Former Prime Minister of Iceland, Halldor Asgrimsson said in an interview that the privatisation of the Icelandic banks was not the wrong decision. He said the biggest mistake made was not joining the European Union as he has always pushed for, although he admits a variety of factors got in the way.
RUV.is reports the former PM as saying that the decision to privatise the banks was correct, as was the timing. Asgrimsson finds it incomprehensible that the government decided to nationalise all three banks. He believes one should have been nationalised and the other two left in the hands of their creditors.
Asked if the beginnings of the current crisis can be traced all the way back to the banks’ privatisation, Asgrimsson says he believes not. “The privatisation began right at the time of the Independence Party/Peoples’ Alliance (now defunct) coalition government. Then it continued during the time of the Independence Party and Progressive Party. I believe that was only right. I think that the worst mistake we made, with hindsight, is not entering the European Union and beginning these talks much sooner.”
So, he thinks that being outside the EU contributed more to the financial collapse than the lax regulation. Perhaps he is suffering from Alzheimer’s disease. I would suggest he undergoes behavioural assessments and cognitive tests, followed by a brain scan.
>I think that the worst mistake we made, with hindsight, is not entering the European Union
No, the worst mistake was how the privitisation was handled, specifically the system of corruption and favours that appears to have been (and still is?) prevalent in Icelandic politics. Good call Transparency International (not!).
From one of many articles:
http://www.grapevine.is/Author/ReadArticle/Article-Icelandic-Banks
I haven’t read the interview but I think that privatizing the banks in itself was not a mistake, but privatizing them without proper supervision and a mature system of regulations definitely was.
For this politicians like mr. Asgrimsson bear a big responsibilty.
I really do not know if joining the EU would have prevented the collapse but it would have helped in 2 ways:
-Iceland could have already joined the eurozone by 2008: operating the smallest free-floating currency in the world was a BIG risk.
-as a member of the EU Iceland would have had more access to emergency loans and the ECB.
Iceland has crashed. Malta , a country of similar size (regarding population) and without the natural resources that Iceland has, didn’t. Malta joined the EU in 2004 and introduced the euro in the beginning of 2008…
> Asgrimsson finds it incomprehensible that the government
> decided to nationalise all three banks.
I’d need to check this to be certain, but I think they were not nationalised. They were allowed to fail. They were taken over by the regulator to be wound up – they were not taken over by the State.
I agree, I have to say. Privitization is inherently right. Also, regulation is not the issue, nor a or the solution; if people want to do stupid things, then you have to manage with your regulations to catch them every single time. Firstly, it’s not possible, second, what business is it of yours to be doing so in the first place? we are free – individually free – to do as we wish. Freedom does not mean “freedom to do whatever you want, except for the bad stuff and the things I think are unwise”.
The banks went wrong because they made bad business decisions. They massively borrowed short and invested long and then when the short term money market froze, they died. It had huge consequences, because the banks were many times larger than the economy which backed the currency they used.
You can’t regulate correct behaviour in complex systems. Firstly, what is correct behaviour? how do you know what it is? second, you can’t force it to be adopted, because it just doesn’t work.
Business exist, some will do well, others will fail. That’s the best way to go about things, not regulation.
“Former Prime Minister of Iceland, Halldor Asgrimsson” – a main character of all jokes at the time. Both as “foreign minister” and “prime minister”.
Have he surfaced from oblivion because of fear of being investigated?
“The fool who fancies he is full of wisdom
While he sits by his hearth at home
Quickly finds when questioned by others
That he knows nothing at all
The ignorant booby had best be silent
When he moves among other men,
No one will know what a nitwit he is
Until he begins to talk;
No one knows less what a nitwit he is
Than the man who talks too much
Wise is he not who is never silent
Mouthing meaningless words:
A glib tongue that goes on chattering
Sings to its own harm..”
What? You’re looking at the wreckage of an unrestrained banking system and saying that nothing needs to change? Patronage, market manipulation, asset stripping. These were not bad business decisions (the people that took them have cashed out), they were actions that should be (and in some cases are) illegal.
As to the freedom bull, I think I’ll go and kill my neighbour. Oh, wait.
Just to be clear if I being too subtle, Halldór is that nitwit.
Not because he thinks privatization was the right thing ( which of course it was and is ) but that he always talks about the EU being the solution to everything.
Because no doubt in his mind he is hoping for high back slapping position in EU commission. This is clearly his dream.
( To his simple politician mind the banks were nationalized. Of course they weren’t — they were forced into government controlled adminstration because they could not raise fresh credit. )
But most importantly he is a nitwit that had a juicy conflict of interest in the privatisation of Búnaðarbanki ( The Agricultural Bank ) that was what became Kaupthing — exactly how he thinks his words now can help him on that is a mystery.
Well as nitwit is nitwit does.
Halldór made sure that to allow the privatization process for the banks went through ( Landsbanki and Búnaðarbanki ) the Landsbanki shares in the insurance group VÍS had to be given to the so called S Group ( Samvinnulífeyrissjódurinn and Samvinnu- tryggingar ) that already own the other 50% of those shares — pre-privatized Landsbanki owned the other 50%.
He was so for this he threaten to block the privatisation process which would have caused dissolve the Independence Party – Progressive Party coalition if it was not done ( the VÍS shares going to S Group ).
Why? Well the S Group needed VÍS to have the credit to buy Búnaðarbankinn.
It was discovered in Landsbanki after Samson Holdings ( the Björgólfurs ) paid and got the controlling interest in the bank that pre-privatization Landsbanki had loaned billions of Krona to S Group !
( Half of Búnaðarbankinn was paid for with a loan the government controlled Landbanki gave the S-Group with a very fair loan rate. )
This is what caused the shift from limiting ownership in the banks favoured by Geir with floating on stock exchange to the public, to the idea of core investor holding controlling interest — because Progressive Party people decided they own Búnaðarbankinn.
That and that when they got HSBC first to shop for buyers it was in late 2001 which was not a great time to be looking for capital for banking privatisation.
Halldór earlier brokered the S Group and Kaldbakur to work together ( but in the end was S Group that got it alone ).
Halldór did all this and it was discoved later he had a financial ownership position in S Group — he and family benefitted directly from this sale.
It was not just about helping his political colleague but also to line his own pocket.
http://eng.forsaetisraduneyti.is/ministry/Privatisation/nr/989
Niels and Brumely, hold the horses there.
EEA regulations — the majority of them — the ones that apply to banking are the same in Iceland as they are in the EU.
In fact Iceland implemented them in the 2000s earlier than most EU memberstate.
You cannot make it about that aspect without calling into question the whole EU regulatory framework of EU — which is frankly at the core of this.
>Niels and Brumely, hold the horses there. [snip usual "it was the EU" bit :)]
Pretty sure the EU doesn’t approve of corruption, but it’s really a matter for national sovereign (there’s that word again) governments.
Did the EU regs force the Icelandic government to privatise?
Did the EU regs force the Icelandic government to sell the banks to their buddies?
Don’t tell me that you think the privatisations were kosher? Steingrímur Ari Arason not IP enough for you? He felt he had to resign over this and didn’t hold back as to why. Another article:
http://icelandreview.com/icelandreview/daily_news/?ew_news_onlyarea=&ew_news_onlyposition=0&cat_id=16567&ew_0_a_id=136252
@Fisy
Nice to read your mock-Saga stanzas about Halldór. It’s good to see the art of poetry is not dead in Iceland!
Apologies Fisy, I didn’t see you previous post. Looks like you’re well aware of the privatisation process.
Although I can’t help but notice that, whilst you fairly lay into the PP, Oddsson & the IP get off. Mind you, you at least acknowledge that the IP were responsible for “unfairly” delivering one of the banks to a friend of a party, even if they did it for the good of the privatisation project.
Lax regulation doesn’t just mean poor regulations, it also means poor enforcement of good regulations.
Jim said “would suggest he undergoes behavioural assessments and cognitive tests, followed by a brain scan.”
in this case a brain scan would mean scanning for a brain :)
Fisy
The issue is not the existence of the regulations but the application and enforcement of the regulations. In Iceland the regulations existed but were never enforced. (I can give rather a lot of technical examples from accounts etc but believe me they are. I’m busy this morning!)
The FME was unable to enforce any of the necessary regulations for three basic reasons. First, it didn’t have the necessary resources, skills or personnel to monitor abuses. Secondly, it didn’t have the power to enforce compliance when it did detect abuse. And finally, the government didn’t back the FME at any stage – the government was always on the side of the banks in any dispute.
It’s a bit like having laws with a useless police force.
If you want a direct analogy think about Eva Joly’s basic complaints about the fraud investigation. These are the same as the three I’ve just listed: insufficient resources, insufficient powers and an unhelpful government.
Plus ca change.
Fisy,
I am sorry but you are contradicting yourself.
In thread http://www.icenews.is/index.php/2009/06/11/iceland-bank-collapse-investigation-family-ties-foreigners-and-funding/
you wrote:
”
Her again we see this EU party line about the pillars of the EU taken by Iceland under EEA — when in fact only 6.5% of regulations or so have actually been taken into Icelandic law. Not two thirds.
”
And above you mention:
”
EEA regulations — the majority of them — the ones that apply to banking are the same in Iceland as they are in the EU.
In fact Iceland implemented them in the 2000s earlier than most EU memberstate.
”
I rest my case.
Continuing about this: it does not matter wether Iceland adopted a regulatory framework or not: the crucial thing is: the whole regulating framework did NOT work in practice.
Basically the situaton with mr. Asgrimsson which you describe above is a perfect example of this: a manager manipulating the privatization of ‘his’ bank in order to get maximum profits from this.
If there would be proper supervison such a thing should not have happened.
A manager is supposed to act in the best interest of his company and the shareholders of it: he is paid very well for this.
If this salary is not enough for him and he abuses his position to make a personal profit from the privatization, it is a crime.
The fact that mr. Asgrimsson managed to get away with this shows that there was/is something wrong with regulations in Iceland.
David Oddsson was busy with all kinds of things: politics, writing novels, making unwise statements , waging his very own petty personal wars against local rivals, but most certainly not with his job as a governor of the icelandic national bank.
The Icelandic national bank was unable to act as a lender of last resort (one of the points Buiter made), was unable to control inflation, was unable to keep the kr. stable. Moreover, Oddsson was unable to build up and maintain a relation of trust with the ECB, something which could have helped Iceland at the beginning of the crisis.
You always try to blame EU burocrats or EU rules for the economic collapse in Iceland but if these things are so bad, please tell me why not a single EU country had such a total meltdown as Iceland? I mean, if these rules are so rotten and if these burocrats are so evil, then why is the situation in countries like Lux or Malta so much better than in Iceland?
If I compare the average situation in my own country with Iceland I get more or less the same results as a comparison between Iceland and Spain (made on this site several times):
here in the Netherlands the average income is higher than in Iceland and basically most things are 30 % cheaper. Especially meat, vegetables ,alcoholic beverages , tobacco products (and what more do we need in life?) are only a fraction of the icelandic price (also more choice and better quality, no queing for a state-shop). Moreover unemployment is a lot lower here and we have a stable currency.
really, we live very, very badly under these ‘evil eu burocrats’.
In my opinion rules are not the main thing: the way they are applied in practice is the thing that matters.
As your story about mr. Asgrimsson above illustrates (and there are a lot more of such examples to be found on this site), Iceland had a completely corrupt economical and political culture, this is what caused the meltdown.
Those in power were able to lie and manipulate, filling their pockets without having to fear juridical persecution or a critical press. The system this created collapsed at the first shock.
I agree with Bromley that transparency International is a joke, just one of these NGO’s living off subventions and providing a list that , at best, can be labelled as ‘not very transparent’.
The Netherlands has a quite high place on this list and in my opinion this is completely unjustified. In this country political murders occur and are covered up (the case with Fortuyn).
This is the same exact thing we have in America..just on a different scale. Instead of going into all of the financial mumbo jumbo and doublespeak, it is simpler to recognize that the problem is simply that members of the banking and politician classes have decided to rule us. We are supposed to work, but we are born “in debt” that we have to pay back to someone somewhere forever. And amazingly, those bankers and politicians get rich at the same time without doing any real work at all (other than theiving).
Here, however, the enemies of the people are learning that their biggest enemies are the First and Second Amendments to the Constitution. For they can never have full fascist ownership of the serfs while those are around. They are close to whittling them away, however, but in the end, it will be up to the people to decide whether or not they want to keep what they earn or if it is just easier to follow all of their masters’ rules and slave in poverty for their whole lives. What makes it dreadfully complicated though is the powerful brainwashing quality of the television and news media. All of our media falls into two wings…the majority in one, and the other run as controlled opposition. A great number of people are daily addicts, but that is slowly changing as what they put out becomes so ridiculous.
P.S. Bought some Icelandic cheese the other day. Dimon. The flavor and quality were nice..nice enough for it to have been almost twice the price..but it is expired and has started to go bad..
On Jun 16, 2009, Fisy said:
( To his simple politician mind the banks were nationalized. Of course they weren’t — they were forced into government controlled adminstration because they could not raise fresh credit. )
That is nationalisation.
@Neils
>You always try to blame EU burocrats or EU rules for the economic collapse in Iceland
Neils you are forgetting Brown and Darling :}
Niels quoted me saying exactly what I did say:
>”
>Her again we see this EU party line about the pillars of the EU taken by >Iceland under EEA — when in fact only 6.5% of regulations or so have >actually been taken into Icelandic law. Not two thirds.
>”
>And above you mention:
>”
>EEA regulations — the majority of them — the ones that apply to banking >are the same in Iceland as they are in the EU.
>In fact Iceland implemented them in the 2000s earlier than most EU >memberstate.”
Not really, as what I said is that the majority of that 6.5% we have are for finance.
There are a *lot* of other regulations that the EU has that we don’t have. ( That is one of my recurring point about Iceland taking EU membership. )
But nearly all of the ones we do have taken under EEA are the EU financial regulations.
If you look it up you will find out that there is no contradiction in what I have stated.
I doubt even knowledgeable person as Mike (UK Nordic Analyst) will dispute that fact.
Jim says
>Lax regulation doesn’t just mean poor regulations, it also means poor >enforcement of good regulations.
You mean supervision.
It can also mean good enforcement of poor regulations ( which for is the case with Directive 94/19/EC of the deposit guarantees where UK and Netherlands did good enforcement of poor regulations to everyone cost because that was the EU law they had to follow and had little choice — because that is the way the EU work ).
I do not dispute that the FME has to answer for that they did not supervise the banks — most specifically Landsbanki and Glitnir — for the systemic risk of all the borrowing.
Peter – London you need to stay from posting with you usual primae face factual inacuraccy.
You would do best to read the epic poem that I posted above and learn from it.
>David Oddsson was busy with all kinds of things: politics, writing novels,
> making unwise statements , waging his very own petty personal wars
>against local rivals, but most certainly not with his job as a governor of the
> icelandic national bank.
Judging by the historical record of Central Bank reports and other source I would say that Davið Oddsson, Eiríkur Guðnason and Ingimundur Friðriksson were the ones doing they best and trying they best to bring down the size of the banks as might be in their power.
What exactly should
>The Icelandic national bank was unable to act as a lender of last resort
>(one of the points Buiter made), was unable to control inflation, was
>unable to keep the kr. stable. Moreover, Oddsson was unable to build up
> and maintain a relation of trust with the ECB, something which could have >helped Iceland at the beginning of the crisis.
Yes Buiter analysis is fairly taken. But it does not apply now because our banking sector is gone for the time being. His thesis applied specifically to the large outside Iceland asset holding banks.
But any of Jean-Claude Trichet ( ECB ), Mervyn King ( UK ) and Ben Bernanke ( US) could have offered swap to help as was given by Nordic nations. They were all approached.
( The whole description from that Forbes article of how Davið made did not cosy up to Trichet in the smoozing EU burecrat way but instead made simple direct requests for what was asked — says more about Trichet and EU burcrat than it does about Davið. )
None did offer swap agremeent because they do not care about Iceland.
US and UK used to during cold war but not now. That is mistake given Iceland’s future importance in oil and gas and also in trans shipping.
>You always try to blame EU burocrats or EU rules for the economic
>collapse in Iceland but if these things are so bad, please tell me why not a
No not all.
I do specifically blame EU burecrats for IceSave being such a big failing that it was in the end and for falling short term on the heads of Icelandic taxpayer, and first on the UK and Netherlands taxpayer.
( This did not happen with Glitnir and Kauththing.
Glitnir case of they could not refinance.
Kaupthing went to the wall because of the action of Brown Darling ordering UK FSA to taking Kaupthing Singer and Friedlander into administration by taking its Edge to ING under Northern Rock Act — which is subject of the UK judicial review.
http://www.icenews.is/index.php/2009/03/16/kaupthing-uk-legal-case-makes-high-court-progress/#comment-68969 )
>single EU country had such a total meltdown as Iceland?
The answer is that the meltdown is happening in a different more diffused way, the result of which we will see in coming years.
Countries that desperately need to devalue they currency cannot. At least UK has had that possibility outside the Euro.
But do not mistake that there is no problem with Eurozone economy from what has happened. The pain is to come.
>I mean, if these
>rules are so rotten and if these burocrats are so evil, then why is the
>situation in countries like Lux or Malta so much better than in Iceland?
Will you please stop this characterization of what I say. I never call them evil.
You know the answer — that Icelandic banks tried and suceeded to be big banks in a short term through large borrowing including many bond issues.
That was made possible because the were loaned money by other banks and others bought they bonds.
This money was available because of ridicolous low interest rate from main government issuer of money Japan, US, lesser degree ECB that meant this money was seeking place to make interest for those lending money.
In the era of banking after dot com burst 2000/2001 to 2008 Icelandic bankers did do well. It is just that era was never going to last because one based on cheap credit never do, because that cheap credit made artificially by incompetitent Central Bankers.
What Icelandic Central bankers were trying to do was keep inflation down — what would happen if they did not keep interest rate high?
Inflation has always been the enemy of Icelanders and after big aluminium plant opened this was real problem to be contained.
Still I have not heard specifically, anywhere, what Central Bank should have done that they did not do which was in their control.
Maybe they could do more before 1998 — but as I read into all of it the problems are with the FME supervision.
( For example Mike UK analyst I interested to hear from you on this. )
And As I say before this Central Bank/financial regulator split was exactly modelled on the UK split implemented in UK by Brown as Chancellor ( there in the UK being the FSA being created, here the FME ).
>If I compare the average situation in my own country with Iceland I get
> more or less the same results as a comparison between Iceland and Spain >(made on this site several times):
>here in the Netherlands the average income is higher than in Iceland and >basically most things are 30 % cheaper. Especially meat, vegetables >,alcoholic beverages , tobacco products (and what more do we need in
> life?) are only a fraction of the icelandic price (also more choice and better
> quality, no queing for a state-shop). Moreover unemployment is a lot >lower here and we have a stable currency.
>really, we live very, very badly under these ‘evil eu burocrats’.
We have state shop for alchocol because of our puritain Lutheran Heritage. That is the only state shop we have, but that is not uncommmon in Nordic countries. Do I think it is wrong, of course.
Cigarettes here are highly taxed and available under the counter only to try and discourage children smoking.
Higher food prices is because of our stupid agricultural protectionism mainly. But also because of the hiking up of the ISK due to the carry trade causes now our currency to be so much lower than before.
( Short term our local protected producer of foods means that now these prices are reasonable compared to import but that is not going to last. Protectionism is stupid. )
Historically prices have been high because of cost of shipping goods to this rock. But since containerization that has bought prices down a lot.
Malta has exact same issues as we do in food prices but not in the same way since we have still our protectionism. But still without tariff etc Malta food prices are still higher than elsewhere because it is also a rock.
>In my opinion rules are not the main thing: the way they are applied in >practice is the thing that matters.
Yes, I do not disagree that FME failed in its supervision of the systemic risk.
As to Mike UK Nordic Analyst say he has many examples I am open minded to believe he has — but I want him to list them.
As we cannot debate on ghosts.
>Continuing about this: it does not matter wether Iceland adopted a >regulatory framework or not: the crucial thing is: the whole regulating >framework did NOT work in practice.
Same also can be said for other countries that has EU burecrat created laws.
Taking for example the case of UK’s RBS Royal Bank of Scotland. And also Northern Rock. Where was the UK FSA when these were on they way up.
The FME failed in they supervisory duties based on the EU regulations but they are not alone in Europe.
>Basically the situaton with mr. Asgrimsson which you describe above is a >perfect example of this: a manager manipulating the privatization of ‘his’ >bank in order to get maximum profits from this.
>If there would be proper supervison such a thing should not have >happened.
>A manager is supposed to act in the best interest of his company and the >shareholders of it: he is paid very well for this.
>If this salary is not enough for him and he abuses his position to make a >personal profit from the privatization, it is a crime.
Yes, and for their actions those that are guilty will be investigated and punished.
They cannot take back they actions.
>The fact that mr. Asgrimsson managed to get away with this shows that >there was/is something wrong with regulations in Iceland.
Do not foget that when things are going fine money is being made and taxes paid, there is little interest in investigating the sharp practice.
No doubt those that observe Northern Rock and RBS, etc in the UK, and also the many banks on Wall Street will agree with that.
At the time of privatization of the banks there was a large external sovereign debt created by mainly the idiot socialist policies of the 1980s here.
Davið and Geir as matter of good housekeeping need to pay that down, and that is where the money went in privatization process from banks.
Halldór did what he did. They could not stop him as his interest in the ownership was slightly hidden from view.
>Continuing about this: it does not matter wether Iceland adopted a >regulatory framework or not: the crucial thing is: the whole regulating >framework did NOT work in practice.
>The fact that mr. Asgrimsson managed to get away with this shows that >there was/is something wrong with regulations in Iceland.
>In my opinion rules are not the main thing: the way they are applied in practice is >the thing that matters.
>Basically the situaton with mr. Asgrimsson which you describe above is a >perfect example of this: a manager manipulating the privatization of ‘his’ >bank in order to get maximum profits from this.
>If there would be proper supervison such a thing should not have >happened.
>A manager is supposed to act in the best interest of his company and the >shareholders of it: he is paid very well for this.
He was not directly a manager but he was an owner with a conflict of interest and should have acted with personal ethics.
Now he is going to pay for it.
( The bank was the tradiitional bank of the Progressive Party being the farmers party and the farmers bank. It is a holdover form the bad old days where the politicains did control credit in the country, directly. )
>If this salary is not enough for him and he abuses his position to make a personal profit from the privatization, it is a crime.
Yes it is.
>As your story about mr. Asgrimsson above illustrates (and there are a lot more of >such examples to be found on this site),
I know only of two others.
( And ironically it involve Mike UK Nordic Anaylst favourite man Hannes Smárason and also this loans for stock.
This complaints came from dogged persistence of Davið — something he does not get due credit for. )
>Iceland had a completely corrupt economical and political culture, this is >what caused the meltdown.
No, it does not. And it did not.
What it has had is a handful or two of specific people that abuse they position.
Those people cannot take back they actions and will be punished. But they will be punished after a fair investigation and judging by impartial judges.
>Those in power were able to lie and manipulate, filling their pockets >without having to fear juridical persecution or a critical press.
You make Iceland sound like continental Europe like Italy or Greece.
In fact Iceland is like UK.
>The system >this created collapsed at the first shock.
It did not collapse at the first shock. That came in 2006.
The unholy way banking has been 2001-2008 in the whole world is the system that has collapsed.
And because of the perfect storm of conditions here — small currency,, large bank system, use of branch in UK and Holland, regulatory split following UK model, when the markets closed for lending money this happened to our banks.
Fisy,
I am using the adiective EVIL connected with EU burocrats because you are constantly blaming them, as if they are the only ones responsible (together with Brown/Darling, right Terry). It is irony, you know. Just have a look at the large amount of sentences written by you ending with “caused by EU burocrats”/ “done by EU burocrats” /”crazy actions of Brown/Darling” etc.
About the discrepancy between 6,5 % or 2/3 of EU laws being applied in Iceland I still have my doubts but I will take a look at it with an open mind. Perhaps you have some links.
I agree that the crisis keeps on burning throughout the whole world and a lot of unpleasentness is still to come but a complete meltdown of the entire financial sector like in Iceland….i do not believe this . In fact there is some sign of macro economic recovery.
You wrote:
++++++++++++
“( The whole description from that Forbes article of how Davið made did not cosy up to Trichet in the smoozing EU burecrat way but instead made simple direct requests for what was asked — says more about Trichet and EU burcrat than it does about Davið. )
”
++++++++++++
In fact this shows that Oddsson had no idea what he was doing, or anyway that he was totally unsuitable for his job.
IF you are a very small player,
IF you are desperately in need of money,
IF you have to ask a very big player and
IF you have (in the past) always criticized and attacked this big player, you have to swallow your pride, sit down with mr. Trichet, have a cognac and a cigar together and try to repair the relationship.
Just sending a plain request (“give me the money”) will not work.
If you were mr. Trichet and if some little guy, who in the past always criticized the EU, the euro and the ECB, constantly bragging how much better Iceland was all of a sudden asked money from you, morevoer doing so in a rather unpersonal manner (something which is not appreciated in continental Europe) , would you grant his request? I wouldn’t.
keep in mind too that the ECB already had plenty of problems too with the upcoming crisis, so why give a special treatment to a country like Iceland?
In my opinion Oddsson was used to the fact that he could get away with everything in Iceland but unable to deal with much bigger parties on the international stage, which still was an important part of his job.
I also think you should reserve some of your indignation for the scandinavian brothers who (with the exception of the Faeroer) were not very much willing to lend support to Iceland.
++++++++++++++++++++++++++++++++++++
do specifically blame EU burecrats for IceSave being such a big failing that it was in the end and for falling short term on the heads of Icelandic taxpayer, and first on the UK and Netherlands taxpayer.
++++++++++++++++++++++++++++++++++++
There will always be disagreement between us about this. in my opinion icesave was a scam , basically a desperate attempt of landsbankki to keep the system going: other ways to attract capital were not possible anymore since other banks already had lost confidence in landsbankki. EU burocrats could not help it that landsbankki ran out of money. Even though Iceland did have a DGF- a depositor guarantee fund ( that is basically what EU directive 94/19/EC is about) it was by far too small to cover the obligations of the banks. These banks had completely outgrown the Icelandic economy BECAUSE there was no control /regulation in Iceland. Anyhow, the icelandic national bank failed at this and you cannot blame the EU burocrats for the fact that the icelandic DGF was by far too small.
++++++++++++++++++++++++
This money was available because of ridicolous low interest rate from main government issuer of money Japan, US, lesser degree ECB that meant this money was seeking place to make interest for those lending money.
In the era of banking after dot com burst 2000/2001 to 2008 Icelandic bankers did do well. It is just that era was never going to last because one based on cheap credit never do, because that cheap credit made artificially by incompetitent Central Bankers.
++++++++++++++++++++++++++
You are blaming low interest rates for the faults that icelandic bankers made? low interest rates are not the problem. The problem is that some incompetent people did not know how to deal with this and went overboard.
let us go to the micro economic level: low interest rates (not a ridiculous thing at all) were also available to individuals. And it was possible to borrow, borrow, borrow LOTS of money. Some idiots have done this and they basically ruined themselves since they took on obligations that were much too big for them.
is this the fault of ‘ridiculous’ low interest rates? No, it is the fault of this incompetent individual who cannot count and calculate.
A fool and his money will not be together very long (jewish saying)
Another example: in Germany there is no speed limit on the highways. Potentially this is dangerous but most germans (as well as most people driving around there regularly) know very well how to deal with it: remain calm, do not do crazy things, keep your distance etc. As a result of this the number of accidents in Germany (on highways) is surprisingly low.
BUT sometimes an idiot comes to the Autobahn with a car he cannot handle, driving like a maniac , causing an accident, sometimes also injuring innocent people.
is this a fault of the limitless speed? no it’s the fault of the idiot who cannot drive and judge risks properly.
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Inflation has always been the enemy of Icelanders and after big aluminium plant opened this was real problem to be contained.
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I do think that actually many icelandic bankers LOVED inflation since it seemed to make the perpetuum mobile run on which the icelandic banking boom was based. You know the principle: borrow money from a very low inflationary country (Japan) at a very low rate of interest, convert this to krona, put it in an icelandic account at a very high interest rate: repay the japanese, keep the rest of the interest as a profit. brilliant system. Only problem: it collapsed as soon as the krona lost its value.
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Higher food prices is because of our stupid agricultural protectionism mainly. But also because of the hiking up of the ISK due to the carry trade causes now our currency to be so much lower than before.
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Perhaps it is comforting for you to know that such protectionism is not allowed inside the EU towards other EU countries.
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Same also can be said for other countries that has EU burecrat created laws.
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I do not deny that there is a lot to be improved overhere as well, but fingerpointing is not a real answer. and certainly the consequences here in the EU have been a lot less disastrous so far.
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I know only of two others. (examples of corruption)
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Come on Fisy, there are LOTS of them, plenty on this site, plenty of them named by Alex for instance.
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You make Iceland sound like continental Europe like Italy or Greece.
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I do not consider myself a prejudiced person and in the past I believed iceland was a very advanced and non-corrupt country BUT I am sorry , the more I read about Iceland the worse it becomes. I even think it is worse than most southern european countries. Apart from this Iceland has also managed to destroy itself by this very strange mixture of corruption , political and economic incompetence, greed of certain individuals and naivity of the general population.
You know how corruption works in a country like Greece? Suppose somebody wants to build a house. Getting a permission in the official way is hell and takes years. So what to do if you do not want to wait for years? You just build the house.
After a while some official will notice about this house and some proceedings will be started against you. in the end you will have to pay a fine and that is it: you have your house and the burocrats have their money: this is corruption, but still in the end everybody is happy. so one might label it as ‘useful corruption’.
in Iceland however the system has only created losers (apart from some big fish ).
well, Niels, EU failed to crush Italian crap-luxury agriculture. So EU didn’t protect other members from the worst one who still gains up to 10x with its food (we’re not good anymore on doing something else) compared to whole Europe. Google around: seek and you’ll find.
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I know only of two others. (examples of corruption)
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> Come on Fisy, there are LOTS of them, plenty on this site, plenty of them named by Alex for instance
Please indulge me then and list please. I do find it difficult to debate on ghosts. And ghosts they are until you list them.
Fisy,
I am sorry for my very late reply. missed your last comment:
http://www.icenews.is/index.php/2009/12/12/questions-surround-central-bank-of-iceland-lending-practices/
http://www.icenews.is/index.php/2009/12/09/former-kaupthing-men-sentenced/
http://www.icenews.is/index.php/2009/11/18/iceland-bank-investigator-freezes-assets-in-case/
http://icelandreview.com/icelandreview/daily_news/?cat_id=16539&ew_0_a_id=352155
and one word: CAYMAN ISLANDS