that drives our market economy.”

They actually didn’t describe it as a ‘free market’ there, that was something of an oversight, that’s usually the term of choice. The kind of free market where if you make £5.7 billion through speculation and exploitation it’s “good for the economy”, but if you make a loss the people you’ve exploited have to bail you out. That’s a good system, I’d be enthusiastic about that system if I was them.

So, for example, instead of bailing out HBOS, which only scratches the surface of the billions that have been handed out in bailouts, not to mention the plethora of other ways that the financial sector steals public money, every taxpayer could have been given £1,200 of tax relief. That’s just one small example, there are lots of more radical options open without even changing the existing monetary creation and economic system, which is the core of the problem.

@rep They lowered taxes not raised them. The money is no doubt coming from foreign creditors of icesave.