An article written by Georg Brynjarsson, sourced from his University of California research paper in business:
After 5 years of the highest growth in the OECD area Iceland is facing the consequences of trying to build an international banking empire on the back of an economy of roughly 300.000 people with the smallest free floating currency in the world and an industry based primarily on fishing and aluminium smelting. The financial crisis in Iceland and the collapse of the economy was triggered by external factors – the international credit crunch – that had its origins in the subprime crises in the United States. Due to its high level of exposure to cyclicality in the international financial system, Iceland has been hit hardest of all OECD countries. The reasons for Iceland’s crises are however both economic and political. The origins can be traced in the final analysis to politics, or rather to the failure of the political system and Iceland’s political culture.
Economic/financial factors
The Icelandic economy is the smallest within the OECD, generating GDP of €14.5 billion in 2007. This is little more than 1/1000 of the US economy, 1/20 of the Danish economy, and 1/3 of the economy of Luxembourg. GNI per capita measured in terms of Purchasing Power Parities (PPP) amounted to 34 thousand US dollars in 2007, the twenty-second highest in the world and the fifteenth highest among the OECD countries. In comparison with the Nordic countries, Iceland’s GNI per capita is lower, but somewhat above the EU average. Historically, this prosperity has largely been built on Iceland’s comparative advantages in abundant marine and energy resources. More recently the main driver of economic growth has been services, in particular the financial services sector.
The domestically driven, foreign-funded boom lifted real output by over 25 percent during 2003–2007. Iceland allowed a highly oversized banking system to develop—a banking system that outstripped the ability of the government to act as a lender of last resort when troubles began in international financial markets. Three large banking groups dominated the domestic financial system (Glitnir, Kaupthing and Landsbanki). After the privatization of the banking sector was completed in 2003, the banks increased their assets from slightly more than 100 percent of GDP to being worth close to 1,000 percent of GDP.
By the end of 2007 over 50 percent of the banks’ assets were held abroad in branches and subsidiaries, principally in the Nordic countries and the U.K. This expansion was funded in global wholesale markets, allowing banks to overcome resource constraints at home but doubling their foreign debt. This dependence on wholesale market funding became a source of concern when the global turbulence in mid-2007 started and credit default swap spreads began to increase sharply.
The worsening of the global liquidity crises created unforeseen and ignored challenges that the banks were unable to overcome on their own. In particular:
- Liquidity ratios were comparatively high, but obviously not high enough to refinance short-term debt. Access to Central Bank loan facilities was therefore crucial for survival when international credit markets seized up. Those facilities were non-existent. Reduction or lack of such access required changes in the banks liquidity management strategy. Attempts at change were too little too late.
- Capital levels were above minimum levels, but below the average of the previous five years and did not provide adequate buffers as the crises deepened and market uncertainties about the strength of the banks increased.
- Foreign debt maturities of the financial sector were relatively short – concentrated in the period 2008–2010. They created funding risks as outstanding facilities would mature in a context of limited market funding and perceived counterparty risk.
- Asset quality concerns increased in the light of a slowdown in economic growth in Iceland and host countries, higher inflation, exchange rate pressure and a restricted supply of credit. Non-performing loans were rising and the banks were exposed to market risk through their securities holdings and collateralized lending.
When credit on the international market dried up the combination of these factors created the collapse of the Icelandic economy. In less than a week the three banks collapsed, the krona’s (Icelandic currency) value dropped by more than 70 percent and the stock market lost more than 80 percent of its value.
The astronomical growth of the banks took place in the absence of a solid legal, regulatory and supervisory framework. The Central Bank, the Government and the Financial Supervisory Authority failed to act and plan for worst case scenarios. The Central Bank did not build up foreign currency reserves to counterbalance short-term foreign liabilities of the banks, an incredible policy choice in a liquidity crisis. It was done in the name of independent monetary policy that aimed to keep the Icelandic krona stable (and highly overvalued) and fight skyrocketing inflation. It led to the highest interest rates in the OECD area, around 17%. It can be argued that had the Central Bank asked for IMF assistance last summer the worst could have been averted. It also remains to be explained why the Icesave accounts of Landsbanki in the UK were not transformed into a UK subsidiary as the UK government had requested. The dispute over deposit guarantees regarding these accounts held up an agreement with the IMF for weeks. The reasons for these policy failures have to be sought in politics.
Political / Cultural factors
The structural reforms previously mentioned aimed to increase the role of market forces through privatization, deregulation and integration into the world economy. This process was accelerated by the need to align the Icelandic legislative and regulatory framework to that prevailing in the European Union when Iceland became one of the founding members of the EEA in 1994. It integrated Iceland into EU’s internal market, making the free flow of people, capital, and goods and services a reality.
These reforms brought Iceland many benefits. The problem was, and still is, that Iceland’s political culture and the legacy of heavy state intervention in the economy had created a dangerous nexus of politics and business, exemplified by the adoption of the individually transferable quota system in fisheries. Its adoption was completed in 1990, before the economic liberalization policies were introduced. In essence the political elite decided to give selected fishing vessel owners fishing rights within the Icelandic Exclusive Economic Zone, a de facto ownership of a public good, free of charge. The stated aim was to increase efficiency and make the fishing companies stakeholders in the management and sustainable development of fishing stocks (that aim was reached, but could have been reached as well with a more equitable system). It also made a select group of people, the fishing vessel owners and their political sponsors fabulously rich. All political parties took part in this greatest wealth transfer in the history of Iceland and every political party got a cut. It was not an unforeseen consequence. It was clear from the beginning that this would be the result and the political elite got away with it.
The privatization of banks and state-owned companies was supposed to put an end to the cozy relationship between politics and business and make the division transparent and permanent. The government failed in that task, very much like the Russian government in the 90’s. The most valuable assets, primarily the banks, were handed over under market value to a small number of politically connected insiders who did not have much experience of running banks. The original aim of selling state assets to a diverse group of small investors and encouraging foreign access to the process was abandoned. That was a political decision with fatal economic consequences down the road.
It is not surprising that the political elite repeated the politicized fishing quota allocations when the most valuable state assets, the banks, were privatized starting this century. There are many similarities between the privatization of natural resources and state assets in Russia and Iceland. The privatized banks in Iceland were quick to buy media assets and use their ownership to create a favorable media environment and fight battles against critics and competitors. Both countries suffered from the same lack of an efficient regulatory and supervisory framework and democratic deficiencies. The Icelandic civil service has for a long time suffered from nepotism and political allocation of jobs. It has led to high level of incompetence. Talent and merit have not been the guiding principles in the civil service, except on paper. To demonstrate the danger of the high level incompetence is the misunderstanding that seems to have taken place between the Finance Ministers of Iceland and the Finance Minister of the UK. It led the UK to apply Anti-Terrorist legislation to Landsbanki and delivered the final blow to the Icelandic banks. Another example is the announcement by the Central Bank governor of a USD 5 billion loan from Russia, which turned out to be a misunderstanding. The credibility of the Icelandic civil service and political system plunged to new lows.
Iceland’s incomplete democracy has failed to create an effective division of power. Executive power has dominated legislative and judiciary power. Checks and balances have been weak. It is interesting to note that no verdict in the judicial system went against the state until the mid-90’s and is still a rare occurrence. In a mature democracy a former prime minister, lawyer by education, could not have had himself appointed as the head of the Central Bank without Parliament raising objections and without media criticism; that a veterinarian would become the Minister of Finance; that political leaders and their associates could enrich themselves through their own policies.
It is a telling fact of Iceland’s political culture and democratic deficit that neither the government, individual ministers or the Central Bank governor have resigned despite public pressure. They have also refused to assume responsibility for the greatest economic catastrophe in the history of the republic. 10 weeks after the collapse no official enquiry has been launched into the crash. The idea of an independent investigation led by foreigner specialist has been brushed aside. The government intends to investigate itself.
Conclusion
Causal relationships are difficult to establish in the social sciences, but an attempt can be made. The failure of introducing effective regulatory and supervisory frameworks led to an unsustainable expansion of the Icelandic banking system. The banking system’s failure to self-regulate can be traced to the lack of experience (and human nature; greed) of those put in charge of the banks (Iceland has not centuries old traditions of banking like Switzerland and Luxembourg). That structural weakness was increased by the failure of the privatization process when political connections became the unofficial guiding principles. That political interference was made possible by weak institutions, a relatively weak civil society and the precedence of the fisheries quota system that emboldened the political elite. The institutional weakness can be traced to an immature democracy with a history of heavy state intervention in the economy. That legacy made political appointments and nepotism possible and contributed to the incompetence of the civil service, making attempts at regulation and supervision still more futile. Nepotism is in many ways inevitable in a small society and has demographic roots, but a political culture that has failed to incorporate accountability as an ethic is not capable of regeneration when a systemic collapse takes place. That is in the final analysis a moral problem.
Georg Brynjarsson
Student at Rady School of Management
University of California, San Diego December 2008
Georg (at) georg.is
Iceland is a example for too big ambitions and too small background. What is not fine is that Iceland try to let other countries pay for it.
[…] East | Lebanon ‘immune’ to financial crisis http://www.nytimes.com/2008/04/18/bu…18iceland.html Origins of the current economic downturn in Iceland | IceNews – Daily News […]
An amazing story of gluttony, greed and pride – and the destruction of a nation. Living just outside New York city, I find myself troubled to think how much of this story matches what people like Bernard Madoff and the other Wall St. “genius” types did last October. Time will tell, but I have a sick feeling that this article is also a bit prophetic of things yet to come.
So, if this gets serious, can Iceland feed itself?
This is already serious, and im not sure it can
the government here belives that they can pay all those bn of $ by raising taxes on the 100k people who still have a job,
the government is now working on privatizing the remaning state ovned companies and institutions like healthcare so they are not focusing on anything else, this a golden opportunity for the Independance party, Ingibjörg Sólrún the foreign minister and head of the other government party samfylking is now having her brain opperated on for the second time in a few weeks beause of cancer
one could wonder if someone with brain cancer should lead the nation tru a crisis like this,
the person who takes her place when shes on the opperating table is Össur Skarphéðinsson
Geir Haarde walks over him with out even lifting his feet,
Vilhjalm Antonsen, Excellent analisys of the situation, thanks
Comment from Downunder, and a question.
A very interesting article.
Money backed by pink fluff (fiat money) is just a politician’s promise, seems to me. Banking and aluminium are on the rocks, globally. That leaves fishing.
So, if this gets serious, can Iceland feed itself?
(Typo corrected, apologies)
Comment from Downunder, and a question.
A very interesting article.
Money backed by pink fluff (fiat money) is just a politician’s promise, seems to me. Banking and aluminium are on the rocks, globally. That leaves fishing.
So, if this gets serious, can Iceland feed itself?
@Vilhjalm Antonsen
Thanks for your explanation, it is really illuminating. You are totally right that the icelandic government had no idea what to do when the crisis was coming and failed to make even the most elementary preparations.
Indeed icesave in the Netherlands was set up as a dutch bank, subsidiary to Landsbankki. BTW some more info on this: When icesave entered the dutch market dutch financial institutions (like I said) were very doubtful and imposed certain conditions. One of these conditions was that Icesave during the year 2008 was not supposed to attract more than 0,5 billion euro in capital. However, Icesave broke this agreement and by the start of the whole crisis, in october, already had attracted more than 3 times as much, some 1,6 billion euro.
I have read the wikipedia entry on the icesave dispute and what especially struck me was the tone of both Mr. Oddson (commenting at the beginning of the crisis) and Mr. Mathiesen in his conversation with mr. Darling. I can only describe this as a combination of arrogance and incompetence:
+++++++++++++++++++
Oddson:
That evening, one of the governors of the Central Bank of Iceland, former Prime Minister Davíð Oddsson, was interviewed on Icelandic public service broadcaster RÚV and stated that “we [the Icelandic State] do not intend to pay the debts of the banks that have been a little heedless”. He compared the government’s measures to the U.S. intervention at Washington Mutual, and suggested that foreign creditors would “unfortunately only get 5–10–15% of their claims”
crucial fragment from the conversation between Mathiesen and Darling:
Darling: Do I understand that you guarantee the deposits of Icelandic depositors?
Mathiesen: Yes, we guarantee the deposits in the banks and branches here in Iceland.
Darling: But not the branches outside Iceland?
Mathiesen: No, not outside of what was already in the letter that we sent.
Darling: But is that not in breach of the EEA Treaty?
Mathiesen: No, we don’t think so and think this is actually in line with what other countries have been doing over recent days.
++++++++++++++++++++
@Niels,
A good point. However, I believe the Icelandic government could established (even as late as last October) and Icelandic equivalent of the American FDIC, a separate insurance company backed by federal guarantees, which insures accounts up to $100,000 (it may now be $200,000). Thus most Icelanders would have preserved most of their accounts. Of course the British might have objected to this ploy as a method to evade paying for the Icesave accounts – but the advantage of such a move would be to leave most of the debts and assets of the banks in UK bankruptcy courts, where the foreign creditors (mainly the British and Germans) would fight over them. Credit swaps for the banks were trading for as little as 3 cents on the Euro in an auction last October. Why would this be? Perhaps because the bond holders involved in the credit swaps anticipated that the most logical course of action for the Icelandic government would be to let the bank assets be settled in bankruptcy courts, either in UK, Iceland, or Germany, and that assets would cover only a small portion of the debt, and that the remaining debt would not be assumed by the Icelandic government.
Similarly, the Icelandic government could also have guaranteed Icelandic mortgages (those not already backed by the government) up to a certain point, as is done in the US using the semi-independent insurance vehicles FNM and FRE.
The Icesave disaster could have been avoided if the Icelandic government had required the banks to set up Icesave as an subsidiary company, as I think was done in the case of the bank branches in Netherlands and perhaps Scandinavia.
At this time such speculations are of course useless. But the point is that the government had a variety of strategies that it could have pursued. These strategies would have been very complicated, involving bankruptcy courts in three or four countries, and negotiations with England and Germany and the EU. Whatever the Icelandic government had tried, the outcome could not possibly have turned out worse than the present situation, in which Iceland as a nation is liable for all the debt.
All this could have been avoided if the Icelandic banks and government would have looked for liquidity in the form of loans in countries like India or Germany, may be one or two years earlier, to be prepared for the worst. But the leading class in Iceland may have a tendency to live in a dream world and over estimate their abilities and expertise.
Because the Icelandic elite made too much money too easily, the common Icelanders following their corrupt elite and trusting them like sheep, allowing them to make unimaginable profits. The common Icelander being willing to pay inflated interest rates for houses and expensive consumer goods for years and paying artifically inflated prices on food for decades without a word of protest. This is unique. The greedy elite probably thought it is as easy to make money everywhere in the world but they were wrong about it. The real problem is not the people, the real problems are greed, arrogance and impulsive passion which culminates in weakness for sensual enjoyment, loss of mental strength and the inability to resist. As Oscar wilde once formulated:
“I can resist anything, except a temptation.”
All this could have been avoided if the Icelandic banks and government would have looked for liquidity in the form of loans in countries like India or Germany, may be one or two years earlier, to be prepared for the worst. But the leading class in Iceland may have a tendency to live in a dream world and over estimate their abilities and expertise.
Because the Icelandic made too much money too easily, the common Icelanders following their corrupt elite and trusting them like sheep, allowing them to make unimaginable profits. The common Icelander being willing to pay inflated interest rates for houses and expensive consumer goods for years and paying artifically inflated prices on food for decades without a word of protest. This is unique. The greedy elite probably thought it is as easy to make money everywhere in the world but they were wrong about it.
@Vilhjalm Antonsen
Excellent post and very good analysis but i have doubts about one thing you mentioned:
+++++++++++++++++
What is most sad is that the worst consequences of the crisis — saddling the entire population of the country with $20-30 of future debt — could have easily been prevented by a few changes in the corporate law that would have established the banks as corporations independent of, and without recourse to, the Central Bank, as was done in the Cayman Islands and elsewhere. If this had been done, the banks would have gone bankrupt (in Iceland and the U.K.) and the foreign creditors, such as German banks holding $20 billion of this debt would have been left holding the bag.
+++++++++++++++++
If this would have happened it would have ruined the entire icelandic population. After all, since foreign banks were not admitted into the icelandic market nearly every icelander has his/her savings with any one of these icelandic banks. Bankruptcy of all these banks would mean the total dissolution of all these savings and a total collapse of the entire financial system. By nationalizing the banks at least this has been prevented (for the time being) .
So basically the government could only choose between the following alternatives: saddling the entire population with a huge debt(as you correctly stated) or ruining the entire population at once.
SJÁLFSTÆÐIS-FOKK!!!
BURT!!
Exellent post Vilhjalm Antonsen.
An excellent analysis by Georg. I would characterize the problem more bluntly – what has destroyed Iceland has been rampant corruption, stupidity, greed and immorality among the crony business and political elite — corruption bordering on criminality.
I disagree slightly with several points (or implications) in the article. First, there wasn’t really much “real growth” in the Icelandic economy since the nationalization of the banks (from 2003 on). The banks grew only by borrowing, and this borrowed money filtered down to the domestic economy through (mostly) taxes and loans to domestic firms. So the growth was mostly debt-financed, not the result of greater output of real services and production. Any economy can grow at 25% if you throw free money at it.
Second, the article assumes that the banks fell due to unserviceable debt levels, lack of capitalization and liquidity, and the global credit crunch. The real culprit was very poor “management” of the banks (and by poor I mean “enormously stupid”). Nearly all their investments turned out to be poor ones. Most importantly they overpaid for nearly everything they bought. They borrowed money at relatively high interest rates and bought companies with relatively low profit margins (retail consumer stores), and companies most susceptible to contraction in slow-growth periods (brokerage firms, banks, airlines, hotels, fashion, etc.). In addition, these investments were relatively illiquid and could not be easily sold to raise cash as the crisis unfolded in the past year. In 2006 the banks went to the Icelandic government and demanded hard foreign currency, and lots of it, and after the Icelandic government refused the banks started the foreign consumer banks (Icesave et al) as a means to keep the Ponzi scheme going. This indicates that the banks were basically broke as early as 2006, only a few years after nationalization. It is clear in retrospect that the banks were little more than poorly-run, amateurish hedge funds, with the principal aim of enriching the insiders who ran them, partly by enormous salaries, partly by inflated stock prices of the banks.
Third, Georg does not mention the lack of an independent media (newspapers are owned by the political paries, or the oligarch businessmen), which might have partially prevented the problems from developing as they did had the population been properly informed of all the details.
The politicians were not directly responsible for the bank collapse but as the “facilitators” of this disastrous misdaventure they deserve an equal measure of blame. Their decisions have been almost uniformly terrible from first to last, starting with the expansion of the fish quotas and ending with the nationalization of the banks last fall. What is most sad is that the worst consequences of the crisis — saddling the entire population of the country with $20-30 of future debt — could have easily been prevented by a few changes in the corporate law that would have established the banks as corporations independent of, and without recourse to, the Central Bank, as was done in the Cayman Islands and elsewhere. If this had been done, the banks would have gone bankrupt (in Iceland and the U.K.) and the foreign creditors, such as German banks holding $20 billion of this debt would have been left holding the bag. Yes, it is true that various domestic companies owed a great deal to the banks and would “owned” by foreign creditors but this would have let the Central Bank basically intact, and the loss would have fallen on those who could afford it and willingly lent money in the hope of increasing their own profit.
Since the crisis several Icelanders (mostly living abroad) have correctly identified some of the broader sociological factors behind the collapse: a culure of dilettantism, where persons are put in postions for which they are not qualified; an inflation-mindset, where inflation and high levels of spending and borrowing are considered “normal” events; a lack of self-criticism and a reluctance to openly criticise others (common in small socities), which results in a general feeling of lack responsibility by anyone; and a very optististic view of the future, including a strong belief in good luck, that things will eventually turn out “ok” one way or another. One might generally characterise these traits as “self-delusion”.
But the most basic problem was the inability of Icelandic society to restrain its worst, its most immoral individuals. In any other western European country these persons would be sitting in jail on a variety of financial corruption charges.
If we look to the future, as matters stand now, anything of any value in country has or will be transferred to foreign creditors in exchange for retaining a basic but much reduced standards of living, with decreased health and welfare benefits, high unemployment and inflation, and so on, with many Icelanders emigrating. The general population of Iceland will be little more than economic rentiers or serfs for the next 20-30 years. Any real improvement would involve electing a leftist government, wholesale legal and economic reforms, including prosecution of the 150-200 individuals mostly responsible for the collapse, re-nationalization of the fishing quota, media reform, complete repudiation of the Icesave money, partial repudiation of the national debt (along the lines of Ecuador’s repudiation), no membership in the EU, and unilateral adoption of the dollar (with any reserves exchanged for euros).
I doubt very much that any of this will happen. Mostly likely, the Social Democrats will take over for the discredited Sjalfstaedisflokkur but will continue their general policies. What a shame.
in Iceland, we have an expression for this type of activity. it is called ´wild partý píka´
LYDUR, málið er bara að muna þetta og kjósa aldrei sjálfstæðisflokkinn aftur meðan við lifum, ég hef kosið þá alla tíð og skammast mín fyrir það núna, þeir hafa oft litið vel út á yfirborðinu og eiga eflaust eftir að gera það aftur en núna veit maður hvaða skítur er undir yfirborðinu, sami fnykur af samfylkingunni sem á ekkert gott skilið,
þessi grein er mjög góð
ég er þeirrar skoðunnar að okkur sé stjórnað af glæpamönnum, best væri ef við fengjum vinstri stjórn sem myndi framkvæma nýja rannsókn, sem myndi láta handtaka fjárglæframenn og þjóðnýta það sem þeir hafa svikið út og stolið, sama hver það er
eins þá sem tengjast málinu eða hafa aðstoðað þá.
@ Physchim62
Fully agree with your reaction. If Iceland would have fully adapted the EEA agreement not only (as you remarked) it would have been forced to keep its reserves at a certain level, but also it would have been possible for foreign banks to enter the icelandic market.
Off course the bankers maffia did not want this competition so they used the EU regulations that were favourable to them (like forcing other countries to accept the activities of icelandic banks in their own market) and ignored those regulations that were not in their immediate interest (keeping out foreign competitors).
When Icesave entered the dutch market, about one year ago, dutch financial authorities had big doubts but they had no legal means to stop it. Icesave appeared to fullfill certain minimal standards and thus it was not allowed to shut them out from the dutch market.
On the other hand , healthy banks from EU countries were not allowed to enter the icelandic market.
@ Mattias
I can relate to your comment. I always watched Iceland from a distance with a certain admiration, after all it seemed to be a model society with free energy and enormous possibilities. The fact that it could collapse so fast just amazed me. That is one of the reasons that I started reading this forum and visited the country last november.
BTW I still think Iceland has an enormous potential as a tourist destination. If at least the government would be able to give some more clarity on monetary matters I am sure more people would visit.
This is an excellent article. In fact, this is the first article I have read in Icleandic media that gives an accurate picture of the causes of the crisis.
I have closely followed the Icelandic crisis and I have some insights into the discussions that took place in international financial fora.
Although I have a lot of sympathy with the current hardship of the Icelandic people, I cannot understand why nobody took any action to avert the crisis. It is clear that the government, the central bank and the financial supervisory authority have acted with utmost incompetence for a long time. The crisis management was an absolute joke.
I was shocked that the government and the central bank took no action to improve the situation over the past year when it was clear to most people in the international financial markets that the Icelandic banking system had lost its credibility. My only conclusion is that the Icelandic leadership was too closely linked to the Icelandic “oligarcs”.
For a foreigner, it is incomprehensible that the government is still in charge as well as all other responsible civil servants.
I also find it very sad that Icelandic officials have tried to divert the focus of their own incompetence by making unjustified accusations of negihbouring and friendly countries. This is a shame, and I think that an apology is long over due. And it is a bit naive to think that Europe would immediately come to rescue, taking into account that Iceland has over the years shown a rather self-fulfilled attitude towards European co-operartion and integration.
I am actually a very close friend of Iceland, but I sincerely think that it is time for a more humble attitude towards the rest of the world.
Yes I agree that this article is very clear and true to the point. Most of what Georg writes here is well known to the population here in Iceland, but we were somehow not able to stop what was happening. The whole situation will be a nice example for students of economics to study in the future. Our big and traditional problem in Iceland is nepotism, which seems to me to have become a mafia system with the over-popularity of privatization in this country. We need help in this country with creating a more transparent and ethical political system.
@Lilja, the EEA agreement should have made much of the mess impossible: for example, had the Icelandic banking system (or failing that, the government) had enough reserves to covers its guaranteed overseas liabilities, the economy wouldn’t have collapsed so badly. The problem comes down to a small “Mafia” seeing opportunities in the EEA to make money (and lots of it) while ignoring the responsibilities which came with it. Given that the “Mafia” includes not only businesspeople but many leading politicians, disaster came.
There are several people for whom I find it amazing that they can still walk the streets of Reykjavík. If they had an ounce of honour, they would have already left the country out of shame for what the have inflicted on their compatriots. If they won’t leave the country, and can’t (yet) be sent to prison, they should be thrown into Þingvallavatn to see if they sink or swim, or simply shown the Atlantic Ocean to help them in their decision-making capacity.
HI MOM,
I DON’T UNDERSTAND, I POSTED A COMMENT HERE AND I DON’T SEE IT. WELL, MAYBE WAS A COMPUTER ERROR.
I LIKE THE ARTICLE.
Sorry to interupt but Gus is of at the moment,he needs to do his homework,but i will let him on later..Thanks
icelandbob – double the beer – and stop taking the anti cold medication!
Lilja – Hello – Of course Icelandic people are also victims. That is why I said ‘This is what your government has done for you’…. Perhaps I should have said -‘to you.’
You say it is difficult to resolve the present situation because of despotism – and yes, this is difficult for Iceland. The writer of the article, problems relating ‘nexus’ and ‘nepotism. Such issues are perhaps not so evident within larger populous and diverse nations, where “talent and merit” cannot be so readily displaced. He also states – “It is interesting to note that no verdict in the judicial system went against the state until the mid-90’s and is still a rare.” I noticed in an earlier thread –
https://www.icenews.is/index.php/2009/01/05/kaupthing-to-sue-british-government/#comments
Contributor – black jack 1, stated – “If you ask a british law firm to investigate to sue the british government ofcourse it will say no. Its their country they will be fighting against. I dont think law firms are that stupid.”
Well no. – The UK government are frequently subject to litigation by UK lawyers, and suffer their fair share of defeats. Again, this reflects what the writer refers to as ‘mature democracies’. However, black jack may articulate a mindset of Icelandic people based upon their own experience.
During the course of these events, and within these forums – there have been many acolyte Icelanders unquestioningly defending your ‘despots’.
My final comment relating to demonstrators having ‘coffee and a chat’ with Grimmson’ was simply a message that such tactics are unlikely to achieve the required changes.
This is a very good article writen by an Icelander to posted on the Hufftington Post on the 5th of Januar
http://www.huffingtonpost.com/iris-lee/iceland—-the-nordic-zim_b_155375.html
…. Oh and why aren’t we talking about the real Villan of all this?? Of course i’m talking about SPORTACUS!!
Lets’ bomb lazy town and spray pepper spray in that little kids face.
(note – i’m drinking beer and taking anti cold medication, but i don’t think that it’s affecting me)
Well written article – and as Pete from Ireland (above) wrote everyone living in Iceland should read this. Even the government should take a look at this, wonder if they could get by without fetching a dictionary. Nepotism and democracy fx. can (and seems to) be either to advanced or unknown terms for our leading politicians and “greed” still has not been understood by business men.
Icelandic business men and politicians are like magicians, really. They keep their mystery towards the audience by not speaking. They also makes sure that no one gets a look behind the curtains where they keep all their trash, wires, effects, exits etc. And if the magician is good enough at deceiving, the audience might try to figure out “why and how”, while the magician never tells.
[…] From Icenews.is […]
A link to bbcnews on iceland supermarket woolworths deal
http://news.bbc.co.uk/2/hi/business/7820981.stm
Thanks for this usefull information. I hope to read more in future.
Yes finally i think we all agree on this one !
A great article.
I want to draw attention to this Copied from Timesonline
Iceland, the supermarket group, also confirmed yesterday that it had bought 51 former Woolworths stores, which it says will create 2,500 jobs.
The Iceland supermarket chain is owned by Baugur Group
Aka Jon Asgeir Icelandic billioner.
Most of Baugur Group was financed and as i still beleive have HUGE debt to old Glitnir Bank.
Who is finacing this deal?
On a lighter note nice acticle for Lazytown fans
http://women.timesonline.co.uk/tol/life_and_style/women/body_and_soul/article5481294.ece
Excellent analyze George.
I want to answer Terry: “Read this and weep Icelanders. This is what your government and their cronies have done for you” We do know. And then he goes on “Understand that the UK was not the perpetrator but a victim of this Icelandic incompetence and corruption – together with Germany and the Netherlands.” Please notice Terry that it is the Icelandic people who are the victims along with the UK, Germany, Netherlands and Belgium as well as Luxembourg.
Pete from Ireland if you could read Icelandic you would know that the Icelandic people do not “stick their heads in the snow and believe the crap…” read Georg’s article carefully and you will understand why we can’t (yet) do anything constructive, one word ‘Despotism’.
Finally we could say that the EU legislation have a leak in it as this was made possible by the EEA agreement and with Iceland in no way prepared to cope with it.
Their alþingi is so small, they can swiftly pass any laws whenever they want, changing rule of the game in favor of themselves. As a foreigner working in Iceland, I feel very helpless with this. I hope they at least lift the ban on transactions between account of different currencies within the same person, so I can convert my monthly salary into euro, a more stable unit of measure for saving. Otherwise, they are just effectively making me to pay for those people who are in foreign currency debt.
It was very interesting article and so far a comprehensive analysis, for English readers, of the current situation and its causes. We are all angry as we are affected by this downturn of historic proportion. But one thing I think was missing that you have not touched upon the way forward from this mess- a way that take into consideration the demographic and social features of the society.
The first person you con, is yourself.
Þakka goda samantekt og þarfa.
Sjalfstaedisflokkurinn er ekki nema skugginn af sjalfum ser og okjosandi medan afstadan til kvotakerfisins breytist ekki. Haegri menn a Islandi thurfa nyjan valkost med nyju folki.
Kvedja fra Islandi,
LA
This article describes the view of many Icelanders, we must learn from this disaster and never ever allow the government to ignore our voices again.
Takk fyrir greinina Georg og haltu áfram að skrifa.
This is exactly what very many people are voicing in speech and writing here in Iceland. The discussions have, however, been mainly in icelandic and amongst ourselves. Confronted with a total collapse of this magnitude and the appalling immorality of the political class and cronies, we are gathering our forces and speaking out, in english as well.
Well done. At last a perspicatious account of what happened in Iceland and why, and written by an Icelander. That is cause for hope. This article needs to be spread and read throughout Iceland, and then the green shoots of recovery might appear. If they are not trampled down by the loony nationalists.
An excellent piece of work: bravo to Georg and bravo to IceNews for publishing it.
If I were to add a couple of points, in the same line as the general analysis above, I would
*lay less emphasis on the fishing quotas but more on the longer standing “import Mafia”, which has kept króna prices of imported goods so high for so long (especially by repeated devaluations of the króna)
*also question the huge increase in króna money supply in the two years before the kreppa (who actually benefited from this policy that flew in the face of the CBI’s inflation target?)
GENIUS! This is the best written piece I’ve read on the situation in Iceland. This article must be translated and printed in all Icelandic newspapers; it should be a MUST READ and test material in all Icelandic schools. When you finish your studies, Mr. Brynjarsson, please come back home and take over the Central Bank from the incompetent pompous windbag criminal who calls himself Sedlabankastjori.
This the best and most accurate short public analysis of Iceland’s fiscal collapse I have yet seen; it is reflective of much of the internal IMF debate that preceeded the reluctant decision to grant Iceland a loan and mirrors the conclusions already drawn by international observers. Well done.
Everyone in Iceland should read this excellent article. Bet they don’t though; they will still stick their heads in the snow and believe the crap their incompetent government feeds them.
Read this and weep Icelanders. This is what your government and their cronies have done for you
Understand that the UK was not the perpetrator but a victim of this Icelandic incompetence and corruption – together with Germany and the Netherlands.
Enraged Icelanders visit Grimmson for a coffee and chat – whilst Haarde trawles the world for a sympathetic legal system in an effort to pass the blame to others…… Such a sad situation.
Excellent review, although it could be summarised as “Iceland is governed by a Mafia”.
EXACTLY!! I think this has been so far the best layout and analysis i´ve read so far on the issue. E-mail it to all your friends. I do wonder if the “patriots” at indefense.is will put a link to this on their web page? I think not ;-)
Thankyou Georg for your highly illuminating article on this,the most tragic of Icelandic Sagas.
“Betrayal of a Nation” would have been an appropriate title.
It is not uncommon to have a few rotten apples in the political barrel….but,why does it have to be all of them?? Did their parents not teach them right and wrong??Did they have parents?? There is no morality,only amorality.I could not live with the shame.Lies and deceit from start to finish…bluff it out…tough it out….keep taking the salary….keep the expense account…..divert attention to Gaza….break off diplomatic relations with Israel because of your social conscience(Ha Ha!!)….but send your own country down the toilet without blinking.
How many people do you need shouting at you on your front lawn before you realise that it’s time to go??
Will somebody please drag this apology of a government into the street,because nothing else will shift them.
Only Vikings.
There are four animals led to slaughter in Iceland.The sheep,the cow,the pig and the population.Eventually,they are all fleeced,skinned,and gutted by the farmer.
As it currently stands it seems that little is likely to change, this is the disheartening part!