It is of critical importance for Iceland to improve international relations and increase its credit rating. So says Gylfi Zoega, University of Iceland economist, adding that the government seems to be burning bridges in its wake with regard to its relations with international financers and other nations. Without foreign capital, he says, there is no future at all for Iceland.
RUV television news reported that Gylfi believes the government has become increasingly inward looking since the banking collapse last October, at the expense of important international banking and trade – although it is certainly important to protect homes and businesses domestically.
The economist says that international trust in Iceland is at a real low and the country’s access to international investment is likely to be next to zero for years to come. “Whether it will be five years or ten, nobody knows,” he says. “But without it there will be no future. Nothing happens in or around countries that have no access to international banking and investment.”
Gylfi told RUV that the conditions of loans to Iceland are generally too harsh and inflexible, leading to a possible worsening in trade and international reputation. That means that Icelandic savings will more or less go into the national treasury to pay them off. Gylfi therefore believes that without international investment, there will not be enough cash left over to rebuild the economy.
Foreign capital for Iceland? Not bloody likely.
Last week there was an article citing an EU report that said that losses by European banks will total about $25 trillion (2x EU GNP), and that in order to save the banks Euro governments will have to come up with that enormous sum, mostly from the Euro Central Bank (ECB). The result would be that the ECB will have to become a welfare agency for the Mediterranean governments, Austria, Ireland and so on. The Germans, the piggybank of Europe, will revolt, however, and that will be the end of the euro. Some predict that the Germans will get out by 2011.
So there may not even be an EU or a Euro by the time Iceland plans to join, much less foreign capital to invest in untrustworthy, corrupt Iceland.
Iceland’s best solution is to pay as little as possible, or delay all payments as long as possible. Promise everything, deliver nothing. In three to four years, maybe everybody will be defaulting on all debts.
If this was correct quotes from “professor” – them I have to say “OMFG!” only.
Investors don’t care what governments are saying or how polite they are. If there is a chance to get your investment back in one year and with 50% return rate – but in North Korea – investors would jump there without a second doubt.
It’s only about When and How much. The government’s actions are just one of the risk factors – among others. But not more important that volcano or tsunami chances. And for sure Icelandic government’s actions are much more predictable and much less destructive then volcano/tsunami/North Korea…
So my point is – the professor has very little idea WHY economy works.
PS. And agree with Vilhjalm – no need to rush paying back. Let’s wait for a while. At the end it might me that Iceland owns less then others. We simply haven’t seen the whole picture yet.
Keep dreaming :D
WOW, I have read some misled and ignorant comments here before but the first two on this list are astounding!!! Great idea, Wait and See, let’s think about this, oh, your house is burning let’s Wait and See if it stops on its own or maybe it will rain. Really guys, I am open to people expressing opinions but if you are going to suggest something that is both unethical and foolish……well, I guess that is your opinion.
There are corporations with more employees than Iceland has citizens. If the government uses their resources wisely to rebuild the economy, through internal investments to create jobs and stimulate this economy, they can rebound very well. If they try to force this ridiculous exchange rate they are setting on this island, and try to exclude foreign capital, they will be saying goodbye to the good life for many years. The choice is theirs, I hope they make the right decisions and invest wisely, if not………………..
Iceland, don’t wait to long – until it’s too late :D
Here is a little info about the “fall” of EU:
http://www.europeanvoice.com/article/2009/02/too-european-to-fail/64070.aspx
Don’t be too enthusiastic, folks. ;) Neither the Euro nor the EU will fall. The core group of solid European countries (Germany, The Netherlands, France, Finland, Luxemburg, Denmark, Sweden and last not least Britain) won’t allow that to happen. Also, the reports about financial problems in Austria are vastly exaggerated. Even if Austria had to take over all its banks its deficit would still look quite good compared to other states.
Let me just add that – quite in contrast to what has been said above – the Euro has been a blessing and a haven of stability for the countries that are part of the Euro-zone.
What else can we do here? Only dreaming …and waiting ;D
So when Iceland sells fish abroad – is it foreign capital or not?
The future for Iceland is what the country can offer abroad. Whether with help of foreign investors or not – this is irrelevant. Like aluminum smelters. It was not a humanitarian aid or philanthropy. Iceland can offer to investors land and electricity at better terms than any others – and investors came. And I know that same investors are shutting their smelters in other countries – cause demand is going down and other conditions are worse than here. Like cost of electricity and work force. Yes Icelandic worker cost more but as smelters are much more effective here – only 1/10 of people needed.
So once again – government can make stupid decisions to affect investors. But for them the first priority is … profit.
You can dance nude in front of car makers – but they won’t open a car plant in Iceland anyway.
Investors are rather strange creatures really. ;)
Thanks, Robert. I’m glad to see the person with open mind ;)
Indeed, why does Iceland have to run in front of the train? I understand that other “passengers” (aka EU) are enjoying such show… But better if we just step aside and see where the train is going – to the dead end or somewhere else.
I would admit my opinion is foolish..but after you, sir ;) First you have to admit that it was foolish to place your money into “icesafe”. And remember – it was your decision and you never asked my opinion about it.
What does this suppose to mean?
But if you want to point to the size of the Iceland – let me tell you something. The biggest country (and economy) in the world doesn’t complain about Iceland. At all. And I mean – China. So might be something wrong with huge corporations then? ;)
Please verify what you mean by “foreign capital”? This is kind of confusion as many consider their deposits in icesafes as “foreign investments” into Icelandic economy.
Robert, I guess I know what you are talking about
From this point Iceland really looks like a little rock in the North Atlantic…
RE: Alexander E -
Alexander, if you are going to comment on a quote of mine, you should post all of it. Wait and See was a comparison to an individual hoping his house fire stops, instead of putting it out. When you have a problem fix it, do not hope it goes away.
Your comment was you agreed with Vilhjalm. You agreed with waiting to see if they could get out of this problem, instead of trying to fix it. “Promise everything, deliver nothing.” was a statement you agreed with, unethical and ignorant.
I have never had my money in an ICESAVE account. So, come on, do not presume anything.
I think you finally got the idea about my size comparison. This country is small enough to rectify this situation very quickly. They are not dealing with millions of people and a massive infrastructure. This beautiful country that I call home, is smaller than most cities. The government can bring around the necessary change and implement their policies almost overnight.
And finally, “foreign capital”, Currently, the exchange rate is being set here in Iceland at a rate that is at a great contrast to the world’s view of the strength of the ISK. There is still a limit on the amount of foreign money that can be exchanged. I understand that this has to be done to some degree. However, they must be careful to not set such a low rate, and to not restrict so much foreign currency, that investors and business decide to ignore Iceland.
As much as I love this country. It is a small rock in the middle of the North Atlantic. If we want to be a part of the world market, there must be a measure of reality used on what the rest of the world will accept as viable business.
Yesterday I arrived to London Stansted Airport. There you can BUY and SELL currency from Russia, Romania, Turkey, Korea etc. in the exchange office……..however you can JUST BUY Icelandic krona (146 ISK for one pound)…..like the only currency from more than 30 on the list….
So YES – Iceland needs really more international trust – however there will be no trust from foreigner investors until there will be David Odsson sitting in the Central Bank….and until there will be some artificial exchange rate of ISK (e.g. until there will be restrictions on trade with ISK – until ISK will not be traded again on international markets).
Yes – surrely it will mean big decrease of the exchange rate and value of ISK – but this will also mean that Icelandic products and services (incl. tourism) will become more cheaper and then can better compete on international market. Now – when people all over the world are hit by crisis – you cannot expect that anybody will buy expensive products or will go on expensive holidays…..you can just win with cheap (and good) products and services….
And mainly – when ISK will get its REAL exchange rate, there will come back again trust in Iceland (because otherwise it is STILL very well developed country…..the question is how long it will remain). Because who would invest in country where you do not know what will happen with value of your investments.
However – who would not invest in developed country, which can produce cheap and good products and services.
I say – let ISK float….and after stabilizing its real exchange rate investors will come soon……it is like volcano (and whole your country)….once there is a horrible eruption of magma…..but then there is a new soil where starts growth of new life…..but you should know more about it, kærur Íslendingar…….and do not think anybody (like EU) can save you – just you can save yourself.
Áfram Ísland.
No one will invest in Iceland until the currency is freely traded and finds its “real’ value. The government is whistling in the dark because it does not have the least clue what to do and only wishes this kreppa would just go away. The crisis has revealed the limits of Iceland’s resources in talent and wealth.
Alexander amazes me more and more every day, he most be 14 or mentally retarded, it is just amazeing to see his “ideas”. I just gave up on him, it is like listening to a 5 year old talking politics.
2Easy
Well, Easy. I can tell you that 5 years old kid has much more common sense than politician or professor of economics with 25 years of “experience”. For very simple reason – 5 years old doesn’t know all this BS that politicians/experts accumulated ;)
@Robert
Where is your sense of humor, Robert? We are not in Althingi! ;)
I agree with waiting. because before fixing anything it’s a good idea to find our what’s wrong. And we still don’t know that. We don’t know how much and who is owns whom. Icelandic problems are not more severe neither more urgent that problems of Germany, UK or USA. So why Iceland should “plead guilty” first? I really see no reason for that. To “please” investors? Then Iceland doesn’t need such “investors”. Their only interest – to get something cheap or for free.
Iceland is twice smaller then my home town. And 500 times smaller than my home country. SO WHAT? Maybe the problem is that government here is also 500 times less wiser? ;)
And I have to say that only BAD/WRONG things happen overnight. Good and right things need more time. And the government can speed or make it slower – but changes happen in the heads of people! If you are going to wait for government to implement something – then I wish you luck. Much of it.
First of all there is no such thing like “world”.
Second – what is you opinion about fair rate? I guess you don’t speak for the whole world – so just give us your personal estimation. From my opinion – the rate is OK. Could be closer to 120 per euro but … It’s market – one can wish to sell something for 1000 XXX but no one wants to pay more than 50 XXX. And no government can fix it – it’s up to two parties – either agree about 60 XXX or forget about each other. So if other side can afford to forget about fish and aluminum – than the rate will go down the toilet. But I guess it will stay where it is now.
So far the world welcomes Icelandic real business** No matter what government we have. What “world” is looking for – good products at good price and in time. That’s it.
**banks are not business
PS. I also love Iceland. That’s why I see no reason to trash it only because some professors and journalists think so. At least I’m not the person who jumps of the cliff just because “the world’s” shouting “JUMP! JUMP!” But I can p…s on those who shouts too loud :)
suomi.
Could you tell us what Finland was doing with the most stable currency in the world – Soviet rubles – all decades of bilateral trading? ;)
Yes, the limits of Icelandic central bank appeared to be much smaller that ones of Germany or Britain. But we are not in the final act of the show. So let´s see what will happen with wealth and talents of others.
So far talented guys at NYSE got their wealth back to 1997… And I think they are far from their “best performance” yet.
RE : Easy
I have to agree with you about Alexander E. It is like talking to a brick wall. No wait that would be better. The wall would not reply with nonsense. He posted a nice comment today about another article and I agreed with most of what he wrote. But there is no getting through to him on this article. Seems insistent on defending a lost and troubled cause.
RE : Alexander E
NEWS FLASH!!!!! YOUR SHIP IS SINKING!!!!!! ARE YOU GOING TO WAIT AND SEE WHAT HAPPENS OR ARE YOU GOING TO FIX IT!!!!!
And seriously, to say “First of all there is no such thing like “world”.” where do you think you live? Read the papers, check with the world banks, the ISK is rated at nearly half the worth the Icelandic Government claims it to be. Many countries have stopped exchanging it because of the false rate Iceland has placed on the ISK. Do some reading, many economists warned Iceland to not try to control the ISK like this and to let it float. Otherwise, it will become considered no different than a piece of paper from a notebook. This is not my opinion, this is a fact of the world’s economic system.
By the way the “world” is the really big blue and green sphere that is spinning in space, also known as the third rock from the Sun. Maybe you should visit it sometime, most people I know live here.
hahahahaha!!!!! ROFLMAO!!!! @ Robert
@Alexander.
The fact that any country is better to live than Rusia because even dough Rusia is a very powrfull nation it has always been good only for few elit individuals the rest live terrorize and in great poverty, and Iceland today is still a better place to live than the Rusia you grew up in(phisaically clearly not mentally)by the way I know now you are a grown up because I saw your picture in your “blog” so deffenetly not a 5 year old but the second option. so even if for you things look very good, doesnt mean that they are, ofcourse if somebody is use to eat dirt all his life and today he can at least eat rice without paying for protecction, well… things will look promising for this person, and ofcourse compared with what you grew up with even argentina is paradise, but look you are use to live day by day and if you have food today, man you made it, but things doesnt work like this, so use your brain not just get exited with the shiny lights and cars you saw when you came her and because you still see them doesnt mean things are ok.
Just a cuote;
Well, Easy. I can tell you that 5 years old kid has much more common sense than politician or professor of economics with 25 years of “experience”. For very simple reason – 5 years old doesn’t know all this BS that politicians/experts accumulated ;)
What kind of statement is this, are you for real, are you really that dumb, do you actually belive this? well, now I understand your posts based on that reasoning. Look its not even personal, I dont even know you, but you are like going to the cinema and having a kid in the back of your sit talking and taping your sit with his foot.
First of all I don’t give a damn what flash news are saying.
Second, I’m not going to jump over board because flash news says we are sinking.
Third, I see the storm but who told you we are sinking, you, panicking sailor? Seat at your bench and row!
And don’t listen to the flash news… it’s same as listen to the toilet flash ;)
I prefer to trust my eyes and ears. Yes it’s difficult. Yes it the storm will last. But we are NOT SINKING, sailor!
PS. yes, I’m a kind of a rock… but it’s better than being floating easily like… you know what is floating easily, don’t you Robert? ;)
Are you kidding? Papers, banks, many economists? You forgot rating agencies, BTW ;)
What is the value of “many economists” who have no clue why all this shit happened and how to get out of it? Bank? Do you mean Lechnam?
Unless you authorized to talk on behalf “world’s economic system” – let’s stay with our own opinions, ah? Are you, personally, doing any trade with any foreign country? Have you buy/sell currencies all over the world?
OK, more easy question. What country is paying for Icelandic fish with ISK? Have tourists come here with sack of ISK or with euro/dollars? Do British depositors (aka foreign investors) keep their deposits in Icesafe in ISK or pounds?
If you answer these questions you’ll see that ISK is internal tool to measure the value of product. Same as sea shells. And it’s true for any “currency” – they are not more than sea shells. In form of BANKnotes. And as such it’s up to the banks that issues these notes to decide what are the rules of the game. If Sedlabanki thinks it can’t keep its promises against the notes it printed – so it be. I’m really not in the position to tell whether it’s right or wrong – I don’t know numbers. But I have rather good understanding WHY economy works. And Iceland from this point is really a rock compare to many, many others.
And as i said real investors don’t care about “floating”. Ruble has never been a currency in classic terms. But ask Finish or Japanese investors if they were worried about that. I asked suomi about it and hope he’ll answer.
@Easy
Yes, Iceland is a better place to live. And why? It reminds me Russia when I was a kid. Same feeling of safe and easy place. Well education was much better – that’s why I’m here.
But enough for off-top…
PS. Shiny cars? LOL I was a registered car dealer in US almost 20 years ago…(I wish I was 5 yeas old kid now)
Re : Alexander E
I cannot stop laughing. This is my last comment for you.
Open your eyes and ears, I never said jump ship, I SAID FIX THE SHIP!!! Look around you, check the unemployment numbers, talk to the people who have lost a great deal of money, and those about to lose more, talk to the foreigners who are being told they cannot have another permit because they are being removed from the workforce. Not people living off loans, but hardworking Icelanders who have lost a great deal due to this problem. Iceland is sinking, I never said they will sink, but they are heading that way. They have to fix it, or they will.
Check the hard numbers that virtually every major bank outside of this island has rated the ISK at. These are facts.
Opinion is thought, facts are facts, please learn to distinguish between them. Just because Iceland is a little confused at the moment, there are plenty of people who know exactly why this happened, and have been saying for a couple years that it was coming. That place I mentioned for you to visit “the world”, it is a big place. Many people there have a good education and offer sensible suggestions and information to try and help those around them. Unfortunately, the government that was in control of Iceland did not listen. Hopefully, this new one will.
I have enjoyed this little debate, but Alexander E, do yourself a favor and get some education before making any more foolish statements. Read what the comments are and try to understand them, your responses to me have completely missed the point and have lacked any form of intelligence. But thanks for the laugh :-)) or…… keep writing comments like you have, people all need a laugh right now, and you are helping them to do just that.
Thanks Robert.
And in particular for the very specific and detailed and well thought advice “Fix it”.
In case you missed them I asked a couple questions (just to get feelings of your experience)
“Are you, personally, doing any trade with any foreign country? Have you buy/sell currencies all over the world?”.
PS. In fact this is what I’m doing now – fixing it ;)
Menu, this afternoon:
to talk nonsence, racism, folks, and special cake of monetary and economic policy. Night can be exciting!
Some Iceland lovers want a floated krona: please, ICB, could you float the krona? So, icelanders will eat many cakes; they will buy many items from Europe at ISK300-350-400 against Euro; also they will pay cheaper petrol, x2; they will pay cheaper loans, x2; they will pay lower interests, x2-3; they will pay their mortgages sooner; Lower inflation, 18,6% x 3; ICB will cut policy rate, 18% x 3; they will be richer men, x3; they will be able to buy many cars, houses, x2; Estate will be able to pay welfare education, x2. Please, float the krona NOW, without – before – knocking down inflation, without rebuilt economic and monetary policies, banks, without clean corners!! Please, float it!!! And billions of krona will fly outside. And, Icelanders will see the devil, the hell for many years.
Iceland also has other lovers, and these prefer things little by little, without profit!!
Float the Krona now? NOOOOOOOOO!
By the way, Oddsson out!
Icelanders, where are you?
RE : Alexander E
You made me do it, I am commenting again :-)
Our discussion today was never about how to “fix it” only whether or not to do something or sit by and WAIT for something to happen. So, I was commenting on that point.
Yes, floating the ISK now would cause a big hit to the economy. However, not doing it can cause its demise.
How to fix it, here are a few ideas:
One, and this is underway, finish the convention center at the harbor. Using some of the loan money to finish the project, along with seeking foreign investors, will bring many jobs to the community.
There is a complaint by the city of Reykjavík that they need more police officers. If the city would allow more of the revenue from traffic violations to go to the police department operating costs they could pay for many officers from that alone. I personally did a survey one Saturday. I sat downtown for 60 minutes and counted all the traffic violations: speeding, not stopping for red lights, illegal turns, etc… In 60 minutes there were 90 violations. Charge 5000 ISK per violation (very reasonable compared to many countries) that is 450,000 ISK in one hour. I am not saying they should create charges unfairly. Just keep the peace and enforce the laws in place.
This next one is a touchy subject right now, Whaling. Yes this will generate jobs now, but it will cost this country money in the long run. There are many tourists and investors that will stay away from the country because of it. Right or wrong it will happen. There is far more money to be made from Tourism here in Iceland then the limited amount from whaling. And before you ask, I am speaking from education and experience. Honors Zoology and Business Administration for my education. More than 20 years in the leisure and tourist industry working with tourists from all over the globe, and paying some of my tuition as a commercial fisherman, experience.
I could continue but these are a few distinct possibilities. Action to bring about change is needed. There is a very well known law of science that is part of Newton’s Laws of Motion. “An object in motion will remain in motion until a force is acted upon it.” This also applies here. Iceland has hit an obstacle that has caused its economy to fall. Sure, you can stand aside and wait for another force to hopefully change this motion, or we can create a force to change it.
@Robert
It’s a pity Messrs Haarde & Co didn’t understand Newton’s Third Law of Motion – when they reneged on the Banking guarantees.. ;)
@ Robert
I got your answers to my questions ;)
I have no problems with that :-)
First I have to ask you – are you in construction or developing business here? Cause I’m in construction and I know the situation with tonlistahus (awfull design btw). and I have better idea. As the volume is sealed from the bottom – we should dig around and fill the whole with water. By doing this the building will float – and we could ship it to UK creditors. A kind of Icelandic floating debt :-)
Two considerations… no..three.
The local driving culture is not good indeed and must be improved.
If you have to stop and give tickets – you can’t make 60 tickets per hour. More likely only 6. So revenue is down to 30.000 minus those who won’t pay minus legal expenses.
After a week of heavy ticketing people will start to drive carefully – so revenues will drop further making the whole idea non sustainable :-)
“Murderer” (c) or you mean these strange guys who catch the fish and let it go? I worked with them too ;-)
Well…what can I say? I studied physics hell many years ago and don’t remember a thing. But I know that bicycle is not falling as long as you push pedals. No matter how hard it is. And I don’t think Icelandic economy fell. I also suspect that you change the Newton law by skipping “remain in STEADY/STRAIGHT motion”… but as I said it was long time ago when I read Newton ;-)
ALEXANDER SAID:
“But I have rather good understanding WHY economy works. And Iceland from this point is really a rock compare to many, many others.”
YES, A HEAVY ROCK IN THE BOTTOM OF THE OCEAN….
RE : Alexander
It is already in place in Iceland to issue traffic tickets to offenders caught by video. A couple of video cameras around town at busy intersections would pay for a few officers yearly salary (for the first year). Yes, the violations would slow down, but it is a start to create a couple jobs.
Not a Murderer, a Conservationist. WOW, you make some ridiculous comments.
And no Alexander E, I did not change or skip anything in Newton’s Law. As I told you before get some education before you try to debate. AND AGAIN, that bike will not move, in fact it will fall, if you do not pedal it. HUH, sounds like the situation here, do nothing and it falls; invest, create jobs, stimulate the economy and it moves forward.
I have to be honest Alexander E, I am through debating with you. The other comments are correct about you, it is useless to try to talk with you. You have not made a single viable and educated comment in response this subject. But like I said, keep writing in, you give us all a good laugh.
2 Robert
This is very unusual interpretation of Newton indeed.
Believe me – the object will continue its motion even after a force acted upon it. So unless your English is as bad as mine – you do understand economy as good as physics ;-)
To save your time – below are all three laws of motion.
An object at rest will remain at rest unless acted on by an unbalanced force. An object in motion continues in motion with the same speed and in the same direction unless acted upon by an unbalanced force.
Acceleration is produced when a force acts on a mass. The greater the mass (of the object being accelerated) the greater the amount of force needed (to accelerate the object).
For every action there is an equal and opposite re-action.
PS. Third is my favorit :-)
We need to float the Krona and get foreign investors, but i think they will have a hard time competing with the financial and political mafia here in Iceland, most likely the next government will be Independence-progressive party and they will keep every thing shut down and isolated until all assets realestate and companys are safely in the hands of carefully selected people, then they will float the krona,
Steve Crosser made a bid for Árvakur mbl and probably a generous one but there is no way he could ever buy it, it was always going to be guided to the “right people” the mafia need to be able to control the press, both to influence the elections and to make sure uncomfortable information is not exposed, i think Crosser should wait until after elections to invest here because Iceland is not anywhere near the bottom yet,
the worst is still to come, we need foreign investors to breath life into our economy but if i was in his shoes i would not trust anyone with any ties to the independance or progressive party,
if we would decide to default on our debts for the first time in our history we could never rebuild trust again, there are many ways of beeing ruined
and i would rather be poor than dishonest,
the worsening state of the economy in Switzerland UK Ireland etc should not affect how we handle our busyness, im not really that much worryed over the economy, more about the corruption and how antisocial behaviour of many people in politics,
if SF and VG stay in power after apr 25th there is a good chance thing will turn around, if not some 50-100k people will move, probably to Canada and Norway.
Axel, you are right.
If you looked at the evidence it seems that Cosser may actually be a legitimate businessman. What he wanted to do was to come to Iceland to experiment with wireless broadband tv delivery. He probably wanted to buy a tv station first, but no one would allow him to do that. So he decided to buy MB in order to get established in the Icelandic media market, and then later buy a tv station.
His financial backers were Australian mining tycoons, who have lots of money as a result of the huge increase in gold prices and from selling minerals to China.
Their ultimate aim appears to be to develop a broadband wireless tv delivery system (especially for tv on demand) that can work in the US — whoever can figure out how to do that will make a killing – absolutely enormous profits. Iceland is a great place for experimenting because nearly all the microwave broadcast frequencies are unused.
But no — Icelanders were suspicious and paranoid and could only think that he was an agent for Jon Asgeir or would buy the paper and run away with the high technology printing press.
So they have chased him away. After this, Iceland will NEVER get any foreign investors.
And what they get instead is that MB falls into the hands of the same corrupt Sjalfgraedisflokkur-mafia cronies, who will use it as their mouthpiece.
Alex and Vilhjalm.
There is a good reason in what you say. But so what? WHAT can you do to prevent the disaster you are talking about?
PS. 50-100k people moving overseas? I wouldn’t count on that
Vilhjalm, I think Steve Cosser is a man who does not give up so easily, he will find a way to do what he wants,
the people who bought Mbl are people like Þorsteinn Már Baldvinsson ex Glitnir chief executive and other fishing quota kings,
some people here in Iceland are so naive that they think the state distributet the fishing quotas to some individuals for free, that is not the case.
Here is a good article on the financial predicament facing Europe, for those who like to think about the “end-game”:
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4782749/Will-Germany-deliver-on-the-Faustian-bargain-that-created-monetary-union.html
Germany must either pay several trillion $ (at least $3 trillion) to save the PIIGS and Austra and Ireland, or see the EU fail. Apparently the Social Democrat government in Germany is preparing a plan to do that, but elections are coming up in the autumn, and if the right party takes control the plan is probably dead.
Germany could pay this amount but only at a very high price, and most likely will refuse to bail out the Mediterraneans.
So it’s possible the EU could break up, with a new union consisting of the “old EU”, Germany, France, Netherlands, Benelux and maybe Austria.
The Mediterraneans will be left on their own and go back to being poor undeveloped countries. Eastern Europe will be a basket case, and may fall back into the Russian sphere of influence – Russia will give them energy and raw materials, and they will produce goods for the Russians. Except perhaps Poland and the Czech Republic, which are like German colonies. Ireland is in real trouble and may be the first to default – probably half the country will emigrate to Australia, or it may join the UK. The UK will go back to what is was 30-40 years ago, a poor service-oriented economy.
The Nordic countries may form a union of their own.
Iceland? If there’s no EU to join, then they will continue along the present-life support system, refusing to pay any debts, including bond payouts, receiving no foreign capital except IMF and Scandinavia loans, and remaining outside the EU, without a viable currency.
Another newspaper article by the same author mentions that Iceland has refused to honor the banks’ debts and will continue to do so. That is probably what will happen. Iceland will refuse to bank bank debt and probably will default on the Icesave debt and on sovereign bond debt. It won’t matter that much at that stage (several years from now) since all sorts of countries will be defaulting on national debt.
Eventually Iceland will join the Nordic economic union and receive welfare payouts from Norway. By that time maybe 50-80,000 Icelanders will have emigrated. Most of those left will be old people or government employees paid with printing-press money. Sjalfgraedisflokkurinn will still be in power. Anything valuable in Iceland will be bought by the bank crooks with their hidden Lux-Cayman-Tortola money.
Well, that’s just a guess, you can add your own if you like.
@Vilhjalm Antonsen
Hi folks,
when I read your posts, I enjoy; these are operettas, nonsenses.
How many beers have you drunk today? Perhaps, twenty!!!
Never, I repeat NEVER, I read a post with such accumulation of silly things.
Incredible !!!!
JAJAJAJAJA JAJAJAJAJA !!!!!
I find it interesting to read these reports in the Daily Telegraph whereas there is virtually nothing on this subject in the German national press. ;) Talk of an imminent failure of Ireland, Spain or Italy is nonsense. And even there would have to be action (which is extremely unlikely) then it would be certainly not by Germany alone, but also by the other solid north European states plus France. It’s also utter nonsense to claim that there is a possibility of abandoning the Euro – this is absolutely out of the question. *No one* in Germany even thinks of that.
As much as I like and love Britain – it all seems to be a wet dream of conservative eurosceptics in the UK.
Vilhjalm, this is more or less what i have been thinking, Jorge is right, this sounds like a accumulation of silly things but the bigger part of this will turn out to be true, lots of good things have been happening here, the last would be the firing of David Odsson hiring of Svein Harald Öygard as CB governor, but everything we have done will be useless if the mafia wins the elections,
in that case Iceland will surely default on everything, some other country, will probably buy the corpse from the International bank and try to salvage whats left, i would guess USA may be interrested beacuse of strategic importance, Iceland USA, the 51st state :)
There is no way Germany can pay off all the debts to keep the European banks solvent. The Euro Central Bank basically means Germany, France can contribute nothing and the other countries are too small. The Euro may survive but one by one various banking systems will collapse and countries will default. Ireland first, they have almost as much foreign currency debt per capita as Iceland. Spain will go down too, once the Latin American countries default. The result will be no intra-European lending, except between Germany Holland Scandinavia and Benelux. These defaulting countries can not get out of the problems by printing more Euros or borrowing so they will have to leave the Euro zone or adopt parallel national currencies. Otherwise they will not have enough for domestic spending and borrowing.
If you haven’t heard about it in Germany, that’s because German newspapers are cautious and Germans generally are good at analyzing things in retrospect but poor at predicting the future. The Germans will revolt when they get the final bill, look here:
http://www.spiegel.de/international/europe/0,1518,610099,00.html
They don’t even want to help Austria, let alone Italy Greece Spain et al.
The Germans will vote for any party that refuses to bail out the rest of Europe from Germany’s pockets, you’ll see.
I still think Iceland will fall under the Norwegian sphere of interest, not the Americans. Apparently 30% of the worlds natural gas reserves are in the Arctic and in exchange for giving Iceland $2 billion a year welfare money Norway would get Iceland’s territorial rights all the way up to the North Pole.
Our rights to the Arctic area will be very important in the future, because of gas and oil
traffic of ships will increase soon because of the ice melting etc, but i dont see why Norway would get anything, of course they will be interrested but we dont really owe Norway anything, the loan from Norway is small, there is a promise for a bigger loan later but if Iceland goes into bankrupcy someone will have to pick up the bill to get the goods, i dont see Norway doing that, my bet is on Russia or USA, i hope USA will be the one.
Yuou want more bad EU news?
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aoSVaDNXQe3s
http://www.telegraph.co.uk/news/worldnews/europe/hungary/4808111/Hungary-on-edge-of-bankruptcy.html
From Yahoo finance:
“The implications are obvious. Berlin is not going to rescue Ireland, Spain, Greece and Portugal as the collapse of their credit bubbles leads to rising defaults, or rescue Italy by accepting plans for EU “union bonds” should the debt markets take fright at the rocketing trajectory of Italy’s public debt (hitting 112pc of GDP next year, just revised up from 101pc — big change), or rescue Austria from its Habsburg adventurism. So we watch and wait as the lethal brush fires move closer. If one spark jumps across the eurozone line, we will have global systemic crisis within days. Are the firemen ready?”…
This has the potential to be a real crisis, far worse than in the US. Without concerted action on the part of the ECB and the European countries that are relatively strong, much of Europe could fall further into what would feel like a depression. There is a problem, though. Imagine being a politician in Germany, for instance. Your GDP is down by 8% last quarter. Unemployment is rising. Budgets are under pressure, as tax collections are down….
It is not clear how it will all play out. But there is real risk of Europe dragging the world into a longer, darker night. Their banks not only have exposure to our US foibles, much of which has already been written off, but now many banks will have to contend with massive losses from emerging-market loans, which could be even larger than the losses stemming from US problems. Plus, they are more leveraged….
http://finance.yahoo.com/tech-ticker/article/195065/Europe’s-Crisis-Much-Bigger-Than-Subprime-Worse-Than-U.S.?tickers=ubs,cs,db,hbc
You can see what’s coming. Germany will throw $500 billion, or maybe a trillion or two at the problem. It won’t have any effect. Then Germany is out and it’s every country for itself.
Axel you should be careful what you wish for!
If Iceland becomes a territory or protectorate of the US, the whole country will turn into a big aluminum smelting plant. All agriculture will be dead, and the countryside will be abandoned. The interior of the country will be used for bomb targets or turned into an industrial waste deposit site. It will be forbidden to speak Icelandic in schools after the third grade. All government business will be done in English. þ and ð and umlauting will be banned. Icelandic history will be erased, replaced by the Founding Fathers and the Civil War. Icelandic foods will be banned because they don’t have enough preservatives. Poor Icelanders will live in trailer parks.
You get the idea.
Maybe if the Keflavik N.A.T.O Base had been bombed like Pearl harbour the U.S would have felt guilty like with Hawaii
and then made Iceland 51st state?
Is there any Icelandic claim to the Arctic areas? Looks like Greenland and Norway block it:
http://www.dur.ac.uk/resources/ibru/arctic.pdf
The problem in Austria is vastly and extremely exaggerated. Even if Austria had to nationalise all her banks (incl their commitments in Eastern Europe) the Austrian budget would still look quite well indeed compared to many other European countries. Indeed the Austrian debts would then (in this extreme scenario) amount to 70% GDP. That does not look like bankruptcy to me. Austria has affluent citizens, has a very strong industrial base and is one of the most popular holiday destinations in the world. Austria is safe, even if people would like to image other thinks.
BTW: Who said by the way that Germany would not be willing to help a country if it gets into trouble? Merkel has been saying something completely different. If there should be a big problem in any European country *of course* Germany and other solid states would come to its help. Actually, there are even plans as to what should be done. But it’s really very very very unrealistic scenario that this should become necessary. It’s really only a wet dream of all Euro-sceptics.
And of course it’s rather laughable to claim the Euro consists basically only of Germany. France is a very solvent and rock-solid country, so are The Netherlands. Spain and Italy are big countries with a large and very modern industrial sector. Frankly, all this talk of an imminent failure of any European country within the Euro-zone can’t be taken seriously. If anything, the Euro has been a huge blessing for the EU. What do you think would have happened in this financial crisis if we still had dozens of national currencies? It would have been an absolute nightmare! Or do you want to claim that Iceland now is better off because it’s not part of the Euro-zone??
“If you haven’t heard about it in Germany, that’s because German newspapers are cautious and Germans generally are good at analyzing things in retrospect but poor at predicting the future.”
I cannot agree. As far as I know over the last four years or so Germany *repeatedly* tried very hard indeed to convince the UK and the US that something had to be done about the financial markets. But even if Germany is an important within the EU it lacks the influence of the UK or France outside the EU which is one of the reasons why Germany could not get through with her proposals.
Peter said:
“If there should be a big problem in any European country *of course* Germany and other solid states would come to its help.”
Peter, could you prove that? What about a couple of billions to Iceland? ;-)
And do you mean UK is not “other solid state”?
Peter (Germany) said:
“all this talk of an imminent failure of any European country within the Euro-zone can’t be taken seriously. If anything, the Euro has been a huge blessing for the EU”
There is a considered and mature economic opinion that Ireland has already failed and coincidentally it’s the only country whose external debt exceeds Icelands.
It’s still standing in the way Iceland is still standing, a temporary defying the laws of gravity.
Bromley86, The Arctic area rights belong to Iceland alone, when the Russians used a submarine to put a flag at the bottom of the sea at the north pole to clame the region they didnt know that i had already reached an aggreement with Santa Claus and payed for it in full with Kronas.
Dont expect a big package this year ;)
there may be some more disputes over this
some people dont believe in santa.
Vilhjalm, im not saying that USA is some Salvador for us here in Iceland,
the best option is to survive, if that doesnt happen then i would like to see Iceland stay in one piece inspite of some negative changes,
the way i see this is that we will not apply to join the EU until we have no choise, by then the EU will be in deep trouble of its own and will reject our application, then we may go bankrupt
if that happens some big nation may want to pay our debts and buy the country,
That will most likely be a country outside EU,
what comes to mind is Russia and USA,
if they are interested Norway will not show interrest,
lets just hope we somehow manage to escape,
its funny how things never change, when people where immigrating from Europe to Canada 1-200 years ago Indians where the main problem,
now Indians are against Icelandic settlers coming to Canada because of unemployment amongst Indians,
wonder if they still have bows and arrows :)
Icelander can now stay in Canada for five months until asking for visa to see if they like it or not
some 80k people in Canada are related to Icelanders, tens of thousands moved to Canada in the last grate depression 1875-1914.
Axel, I disagree.
Iceland should apply for the EU as early as possible, and I think they will do so (especially if Samfylking is in control). I’m not sure how the money exchange works, but converting the ISK would essentially be getting $6-10 billion for free – that’s a great deal. No need to worry about assuming all the bank debts and paying Britain and Germany – Iceland can always default later, and will. Iceland may not meet the requirement or the Icelandic population may do something stupid like voting against it, but the EU and the Euro should be the aim. If Iceland does get the Euro, then Iceland can then fall on is face and decare bankruptcy, like Ireland, and demand a bail-out.
If Iceland gets rejected or the Euro zone falls apart, then Iceland joins the Nordic currency zone, and Iceland becomes a protectorate of Norway, receiving subsidies, much like Denmark supports Greenland. That would be the best outcome.
I don’t see why the US would want Iceland – all these protectorates like Samoa and Guam are a pain-in-the-ass, making all sorts of demands and offering nothing in return. Although if 300,000 Americans would move to Iceland, then it’s an empty slate and the US can do whatever it likes – Icelanders would become like the Eskimo in Alaska: a useless unemployed drunken underclass. Iceland would be an excellent place to dump old automobile tires.
Until the EU decision comes, Iceland will suffer slowly deteriorate. Every week there will be more unemployment, more business failings, mostly in the younger, entrepeneurial class, who will go off to other countries. Norway, Sweden and the IMF will supply some money but not enough. Eventually Iceland will be a hollow shell of old people on pensions and government employees
Manitoba will be a real shock for Icelanders. You can say what you like about Reykjavik but there’s lots of interesting things to do. Icelanders will die of boredom in Canada, esp someplace like Winnipeg.