It is difficult to say with any certainty by how much the Icelandic krona will depreciate in value, if at all, when it is re-floated, according to Gylfi Zoega, head of the economics department at the University of Iceland. It is likely the currency will be floated before the New Year.
Iceland’s application for an approximate USD 2 billion loan from the International Monetary Fund can expect a final decision over the next few days, the Icelandic Prime Minister, Geir H. Haarde said in a press conference on Monday. In addition, the country also has hopes of securing a further USD 3 billion in loans from other countries. A USD 800 million portion of the IMF loan will be available within 10 days, if the loan is approved.
Gylfi Zoega believes that Iceland needs to do more than just re-float the krona. The government will also have to tackle money matters and government finances, he says.
“The Central Bank’s euro exchange rate is determined by daily auctions at the moment. Therefore, the official exchange rate is higher than where the krona is being bought and sold abroad. The euro now costs about ISK 210 abroad, but ISK 172 through the Central Bank of Iceland. That is to say, if those concerned get permission to buy currency. When the krona has been re-floated there will only be one market rate of exchange, meaning importers can get currency and exporters can bring the money they make into Iceland again.”
When the krona is floated again, its true market value will come to light, whether that is lower or higher than the current Central Bank rate. It will be important that the right price is found on the market with as little Central Bank intervention as possible – that is to say that foreign currency reserves should not be used, and that the country should use means to reduce the difficulties of private companies other than squandering its reserves to support short term unrealistic currency exchange rates.
Gylfi Magnusson, associate professor of economics at the University of Iceland says that claims which have been made on how to best exploit borrowed capital are still somewhat unclear and depend largely on what the Central Bank does in the event of too great a change in the value of the krona. The worst outcome would be for the Central Bank to use up its borrowed foreign capital in trying to defend an unrealistically high exchange rate. “That way, the capital could run out very quickly,” Magnusson says.
The Bank’s use of the capital with the aim of rebuilding trust in the Icelandic economy would be positive, and make the loans less expensive in the long run.
Olafur Isleifsson, economics lecturer at Reykjavik University believes, however, that the government should place restrictions on the exchange market, at least to begin with.
Some portion of the money should be used to pay off several complicated ongoing issues. Especially to address the severe need for foreign currency on the market.
Two currency markets have been running here, one being the daily Central Bank auctions and the other one outside the country. “That market can give the best picture of what the minimum exchange rate might be, the way things stand at the moment.”
A different perspective: Lilja Mosesdottir, doctor of economics says that the krona appears not to enjoy any trust abroad. Foreign banks flinch, for example, when asked to deal with Icelandic credit cards. Therefore: “I believe this loan must be used to maintain today’s rates,” she says.
(From MBL.is)
Jesus christ that doesn’t sound good.
sounds not nice to me. Kreppa out to get Iceland!
That’s right Koben, and you know who the scape goat is, the person that Icelanders blame more than their own banks, their own government???
GORDON BROWN!
Posters have appeared downtown in Reykjavik thanking Gordon for single handedly bringing down the Icelandic economy.
It seems, a good percentage of people up here think that it was BRITTISH banks that took hard earned Icelandic savings and squandered them…. how else could they come to this conclusion???
Gordon, if your listening…. finnish the job you aparently started and CLOSE THIS PLACE DOWN!!!
(I’m comin’ home baby!)
PS. I wont hold my breath on this getting posted – It wouldn’t be the first time I’ve been silenced for enlightening the world about the feeling up here….
I think the ISK against the Euro will be between 300/400 ISk=1 Euro.
stan:
I would not be surprised. I have no idea where the 210 figure comes from, its on the ECB web site but it obviously fixed as well (it was at 305 for over 3 weeks).
So I wouldn’t assume 210 has any relevance either. Yahoo and a few other sites report 285-329, but they don’t look right – maybe because of a complete lack of liquidity. Nobody is buying.
Well, i think it’s not sensible to let the Krona die and some efforts will have to be taken in order to strength it. The loans will be paid back in dolars too and if the Krona keeps loosing value, the debt will be higher and higher every time. In my opinion, a good portion of that money should be used to strength the Krona which will encourage foreign investors to operate in Krona in the markets. These transactions will strength the Krona at the same time.
“In my opinion, a good portion of that money should be used to strength the Krona which will encourage foreign investors to operate in Krona in the markets. These transactions will strength the Krona at the same time.”
Robbo, I can see your point and I really understand your intention to strengthen the Icelandic currency. However, if something like this is possible plan, it must really be thought through extremely well. If there is no confidence in the Icelandic currency it may well happen that such a move will not help either and that it just means burning money. And it is questionable whether your large nordic neighbours or the IMF will come to yur help then again.
Maybe there should really be talk about scrapping the independent currency altogether.
Money from (IMF + .no, .dk etc…) loans shouldn’t be wasted on supporting a poisoned currency. But rather supporting the “real” economy and refurbishing the banks. Instead they shouldn’t wait to switch directly to the Euro, the Dollar or the norwegian Krone.
I’m pretty sure, 300 000 people wouldn’t mind losing the sentimental value of having their own currency for keeping their beloved country head’s above the water.
But apparently, they have another point of view. I’m not an expert ok but I see how they handle the crisis and how devastated their decisions was and I suppose anyone come up with a “plan”.
A fair price for our MIGHTY icelandic krona is
………. 70 isk = 1 Euro
………. 58 isk = 1 USD
………. 106 isk = 1 GBP
The ironic thing is xmas 2005/2006 this was were it sat…
Back in the good old days ,when we could still afford holidays
Olafur Isleifsson, economics lecturer at Reykjavik University believes, however, that the government should place restrictions on the exchange market, at least to begin with.
How these people got their economics degree? With restrictions there will be no true market, and without true value, there will be no foreign currency available to iceland. I doubt that government and central banks can made decisions about who can buy EUR and who not. Reminds me of ex soviet bloc…
@robo
Well, i think it’s not sensible to let the Krona die and some efforts will have to be taken in order to strength it. The loans will be paid back in dolars too and if the Krona keeps loosing value, the debt will be higher and higher every time.
Robo, have you tried to pull yourself out of the water by pulling your own hair? It does not work. This is ridicilous idea – foreign debt can be only paid in foreign currency. Assigning monopoly money the value and try do defend it while burning foreign loans to make foreign loans smaller is totaly, I mean, TOTALLY stupid idea.
Hope that government does not have the same idea, although based on their track record, I would not bet on it…
It is like buying stock to prop its value, so you can sell it later for more – but as you sell it, the price falls again.
Well, my point is to try and get the confidence back to the Krona. I think that’s the only way if you wanna keep it. Have you thought about inflation? I don’t mean that we should keep the Krona but if we do, we have to strength it.
What will the Icelanders do, when they have used up the loans to defend their krona? Borrow more?
Using borrowed money to back the currency is the height of stupidity. I feel very positive towards Iceland and Icelanders, but if you waste money like that, you really deserve everything that’s coming to you.
Why not build a gigantic bonfire in central Reykjavik out of this borrowed cash, and set it on fire? At least it gives some heat and light for a while. Defending your currency gives neither.
hi guys iceland is between a rock and hard place they r facing the mother of all recession,the central bank will have to burn the midnight oil as they think of how to float the IS kronor which only a mad investor will buy with a long pole.Now is the time to dump the kronor and adopt Euro or Norwegian kronor,but Oddson and co.cannot revive this economy.
The loan from IMF should come with economic manual for this old fools in reykjavik.
fishy said:
A fair price for our MIGHTY icelandic krona is
………. 70 isk = 1 Euro
………. 58 isk = 1 USD
It was declared the worlds most overvalued currency
http://www.theglobalguru.com/article.php?id=97&offer=guru001
The real value was 158ISK/USD which is maybe 127/euro in 2007. Now, its probably fair to say it should be much cheaper than the dollar or Euro.
Yeh Fishy, I remember this Christmas…, so much to spend and to buy.
This Christmas coming, people will give grace to have their own hangikjöt!
And in midtime some fat Icelandic Pigs will enjoy a sirloin burger with the view of Central Park.
I remember also, strait after that Christmas the first premises of an implosion yet to come, beginning of 2006 Danish Central Bank already turning the red light to Kaupthing and other Icelandic banks. Their liability were concerned and the dept already unsustainable.
Magically, the Central Bank of Iceland gave the green light to Landsbankin with there own screw up plan: Icesave. And let the money flow once more…
Jón Asgeir at that time, clamed that is only ambition is to become the richest man in the world. Well, I hope he remembers his fellow Icelanders and that Baugur borrow up to 45% of Glitnir assets in loans…
I’m not forgetting either our friend form West Ham. So well connected with Landsbanki… Strangely, he starts to invest massively in England with the fresh pounds flowing to Icesave. Does some one knows how much he borrow from Landsbanki?
“David Oddsson mentioned also that one particular individual, probably Jon Asgeir Johannesson, owed thousand billion in the three banks and asks why that was allowed to happen. Geir H. Haarde says it is unbelievable that a situation like this can arise in the bank system that one man gets unlimited loans in three banks through many companies”.
This was today’s news translation by Newsfrettir.
How you can see, what I was talking about before seems to be not a problem for our friend Haarde.
“Using borrowed money to back the currency is the height of stupidity. I feel very positive towards Iceland and Icelanders, but if you waste money like that, you really deserve everything that’s coming to you.”
Especially as it is really doubtful that defending a currency like that would really work. Market forces are always more powerful than one central bank, at least more powerful than the smallest central bank of the world with an independent currency. Trust in a currency can’t be rebuilt like that, I am afraid.
Plus, the international reputation of Iceland would probably be disastrous after such an action. But it is of course for the Icelanders to decide what to do. Scrapping an independent currency is an emotional move but it may well turn out to be necessary.
fishy–”Back in the good old days ,when we could still afford holidays”–You folks can still go on holidays, but support your local tourism industry and holiday at home.
The ISK is a basket case. An overnight flit into the Euro or dollar would be the smart move and such a change might reduce the need for the loans.
For the ISK to work, one needs confidence in the economy, confidence in the competence of the management and a reasonable cashflow each way.
Currently all 3 are weak, especially the management issue. Iceland seems to rely upon the skills of the graduates of the 2 universities here (welcome to the land of the “I have an MBA (From Reykjavik)) and as you can see from the economist comments above, these Nobel prize winners in Chicago are not exactly shaking in their boots.
There are also significant issues with corporate governance and regulatory overview which might suggest that any current IMF funding may just be wasted.
An independent outside element of control might be warranted.
Some people here work for about 120000/150000 a month net after taxes for a 40 hour week .
Think about it 300 isk = 1 Euro.
Thats only 400/500 Euro 1 month
plus inflation on imported goods +200/300%…?
Even well payed professionals are going to stuggle with this.
Agree with Peter Deutschland absolute suicide to burn your loans from your friends the IMF etc to support the Krona go straight to the Euro (like Montenegro not in EU but has the Euro) would get rid of 18% interest rates, must be insane to have mortage denominated in in foreign currencies, at those rates whch seemed like a good idea at the time due to the central banks high interest rate policy which brought in the boyz with jap funds pushed the krona too high ,I have heard tales of €15 beers the krona was the worlds most overvalued currency, ps I hope to visit Iceland next year my €2000 will save your tourist industry !
Why is a true international market value for the krona a good thing ?
External investors will be wary of downside risk for all but the most distressed opportunities until the krona appears to be near a realistic value. Iceland’s “investment” visitors will simply be those looking to flip extreme bargains. A slightly weaker than deserved but internationally supported krona will be a signal to foreign investors who are genuinely interested in long term growth. It would seem to be in Iceland’s interest to promote investors rather than predators.
Assuming the market can eventually agree on Iceland’s current strength and the validity of an independent currency at all, the krona needs to be allowed to slide down now in a smooth and controlled process so that the market can sense the support level. The krona will probably need to slide a little further than its true value initially. First some semblance of international consensus needs to be achieved about the state of the economy and “new” fiscal policy. That can’t happen overnight. It will take demonstrable local realism and a lot of investor relations work.
A weaker krona will make life more spartan locally in the short term because imports will be expensive. The more realistically it is priced now though, the faster it should bounce up, based on fundamentals, rather than the central bank burning currency to support an unrealistic value initially.
Iceland is a great holiday destination and it’s hard to see how it will harm anyone to stay at home a bit more in Iceland. The long dark winter nights will also be perfect for Googling those newly competitive export business ideas.
Not an emotional matter to me, I don’t care what the currency is, the thing is, we have been robbed, disgraced and are going to be robbed again.
The robbed and disgraced thing has been done, the robbed again thing will be done tomorrow.
To top it off, people now want to join the EU.
Brillian, loose control of the natural resources, bananarepublic worse than ours, our greatest assets, I say it again, if our generation were the ones to go bananas, our generation is the ones to take the blame the the price, not the future.
The natural resources are for the future, not to be sold under someone else.
I Don’t live in Reykjavik area, I didn’t take any cheap loans, Iv’e been having recession for a long time, I thought I played safe, and I am angry.
P.S
Mr Darling Brown is just a part of the problem, but a very big part of the disgraced one.
To orchafine:
>>>>”David Oddsson mentioned also that one particular individual, probably Jon Asgeir Johannesson, owed thousand billion in the three banks and asks why that was allowed to happen. Geir H. Haarde says it is unbelievable that a situation like this can arise in the bank system that one man gets unlimited loans in three banks through many companies”.
>>>>This was today’s news translation by Newsfrettir.
>>>>How you can see, what I was talking about before seems to be not a problem for our friend Haarde.
I would take anything that David Oddsson says about Jon Asgeir Johannesson with extreme scepticism and vice versa. The two of them are well known enemies, and they have been battling each others (J.R. type) for years.
It is possible that the fall of Glitnir in the beginning of October, was a part of campaign to wrest the control of Glitnir away from Jon Asgeir which they have been fighting over for years. This was the reason behind that Jon Asgeir called the initial takeover of Glitnir “the biggest bank robbery of Iceland”.
This allegation is of course unproven (it is denied by David), but its an interesting side story that can possibly help explain certain things that happened in October.
About the 1000 billion in debt, this statement is also wrong on several levels, based on facts that are well known:
First, these are the debts of several companies, which are only partially owned by Jon Asgeir.
Second, these companies, including the biggest one Baugur, have major parts of their operations outside Iceland.
Third, large part of those debts (about half) are held by foreign banks, not the Icelandic banks.
Fourth, from what I understand before the crisis, these companies had been fully current on all their payments of those debts. One of the companies, Stodir is now in trouble, specifically since it was a major shareholder of Glitnir, which got wiped out in October.
It is true though, that high concentration of debt by few companies in Iceland, may have played a role in weakening the faith in the lending practices of the Icelandic banks.
Guess what! That should have been monitored, regulated, and managed by the Icelandic financial authorities, including the Central bank and its chairman, David Oddsson.
I just want to wish my fellow Icelanders a Merry Christmas and A Happy Prosperous New Year. God Bless us all. Time to reflect on what we have done in the past and learn from our mistakes and ask forgiveness for our transgressions to one another and to God in which we all forgotten due to our arrogance and pride. Let us face the reckoning with humility and strenght.
We clearly have fallen in all aspects of our lives.
I think the best idea for the icelanders will be to adopt the EURO without asking the ECB let`s say from the first of December 2008 on as official currency and drop the Krona.
Montenegro did so with their currency several years ago as they changed to DEM (without asking the German Bundesbank and later then to the EURO.
The reserves of foreign currency could be used for that change and possibly it is the last time there is any chance that icelanders have any influence on the exchange rate.
And in fact a currency backed by 300 Mio people is more stable than one backed by 300 Thousand.
STAN
So far Iceland has been more expensive for holidays than going to Portugal or Spain with the plane include.
Maybe now, with the rise of the euro Icelanders will stay home. About holidays, that will only happen if the prices don’t raise either. So far there are not even promises of salary races from the last quarter, not talking about the budget cut from the government and the private companies.
It will be interesting to see what happens…
I agree with the other German Peter. ;) And if Iceland has an emotional problem with the fact that they would adopt the Euro, they could still turn to one of its nordic neighbours.
andy J:
‘An independent outside element of control might be warranted.’
That’s what I feel, too. I mentioned this a couple of days ago. To me, Icelanders are hugely and impressively intelligent people, but it’s a just question whether a country of 300.000 people does have (can [!] have) the pool of outstanding experts which is demanded to deal with a crisis like this. I think when Sweden, Denmark and Finland finally may come to your help they should offer technical and professional assistance as well and possibly should even make some preconditions as to how their money may be used. I even take it that one of the reasons why Denmark, Sweden and Finland are still cautious about a loan may well be comments and plans like the ones quoted above.
These four large nordic countries are Europe’s most prosperous countries, but in a situation like this, in a world wide financial crisis like this they also have to take a very close look indeed whom they lend money and what is going to happen with this money. This is also something which they owe to their electorate.
blableh:
‘Mr Darling Brown is just a part of the problem, but a very big part of the disgraced one.’
Okay, I can understand that Icelanders are angry with Darling and Brown. However, the news of the past few days actually seem to imply that Britain’s assumption of Icelandic slight unwillingness were at least not totally unfounded. I think Icelanders are still in a situation which has been called by a scientist as ‘Schweigespirale’ or ‘spiral of silence’ (don’t know whether I got the translation right). By that I mean, there seems to be a public consensus that it is basically all Britain’s fault and if a consensus like this exists it is extremely difficult even for open-minded persons to challenge the assumptions of this consensus.
Frankly, I think the idea that the downfall of the Icelandic banking system is due to British actions is simply wrong. Yet it will probably take a lot of time until an open discussion about that will be possible in Iceland, I suppose.
Having said all that I would like to underscore Martels statement: I have very positive feelings about Iceland and Icelanders. It is actually the reason why I got involved in these discussions in the frst place.
Thanks Bjarni.
What about Bjorgolfur Gudmundsson? I know he invest millions abroad but he got also millions from Icelandic banks…
About our friend David Oddsson, nobody wanted him any more as PM, but he still found his way to stay in power by going to the Central Bank. I know he is a Politian and he was elected democratically and realized he did a lot for Iceland those last 15 years, but, at what cost?
Wasn’t his laws adopted just a powder gun fire? And a lot of them are also very dubious…
The only good thing he did, it is to try to stop Jon Asgeir from owning all Iceland. Still Iceland parliament could have been more efficient on this. In France and other countries in Europe, because of conflict of interests you can’t both cumulate plurality of mandates and own some kind of monopolistic sector.
I think here, we saw a big lesson how capital and megalomania can tide up the parliament and influence the citizens.
The role of the Government is to not let this happen, even if you have to live a bit under of your standards.
Theresa:
‘We clearly have fallen in all aspects of our lives.’
Sorry, but I don’t agree. Technical mistakes have been made, but Icelanders have not acted grossly immoral as far as I can see. It is a small peaceful country which is loved by their neighbours – inspite of current difficulties.
Twelve months ago very few have expected that a financial crisis on this scale could happen. The failure of Lehman changed everything.
Blableh
I understand you are bitter.
I think you need a break. Why don’t you ask to Ingibjör Palmasdóttir some time in her Yacht in the Caribbean?
Keep strong Man. There’s still worse times coming.
Well to clarify something. I have lived in Iceland for over 12 years and naturally my friends are mostly Icelandic. In general the public accepts that the Icelandic banks and government failed in their responsibilites. Furthermore, they accept that Icesave in particular was going to crash.
Their anger with Britian mainly seems to be that Icelanders as a nation were labeled as terrorists. In any manner shape or form this is not a term most people want associated with themselves. Much less in the worlds news media.
As far as paying the Icesave depositors goes, all my friends seem to think it is the duty of Iceland to pay, because the government of Iceland took over the bank. However, they do feel that it should be at the predesignated insured rate, not the entire amount that was in the accounts. If on the other hand the governement of Iceland had let the private bank of Landsbanki (Icesave) go bankrupt, then they do not feel they would have the responsibility to cover this losses.
I have already commented on one or two articles that appeared here but I have to admit I’m still amazed by the attitude of Iceland.
This nation of party-goers still wants the rest of the world to pay for their parties and shopping trips to London and Paris!!! Unbelievable…
If paying the Icesave accounts means national bankruptcy then that’s what it should be. The rest of the world cannot be held responsible for 300,000 lazy people that think we have to sustain their artificially high standard of living.
Tim, thanks for your comment. I do not believe that anyone actually noticed that the law that seized some Icelandic assets in Britain applied inter alia to terrorist states. At least not until the Icelandic government went wild about that. As much as I can really understand this reaction my guess is that it harmed Iceland’s standing more than the word ‘terrorist’ in the British Act that was used to protect the assets of British savers. Also, the facts that came to light over the last couple of days are not all supporting Iceland’s position.
But I agree, it is a very difficult topic. Coming from a rather small region with an extremely strong sense of independence in Germany (East Friesland – look it up, folks ;)), I can understand that Icelanders feel hurt by that.
‘If on the other hand the governement of Iceland had let the private bank of Landsbanki (Icesave) go bankrupt, then they do not feel they would have the responsibility to cover this losses.’
Yet that is what the EEA-law about the protection of deposits is basically all about. If such a guarantee is not honoured we get into trouble as the confidence of savers in many countries will be severely damaged. Iceland, the Netherlands, Britain and Germany will surely find a way to deal with this in a such a way that Iceland’s future will not be in danger. That is at least what I hope.
@ Bjarni: Good points! And Oddsson really seesm to be unable to see his won role any objective way. Which leads me to the qestion: Has that guy ever really accepted blame for anything during his carreer?
@ Peter: I agree with your concerns about a nation of 300000 having trouble coming up with the amount of qualified experts that are necessary to deal with the crisis. Well, the city I grew up in is of similar size as Iceland and I’m certain that the politicians and officials there wouldn’t be able to adequately handle problems on such a scale. It would be a good idea for Iceland to firstly be very careful in the future that single companies don’t get too much leverage on economy and politics again, and secondly to concentrate on the most important competences, and reduce engagement in fields that are beyond the capabilites of a small nation. Having a currency of its own is the first on that list. In a time where some hedge funds have stronger leverage (and more expertise!) than the Icelandic central bank, this simply can’t work.
And I agree that an objective discussion about the role of the Icelandic governments and officials and their UK counterpart will only be possible after emotions have substantially cooled down. This can take months, if not years.
@ Blahbleh It sure is comforting for you to live in your own small bubble, and to have made reasonable decisions that will guard you from the most dire impacts of the kreppa. But Iceland has grown too much, both in numbers and economically, to fall back into a purely domestic economy. Too many people depend on international trade, and their interests differ considerably from yours. Your kind of isolationism would hurt them. So don’t expect a majority to support your politic views.
Btw, folks, another one of my lame self-made jokes:
What do Icelanders get from letting the shit hit the fan?
Kreppa.
Yes, Peter of Germany, we are grossly immoral for not accepting our responsibilities to pay what we owe and living a high life off other peoples money. That is in fact arrogance not including state sponsored abortion which are killing our future generations who might save us from our own follies. We are doomed economically, morally, emotionally and spiritually. That is the undeniable truth whether you agree or not.
Tim 66North
Unfortunate Icelanders have been kept in the dark and fulling them self.
Like it was debate before under other articles, paying the depositors of Icesave is just a legal manner and an obligation. Landsbanki and for any other bank, being part of EEA, have to honor the EC/94/19 Directive.
If Iceland want to keep this so called hypocrite law about Business Kenitala (social secutity number) and allow companies to wipe off their creditor tab by simply getting a new Kenitala, this will not be tolerate with UE creditors.
In my opinion, what Icelanders don’t see, is why in hell, Iceland Central Bank (again our friend David) gave the go-ahead to Britain Central Bank with the Icesave? While everybody knew the shaken situation of Landsbanki. If this could go to court, not only Icelanders will see the scam which has been going on and the real villains will be punished.
Pablo
I understand your point of view and your hate… But here, you are just teasing the fire.
No constructive debate will come out of your comments.
Theresa, I admire your refreshing crtical opinion. Imho much more Icelanders should be criticalof the policies of their government. Simply taking unbased optimism and and self congratulatory speeches at face value will lead into trouble again, soomer or later. But don’t be too harsh with your people, especially with their ability to get the nation on the right track again. Other nations have had even more dire setbacks in their history, and managed to overcome them with hard work and a focus on the essentials. In such a situation, spreading negative views like “we’re doomed!” isn’t really helpful, and bears the danger of becoming a self fulfilling prophecy.
Don’t forget, in a time of crisis, when material resources are scarce, what’s essential for a fresh start is qualifications, work ethics, and, let’s be honest, a good amount of stubborness. Well, it seems to me that Icelanders are well equipped to manage a comeback.
“That is the undeniable truth whether you agree or not.”
The core problem with faith ;) .
“Their anger with Britian mainly seems to be that Icelanders as a nation were labeled as terrorists. In any manner shape or form this is not a term most people want associated with themselves. Much less in the worlds news media.”
The terror title was applied to Iceland by the Icelandic government and media.
Its an excellent piece of propaganda by the perpetrators of this banking scandal to deflect blame and criticism away from them and onto the wording of the title of a UK banking law.
Blame the victim, the British.
“As far as paying the Icesave depositors goes, all my friends seem to think it is the duty of Iceland to pay, because the government of Iceland took over the bank. However, they do feel that it should be at the predesignated insured rate, not the entire amount that was in the accounts.”
Yet again, another example of Icelandic government propaganda. Even an British man in Iceland falls for it.
All that the EU required was that Iceland paid its legal requirement of the deposit guarantee. They have take six weeks to agree to what they have to do by LAW.
They would have to pay the deposit guarantee REGARDLESS because it a direct guarantee between the deposit scheme and the depositors. Iceland chose to bypass the UK deposit scheme to make bigger profits (even knowing the precarious situations their banks were in in 2006)
NOBODY demanded they cover all deposits, just what the Icelandic protect scheme guaranteed.
Totally agree with Pablo. But I would say it in a more respectful way. I don’t wish anyone the bad.
Icelandic society really needed this to happen. I have been here for some years and I have seen how the most of this people looked down to foreigners working here. Endless talking bad about polish people, among people from other nations. And you see now that Poland is one of the first nations to come to help this country. BIG SHAME!!
Someone said ‘no man is an island’, I say ‘no country is an island, not even Iceland’. Retrograde societies easily forget that they depend on other societies for many reasons. For the majority of icelanders will be virtually impossible for a long time to buy computers designed in california but assembled in china, shoes of italian design, holidays in Spain, etc.. etc…
It is not enough for a country to have natural resources. It also important to have brains who can convert those resources into money. Foreign experts have significantly contributed to the development of this country. Teaching at universities, working in different companies… Icelandic educational system is not modern enough, not sufficient in most of it areas to produce the well formed professionals for further economic development. Foreign high skilled workers have been the first to leave. This happens because icelandic wages are the lowest in Europe.
Iceland is not suffering an economic crisis but an AUTHENTIC RECESSION, what is happening here is even worse than what happened in Argentina and Uruguay. And believe me, Uruguay and Argentina were the Switzerland of 30 years ago. Argentina is such a baste territory, with huge resources. But because of the brains flow, that country will never recover again, at least not before 30 or 50 years more.
What Icelanders should know is that this country is not going to get out of this in two years, but at least in two decades. It takes a long time (and money) to put things right. Iceland has no money, nor time.
As argentinians some years ago, icelanders have been taken around by traitors of their own, who have thought more about making themselves rich by using their national equals. I can remember all those news on TV during last years: “We icelanders are so rich!!! Millions here! Billions there” I remember that ****** guy telling me at a bar: ‘ We icelanders are so rich!!’ I did not know what to say because that guy was a poor student, who just bought a car he could’t pay, did not have any job, had taken loans to study and well, was in debt up to his ears… I just asked him: ‘How much money do you have in your bank account?’ Well that guy did not even have one euro. I have met so many persons like that in this country… so many of them. Driving luxury cars and living in fancy houses, showing those houses in design programs on TV. But they did not work for anything of it! It was just all borrowed, they don’t own a single thing in there, it was all borrowed!!!
And then you could see those simple foreign workers, living in small houses, eating at home to be able to save something for the future. Getting the worst paid and nasty jobs of the market. Working endless hours just for the half of an icelandic could earn ( most of the times with less education and skills)… In the meanwhile icelanders were going out to eat, on their expensive cars and wearing their expensive clothes, drinking and singing in Laugavergur, looking down any foreigner they met on their way…. BIG SHAME, because all of that was artificial, they did not work for having that much… Icelanders need to work, hard, and learn what is to have a simple life, save money and understand that all human beings deserve respect.
Theresa/ ”judge not least ye be judged’. Basic Scripture from ‘big guys’ book. As long as every Christian pays the churches 10% tithing, ‘big guy’ will bless you.
Gus,
Jesus, man! You made your point, bit extreme, but still.
If at least Icelandic journalist will have the guts to publish those kind of views, Icelandic pride will vanish quickly.
While I hope that Iceland’s kreppa won’t be as bad as Argentine’s recession (even the IMF has learned something in the meantime), I can understand Gus’ feelings. Yes, it must have been hard acting responsibly, following a reasonable plan for the future, while Icelanders where partying as if there was no tomorrow. And then even to have them look down on you for being a foreigner and not joining them in their dance around the golden calf! Not nice.
Imho a very important story, because it shows that there was another side to the glittery, easy-going fascade of “successful” Iceland. There’s a lesson to be learned in it.
@Julia Set
Why is a true international market value for the krona a good thing ?
Because iceland needs foreign currency to finance imports. Currently, they are burning through what they have left from that bank fiasco.
The alternative to floating krona is the government control of foreign currency – with government forcefully taking foreign currency from those who export (forcefully = at designated exchange rate) and giving to those who import. This also means that the government decides who gets how much foreign currency, which is a situation which cannot last long in democratic western country.
It is natural that people who export (e.g. fishermen) would like to have as much krona for their euro as they can get. If they can sell euro on international market for ISK 400, they will, unless government forbid them and takes eur avay forcefully at for exammple ISK 150.
Now, imagine – currency controls (the only alternative to floating currency) would harm the most the industries the iceland really needs to dig itself out of the hole, since they would be forced to subsidize everyone else in iceland. And that’s bad.
Of course, “middle way”, administrative fixing of exchange rate is even more ridiculous as it seems at a first glance. If you say “1 EUR is worth 150 ISK and not a krona more” the foreigners will say “fine, come back later with better offer” and shut the door. Which is happening right now, as iceland is burning through its foreign currency reserves at too low exchange rate, at which not a single euro will come to iceland.
Isn’t iceland suffering from “Napoleon complex”?
Icelanders want so much to be (have their place) on the “world” map.
“In Iceland we have the biggest fireworks in the world!” “In Iceland we have the best water in the world” “Icelandic women are the most beautiful women in the world”. In Iceland we have this, that, etc…
“Icelandic women are the most beautiful women in the world”
Ok, imho they may have a point with this. Maybe not the “most beautiful”, but certainly high in the ranking. However, it’s all in the eye of the beholder, of course.
# Gray
We will see how beautiful they REALLY ARE when they can no longer afford to buy make up, fake tan,trips to hair studios /beauticians and designer clothes.
Then only the natural beauty can show…
In all my conversations with Icelandic friends and colleagues, I have yet to hear one word of sympathy expressed for the foreign investors and account-holders who have been effectively stripped of their savings; nor have I heard one word of regret for the near-criminal behavior of the banks abd governing authorities as it pertains to the losses incurred by foreigners. Icelanders look inward and seem to have little comprehension of Iceland’s responsibility to act as a good member of the international community. Yet these same Icelanders complain bitterly that their “friends” have betrayed them and failed them in their hour of need. There is a massive disconnect here that only further damages Iceland’s standing in the wider world. I can understand fully, for instance, the cry of Poland in the face of foreign invasion; but Iceland has invaded itself. It must demonstrate its capacity to take responsibility for its own actions before it can recoup any of the respect it has thrown away.
actually i believe it is more accurate to say that icelandic women are the most “beautiful-est” women in the world…
Suomi
That will never change until they release a fair debate and most importantly, a free media.
I said before: “in Europe, because of conflict of interests you can’t both cumulate plurality of mandates and own some kind of monopolistic sector”. You can add to that the Medias.
I mean, so far in Iceland, the government had a channel (RUV) and newspaper (MBL). Then, there was this guy who already owns half of Iceland financially, who bought the rest of the Media. How fair is that to get legitimate information.
From one side you get brain washed from the government, and from the other you get brain washed by Bónus, Hagkup, Kaupthing, Glitnir… All the companies connected to the Saver Jón!
Suomi,
anecdotally it would appear that people have heard different things from different circles of icelandic friends.
Most I know would be different to yours but similar to Tim 66 North as he wrote earlier.
But in general, your points have a good deal of validity and could not demonstrated better that the dellusional arrogant speech by the respected Iceland president in Denmark.
Icelanders have in general got differing silly superiority complexes, but so silly as to be comically absurd.
Deeper down there is a big inferiority complex, a fear of being wrong, a need to be seen to be perfect, a pathological fear of apologising in case it would be seen to be admitting a shortcoming.
The main duty of foreigners who have coupled with icelanders is to radically improve the gene pool for the future generation :)
There are also not many people holding their hands up around the world saying mea culpa,
But considering how very early this year, the Finance Minister, the Banks and the Central Bank on 2 specific occasions were sat down in a room together and told by invited economic experts in the clearest terms using unambiguos language, what was going to happen, how it was going to happen, the extent of the damage from that and how it was unavoidable that it was all going to happen.
They even explained step by step how it was going to evolve.
As each step came to pass what did they all do – stick their heads deeper into the sand.
In order to do that, as successfully as they managed to do, takes the highest form of arrogance.
And now the same bunch of people are expected to act differently as if they have learnt the lessons :)
orchafine-You do not have Satellite tv in Iceland?I am in the 3rd world, on an island, and have an out toilet, but I still have satellite tv. Maybe you need more excuses ‘Icelanders were tricked by the gov media and the rich man woe is me woe is me me me me me. The world, even our on gov, is against us woe is me me me me—-
orchafine, who is Saver Jón?
RUV is owned by the government and 365 media is owned jon Asgeir Johannesson, it is fair to say there is alot of competition between them, if one would start telling lies, the other one would be sure to let every one know, there is also a thing called the internet where people can go to get information, every one knows this, including our newsmedia.
To orchafine:
>>>>What about Bjorgolfur Gudmundsson? I know he invest millions abroad but he got also millions from Icelandic banks…
Just like everyone else that takes on debt, he and the companies he owns should pay the loans back according to the underlying loan contracts. If he does not he and his companies should be declared bankrupt (some of them already have).
The same goes for Jon Asgeir.
Quality discussion here. Really.
ISK could be a completely valid currency, but for that to happen, the central bank and government would have to act in a responsible way. Judging from inflation (not just the current inflation, but over the years) it seems the central bank has been eager to print money, and the government (you the people…) has been eager to spend it. This is not the way to create a stable currency.
The ultimate currency for Iceland would of course be the gold standard, but I’d guess it is in many ways off-limits and also unpopular amongst the politicians, because they would have to curtail spending. So, the options are EUR, NOK/DKK or continuing with ISK. If the latter is chosen, one should be prepared to see the pendlum swing too far momentarily, just like “Julia set” outlined.
Looking at the prices of real estate in Iceland, I don’t see support for the current exchange rate. The same applies also to e.g. Latvia and Estonia, so you are not alone. If the correction is achieved through floating ISK, the prices might be in line very soon. If ISK is abandoned for EUR, the correction will happen over time, through lower local prices. So the choices are between abrupt and gradual pain.
Julien “Isn’t iceland suffering from “Napoleon complex”?
Im sure we are :) but you should come here and see for your self, it will be your best vacation ever.
We will float the Krona this year, and without any support, ofcourse it will fall
we cant do anything else, lets just hope it finds ballance soon, on its own.
To Martel:
It makes certain amount of sense to switch to either EUR or NOK/DKK, rather than trying to keep the ISK afloat. It is clear that trying to float again the ISK will be very, very expensive, and its not certain it will ever gain full trust again outside Iceland.
Taking up either EUR or NOK/DKK will be very difficult without an explicit support from the respective central banks.
The ECB and the EU are already on record that they will not support this without Iceland joining the EU, and in any case there are number of strict conditions (stability, low deficits, etc.) for taking up EUR, that in the current situation will be almost impossible for Iceland to fulfill.
Taking up or pegging to the Norwegian krona (or the Danish) is definitely an interesting idea. But again this would need support from the respective central banks and their governments.
There are really no good options readily available for Iceland, and in the end this will have to be decided politically by all the governments involved.
STAN >>> “You do not have Satellite tv in Iceland?I am in the 3rd world, on an island, and have an out toilet, but I still have satellite tv.”
This was a good one. An Icelandic answer will be: satellites are only for Poles.
Since I am not totally Icelandic and embrace the influence of other cultures dear to me, I will say I have internet and I have been around.
I thing the main message here for Icelanders and even other nations marginalized by their government, is to be aware of your environment. It is like shopping without being worried if you have money in your credit card. It will unconscious to keep shopping like that, wouldn’t be?
I believe the same goes with your government. If you don’t have a minimum of interest in the things going on in your country, then you are fulling your self.
Axel >>> “orchafine, who is Saver Jón?”
Jón Asgeirs, in a “propaganda” way, was published 2 weeks ago as a Saver by his Media.
Before 365 and much before Vísir, I was talking about Fréttablaðið, DV, Skjárinn, Stöð 2…, mostly all the Media. In that time, the same Jón owned in his hand the big banks and without any awareness of the citizens.
The government being tide up since 15 years by economic pressures and a large favorable opinion of the “New riches” just played along. As far as I am concerned, it would have been simpler if “Saver Jón” would have been ahead of Iceland.
Bjarni >>>” he and the companies he owns should pay the loans back according to the underlying loan contracts”
What I am trying to show here, is strangely the loans they took in the specific timing allow, per instance Gudmundsson, to take over companies which after owned part of the bank him self. I mean, he and his family don’t they own up to 52% of Landsbanki…?
About Iceland taking DKK, I really would like to see this one happen… Knowing Iceland pride they will prefer to through them self to the see than go back to 1944.
Knowless
“The main duty of foreigners who have coupled with icelanders is to radically improve the gene pool for the future generation :)”
This is by far the dumbest statement i have ever seen written.
I wonder where all the hate foreigners say they get comes from.
there is nothing wrong with wanting to be perfect
and to try to be on top, if you want to be like a broken and beaten dog, its fine by me
we can and will do grate things in the future
its not in our nature (genes) to give up, so dont expect that,
dont expect me to be humble or ask anyone for forgiveness, none of this is my fault
i have lost a lot of money myself for the same reasons as every one else,
the rules all banks operate by need to be changed
the absolute freedom they have had in the past is not something we will see in the future,
but if you need to stumble around in darkness babling some nonsens and blame the Icelandic public for this, feel free
Hello,
i just went to iceland last summer. First of all a amazing country. But now the crise in a way a thing that was clear to happen.
Example – i am a german when i was talking to people about my payment in germany they were just laughing at me and told me that they would npt work a minute for that money.
That made me really pissed.
How the polish were treated i couldnt belive how arrogant icelanders talked about them.
That cars and all what i have seen everything based on credits – what a story.
And now to blame britain for everything. Hey people in Iceland you had a great party now please start to pay for it.
Till now EU was the biggest shit for you and we should get you out of the shit now. Notice also poland and romania are memebers. The people that you treated so nice in your country.
I wouldn’t let Iceland get into the EU, they just don’t deserve it!! Foreigners in Iceland ( the ones who are still here thinking about how to abandon this sinking boat) Have many stories to tell about how icelanders have thought of themselves to be the best among all other nations. What a complex of inferiority!!! I don’t need to boost myself steam by making others feel less and treat them as less. That is what icelanders have been doing in all contexts, from the banks, the companies, the politicians, the people on the street… Even young people, who I supposed being modern and open minded, possibly more human… But not, even they, treating young people from other countries like if they were coming from other planet… The economic recession is something this society really deserves!! They just don’t want to accept this is happening to them, and they are turning into one the poorest country of Europe, just like Poland or Romania, or whatever eastern country… I have met people from eastern countries here and they are very human, they put themselves at your level, no more nor less… To be the best is not about being better than others, it is about being better than yourself and try to be the best you can be.
To say more, if you only knew how many icelanders think of themselves of being of a pure race… among other human beings… LETS MIX!! Lets grow together, learn, share, etc… The strongest factor in human evolution is intercultural relations. Icelanders write on paper that was something invented in china, use numbers of arabic origin, learn greek philosophy at the universities, etc, etc,,, still they look down at the rest of the world. They don’t really deserve our help. But lets help this poor (spiritually, intellectually and economically) nation. And lets hope that future generations will learn to be more human. Being a poor country is going to help them gain some humanity. I see the children playing on the street, they are really so lucky, because they will have the opportunity of growing up and become human beings, not something that is between the neanderthal and a nazi concept of racial-cultural purity. Because now that the icelanders have no richness to talk about, and their loosing their jobs, houses, everything, is when they will start to value other things…
oh! and I forget! Drop the króna!! the sooner the better… I think the króna will be something around 300-400 isk=euro and 200-300isk the dollar starting soon in December and throughout the next year.. It could happen that it could get stronger in 2010 or 2011, but really, forget about seen it again as it was.. It will take decades for Iceland to get out of this, everyone knows that.
ISK is too expensive for Iceland to afford. Fee convertability will bring a 4ooBn ISK outlow from foreign investors (no confidence in ISK ppolitical management). Icelandic exports …..fish and Aluminium power amongst others. Banking services…..that one is over. Icelandic arrogance is no different from any other cultural superiority and I am a UK citizen who lives here. I would say that most Icelandic people have not quite worked out why and what has happened, but when they do work it out ….
I would guess that the media really are not displaying the level of agression and independence that one would see in the UK or USA because Iceland believes itself to be a small place where everyone knows everyone elses business and everyone is honest. (this view may change radically)
Re