Former Icelandic Prime Minister Geir H. Haarde visited Ireland last week with bad news for the ‘Celtic Tiger’, saying its economy will shrink more than Iceland’s this year.
According to the Irish Independent, Haarde spoke at the Institute of European Affairs in Dublin, where he said that EU membership would not have saved Iceland’s banking sector last autumn and that proposed EU financial reforms now do not go far enough to prevent a future collapse.
Haarde said that Ireland’s predicted 10.75 to 12 percent GDP contraction and Latvia’s 18 percent recession are proof that Iceland would not necessarily have been protected from the global downturn as an EU member: by comparison, Icelandic GDP is predicted to contract by 10 percent this year.
Haarde, who was forced from office following the collapse many Icelanders blame him and his party for causing, said that the EU should create a stronger continent-wide guarantee system. Part of that system should force banks with operations in other EU countries to open subsidiaries there and not simply branches – thereby transferring risk to the host country for operations on its territory. Such a move would, for example, have significantly changed Iceland’s current Icesave situation.
According to Haarde, the reason for the Icelandic banking collapse was that the banks were too big for the Icelandic government to save, but too small to weather the international storm.
The full 50 minute speech:
http://www.youtube.com/watch?v=emxuZvpViVs
“Part of that system should force banks with operations in other EU countries to open subsidiaries there and not simply branches – thereby transferring risk to the host country for operations on its territory. Such a move would, for example, have significantly changed Iceland’s current Icesave situation.”
How funny, being given advice from this idiot.
His solution – let us take risks and other countries can pay for that risk *when* it fails.
Gee thanks, but a better alternative is to prevent massive over leveraging by countries that do not have the financial reserves to back it up. The EU will take that option, you can be sure.
Geir made bad things and, he made mistaken decisions; even so, he wants to make bad things again. He can not deny your ‘viking’ identity: to plunder whereever they go!
“Former Icelandic Prime Minister Geir H. Haarde visited Ireland last week with bad news for the ‘Celtic Tiger’, saying its economy will shrink more than Iceland’s this year.”
As the saying goes: that is not consolation!
“According to the Irish Independent, Haarde spoke at the Institute of European Affairs in Dublin, where he said that EU membership would not have saved Iceland’s banking sector last autumn and that proposed EU financial reforms now do not go far enough to prevent a future collapse.”
EU membership and the EURO would have saved to the Icelanders last autumn, and now, your compatriots would not be men and women ruined, living in a ruined country – IMF aids – and with a worthless and refused currency all over the world.
“Haarde said that Ireland’s predicted 10.75 to 12 percent GDP contraction and Latvia’s 18 percent recession are proof that Iceland would not necessarily have been protected from the global downturn as an EU member: by comparison, Icelandic GDP is predicted to contract by 10 percent this year.”
Again, as the saying goes: that is not consolation!
Geir, you can not compare Icelandic recession to those in Ireland and Latvia! The game is not clean! Currencies of these countries float, and your currency, the Krona, artificially is supported and manipulated every day! Please, let the Krona float and then we can compare the recession between these three countries! Perhaps you would have an icelandic GDP contraction at 25%-30%. What do you think, Mr. Haarde? Please, play fair! Stop playing dirty, and lying!
“Haarde, who was forced from office following the collapse many Icelanders blame him and his party for causing, said that the EU should create a stronger continent-wide guarantee system. Part of that system should force banks with operations in other EU countries to open subsidiaries there and not simply branches – thereby transferring risk to the host country for operations on its territory. Such a move would, for example, have significantly changed Iceland’s current Icesave situation.”
hahahahaha !!!
“According to Haarde, the reason for the Icelandic banking collapse was that the banks were too big for the Icelandic government to save, but too small to weather the international storm.”
Did he regulate? Did his Government regulate? Yes! NOTHING! It was a piece of the cake; a piece of the trick!
By the way, why do not you compare Icelandic GDP contration to:
Denmark: -3,6 (Q4 2008).
Norway: -0,3 (Q1 2009).
Sweden: -6,4 (Q1 2009).
Finland: -1,8 (Q4 2008).
Spain: -3,0 (Q1 2009).
France: -3,2 (Q1 2009).
U. K.: -4,1 (Q1 2009).
Italy: -5,9 (Q1 2009).
Germany: -6,9 (Q1 2009).
GDP Iceland & Ireland, in US$. Year 1980 = 100.
Year 1985;
Iceland: 87.
Ireland: 99.
Year 1990;
Iceland: 188.
Ireland: 225.
Year 1995;
Iceland: 207.
Ireland: 316.
Year 2000;
Iceland: 258.
Ireland: 456.
Year 2005;
Iceland: 481.
Ireland: 952.
Year 2008;
Iceland: 518.
Ireland: 1288.
Year 2009*;
Iceland: 348.
Ireland: 1026.
(1998-2008) 10 years Euro ; GDP, year 1998 = 100.
Iceland: 212.
Ireland: 310.
Mr. Haarde, please, truth will out!! Is it true? IT IS TRUE!
Bankers = Greedy people –> Who has an EXCESS of money ?
Answer: us …. so come here steal as you want, please!
“Duplicate comment detected; it looks as though you’ve already said that!”
>His solution – let us take risks and other countries can pay for that risk *when* it fails
You really dont understand any of this do you Peter? A subsidiary is entirely regulated by the country in which it is incorporated and so that regulator is responsible for it.
What Geir says about the gaping flaw in the EU regulation model is 100% correct.
A subsidiary is a local bank in every way except that it is owned by the foreign bank.
It was the flawed idea of EU Commission burecrats give wrong features to applying EU pillar freedom of establishment idea to banks through branches concept and Directive 94/19/EC that made IceSave as big as it was:
http://www.icenews.is/index.php/2009/06/08/politicians’-pride-angers-man-on-street/#comment-80606
Making banks have subsidiaries and not branches is obviously correct as Geir says, as was case of Kaupthing Singer and Friedlander in UK, and other subsidiaries around Europe of Kautphing and Glitnir:
http://www.icenews.is/index.php/2009/04/20/all-kaupthing-edge-deposits-in-germany-to-be-repaid/#comment-73215
The regulators in this other countries are entirely responsible for this subsidiaries and treat them like any other bank for all purposes.
It is just that in the case of Kaupthing Singer and Friedlander the Brown and Darling decided at best to panic and get that UK bank taken over for no real good reason under Northern Rock Act and definately without due process.
And that is why Kaupthing has its UK judicial review granted by UK High Court ( when Northern Rock was not granted ).
Kaupthing Edge was under a subsidiary not a branch and that is why the debt does not fall in Icelandic tax payer like IceSave. And also why the actions of Brown and Darling on the GBP 550 million from KSF IOM is so bad. They take advantage of situation to have this nice deposit under they control.
Of course also at the time it was refused to give Kaupthing Singer and Friedlander access to the same assistance as the other UK banks. So much for the fairness in the City of London that made it so big over the centuries.
Instead of all this stupid deposit insurance that create moral hazard insist on bettter capital ratio in bank. That make them less risk adverse. And tell them if they fail they will not be bailed out.
As to idiots — you haven’t bothered to read this thread have you Peter as you jaw continue its flapping ( like in this post of yours above ):
http://www.icenews.is/index.php/2009/06/16/former-iceland-pm-defends-bank-privatisation/#comment-81542
>And that is why Kaupthing has its UK judicial review granted by UK High Court ( when Northern Rock was not granted ).
http://www.icenews.is/index.php/2009/03/16/kaupthing-uk-legal-case-makes-high-court-progress/#comment-68753
>The full 50 minute speech:
>http://www.youtube.com/watch?v=emxuZvpViVs
To hear his comment about regulations and other reasons start watching at 06:00.
WHAT A CLOWN!! I CANNOT BELIEVE HE WENT TO IRELAND TO SAY SOMETHING LIKE THAT, AND AT THE COST OF ICELANIDER´S POCKETS!!
THAT IS THE KIND OF USELESS AND INCOMPETENT PEOPLE ICELANDERS HAVE T O DEAL WITH, AND HE IS HAVING MILLIONS OF KRONURS AS SALARY EVERY MONTH WHILE THE REST OF ICELANDERS STRUGGLE TO PAY A ROOF ON THEIR HEADS AND EAT…
WHAT ICELAND NEEDS IS A REAL REVOLUTION AND PUT ALL THIS CLOWNS THAT ARE ONLY SUCKING MONEY FROM THE PEOPLE AND DOING NOTHING, INTO JAIL!!
IF ICELAND WAS IN THE EU, THE MAFIA COULD NOT HAD STOLEN ALL THAT MONEY AND HIDE IT IN THE CAYMAN ISLANDS…
Yes it “will” shrink more cuz there is more to shrink, Genius.
Really this man is dumb, well not only him, probably the hole nation.
ICELAND LIVING THANKS TO INTERNATIONAL AID AND NOW THEY ARE THINKING ABOUT USING THE MONEY THEY HAVE FOR FUTURE PENSIONS, THE MONEY THAT EVERY ICELANDER OWNS TO BE ABLE TO HAVE A RETIREMENT IN THE FUTURE AND BE ABLE TO EAT…. THEY ARE THINKING ABOUT USING THAT MONEY NOW…
WTF!! ÍSLENDINGAR, ÞIÐ ERU ÖLL FUKT!!
I THINK IT IS TIME FOR ICELANDERS TO GET TO THE STREETS AGAIN BECAUSE THIS INCOMPETENT MAFIA IS DRYING OUT THE COUNTRY, FIRST THE BANK SYSTEM ( THE MONEY IS IN THE CAYMAN) NOW THEY WILL TAKE PEOPLE´S FUTURE PENSIONS TO PAY BACK THE STOLEN MONEY…
IS SOMETHING GOING TO BE LEFT AT THE END?? OH YES!! A HUGE DEBT WITH THE IMF!!!
WTF!!
On Jun 22, 2009, Fisy said:
“What Geir says about the gaping flaw in the EU regulation model is 100% correct.
A subsidiary is a local bank in every way except that it is owned by the foreign bank.
It was the flawed idea of EU Commission burecrats give wrong features to applying EU pillar freedom of establishment idea to banks through branches concept and Directive 94/19/EC that made IceSave as big as it was:”
Yes, of course, it was the EU’s fault that allowed a Icelandic regulated bank to by pass the UK regulator and borrow even more money from depositors.
Its not the Iceland fault for vastly over borrowing, against all European advice, its the EU’s fault for ALLOWING ICELAND TO BE STUPID.
Silly me for thinking that Iceland was a sovereign nation with an iota of sense.
On Jun 22, 2009, Fisy said:
>And that is why Kaupthing has its UK judicial review granted by UK High Court ( when Northern Rock was not granted ).
And what will that judge say? Probably that the Icelandic banks should never have been allowed to operate in this country due to their poor management and corrupt political system that made them a disaster waiting to happen. They had no chance whatsoever of surviving the credit crunch unless the rest of the world bailed them out.
Further itinerary for Geir H. Haarde believed to include Washington D.C. where he will speak to Congress regarding obesity followed by Brasilia where he is expected to claim that Icelandic women have bigger tits.
Kind of funny that he think someone is gonna believe that Iceland GDP will contract less than Ireland’s…
Either the currency rate are not accounted or the guys that cames up with those numbers are the same incompetents who drives the banking collapse…
On Jun 23, 2009, JdK said:
“Either the currency rate are not accounted or the guys that cames up with those numbers are the same incompetents who drives the banking collapse…”
He is, of course counting it in local currency which is technically worthless. Which would make Iceland GDP fall 100%.
Even in the rate invented by the central bank the real fall in GDP is 50%.
Beat that Ireland.
Dear Peter
I have no problem with the finding you suggest if the gist of it shows that the UK FSA was fundamentally at fault at letting the Kaupthing group loose on us. What can’t go on is the UK Govt leaving the real victims (KSFIOM savers)never knowing whether KSFUK was the root of the problem or the Darling seizure was the problem. Brown and Darling at least owe us that. UK is not a third world nana republic after all.
Steve
On Jun 23, 2009, steveservaes said:
“What can’t go on is the UK Govt leaving the real victims (KSFIOM savers)never knowing whether KSFUK was the root of the problem or the Darling seizure was the problem. Brown and Darling at least owe us that. UK is not a third world nana republic after all.
Steve”
The root of the problem was that Iceland banks were extremely badly regulated and borrowed far too much money on the mistaken belief that either the EU would bail them out or they would be able to walk away from their debts laughing. KSFIoM relationship was with the Parent bank who guaranteed the depositors not with the other Uk subsidiary. KSFIoM shipped its deposits to the London Bank which was also insolvent. That the UK bank was insolvent is not the HMG’s fault – its the fault of the Icelandic parent bank.
The UK isn’t a ‘nana’ republic but the IoM isn’t in the UK or EU, so its not really either of their problems. If it were, the depositors would have been protected and repaid.
I can assure you the UK and EU owe IoM depositors absolutely nothing, its between the IoM and Iceland.
Peter you say “Iceland banks were extremely badly regulated”. If KSFUK (a UK bank owned by an Iceland parent) falls within that description then the losses of the KSFIOM bank, which have arisen in respect of the deposits made with the KSFUK bank, might lead to compensation being awarded on account of the UK FSA’s mis-regulation of KSFUK. I would also query your comment that the UK bank was insolvent due to the fault of the parent – I would qualify that by saying it was insolvent through the fault of its own directors in making the loans they did. I have seen no mention of the identity of the directors of KSFUK. Any idea?
@steve
Peter’s point was, I suspect, that the whole Kaupthing group was a house of cards (although nothing like the Landsbanki one).
That doesn’t, in and of itself, mean that the FSA did anything wrong pre-Oct 2008. It wasn’t responsible for the parent company.
Fair comment Bromley.
Interesting to see what you say about Landesbanki – when several local authorities etc seem to think Landesbanki’s assets will repay claims in fall, when this has not been said about KSFUK let alone K hf
Yep, that claim by the councils abouts Landsbanki has me foxed too. Bjarni has kindly responded to my question on how it is that on the one hand we hear that the state of Iceland will likely be forced to cover the shortfall between the Landsbanki asset values and the guarantee, whilst on the other UK councils say they’re getting 95% back from Landsbanki.
I haven’t read it yet – looks like it’ll take a while to work through :).
http://www.icenews.is/index.php/2009/06/21/protests-in-iceland/comment-page-1/#comment-82768
Has anyone actually identified any super-defaults in the Icelandic banks loans yet – or cases where large cash deposits have been “stolen” and transferred to Cayman/Lux etc. I keep hearing this, but what is the evidence?
On Jun 22, 2009, Peter – London said:
On Jun 22, 2009, Fisy said:
> >It was the flawed idea of EU Commission burecrats give wrong features to
> >applying EU pillar freedom of establishment idea to banks through branches
> >concept and Directive 94/19/EC that made IceSave as big as it was:”
>Yes, of course, it was the EU’s fault that allowed a Icelandic regulated bank to by >pass the UK regulator and borrow even more money from depositors.
>Its not the Iceland fault for vastly over borrowing, against all European advice, its >the EU’s fault for ALLOWING ICELAND TO BE STUPID.
>Silly me for thinking that Iceland was a sovereign nation with an iota of sense.
It is the Icelandic regulator FME repsponsiblty to be on top of this kind of systemic risk. But they werent.
Not on the problems that were warned about by Davið and his colleagues in public monetrary reports of the Central Bank about the risks if the markets closed.
No one expected this crisis to get so bad so fast as all bankers in world were always expecting Federal reserve and Treasury to bailout its insolvent banks.
When Lehmans was allowed to fail it sent shock wave around banking world — for first time they would actually have to assess risks of lending to other banks without the idea that they could cry to the US government to bail them out with taxpaer money.
This of couese meant the US banks found because they had been doing all this reckless buying and lending related to the mortgage backed securities they could NOT know and trust to lend to their other big banks. And the same for European banks.
Despite that Icelandic banks look okay in assets they come very low in foodchain in rolling over they loans and that is what happen to Glitnir then Landsbanki then Kaupthing during the fate full time end of Sept to early Oct.
So here we have an example of a systemic shock and disruption of lending between banks inside the EU and form banks outside the EU into the EU.
There fore this changes the situation of the EU Directive 94/19/EC from being clear cut — if things were normal then of course Iceland would do what a responsible govenrment would do and back the deposit fund. But now things have not been so clear cut because this was a crisis added to by the digusting behavior of Brown Darling towards Landsbanki, Government and Central Bank of Iceland.
We were knocked over the head by Brown and Darling no wonder we want this in front of impartial judge. But of course EU commission has its reasons not to which Bjarni has bought out in some nice details in other threads.
As to general idea about EU’s fault..
The EU regulations MUST be taken by Iceland into local law under the EEA agreement as has to be done by the EU memberstate in order to do its financial cooperation and operating in it.
So in that sense, yes the EU burecrats are responsible for making this flawed law about freedom of establishment though branches. It WAS forced on Iceland in the same way it was forced on EU memberstate UK and Holland.
That IS the fault of the EU commission that made this law — this EU Directives.
Therefore it is difficult for them to have any high ground — the EU commission — in trying to stop a request for impertial 3rd party to rule on IceSave case.
That Landsbanki did make a branch and not a subsidiary is the problem at the core. Under EU law they could NOT BE STOPPED from doing so. You do understand that I hope.
Should Landsbanki have been making this as a branch? No. But they directors could not be told to stop because that is against the EU law. And Icelanders did not make this law, nor the UK, nor Holland. EU commission burecrats did.
Holland is gentlemanly in this case but still this is general principle at stake here. In case of UK its govenrment show bad faith. In each case as we see by the deal trying to get Iceland to sign they have direct financial interest in trying to limit liability and get best for they tax payer.
Even if as I expect Landsbanki assets cover this over time still we have they interest to pay and it is fair to get this EU directive ruled on because if things go wrong Icelandic taxpayer is on the hook when they should not be because of this crisis.
That Icelanders do pay there debts is not the point of that at all. Of course they do that.
It is the fact that no one inside the case should be allowed to judge it. Of course EU commission does not want to look like fools and have this bad publicity. So they rather that Icelandic taxpayer be on the hook. Which is not acceptable in any way looking at this matter.
It is unreasonable and against due process of justice. And typical of EU burecrats.
Of all the EU regulations we have — this 6.5% under — it is nearly all this financial ones — and look at how bad they have been. Does EU really except us to take more by joining EU and all that costs — until it shows that when there is a problem that EU commission will be honest and let a judge review it and so that innocent people are not damaged and equity can happen.
No one infallible and why would EU commission NOT want to show that they are reasonable people that will learn from the mistakes and correct them fairly ?
* this 6.5% under EEA agreement
On Jun 23, 2009, steveservaes said:
>What can’t go on is the UK Govt leaving the real victims (KSFIOM
>savers)never knowing whether KSFUK was the root of the problem or the
>Darling seizure was the problem. Brown and Darling at least owe us that.
>UK is not a third world nana republic after all.”
Yes they do.
And UK High Court agrees in granting the judiciual review.
It was blind panic at best by Brown Darling. But I know they are going to come out of this looking far worse..
On Jun 23, 2009, steveservaes said:
>Peter.. I would also query your comment that the UK bank was insolvent due to the fault of the parent ”
Peter is on some kind of propoganda mission, so it is wise to use critical mind when listening to him in particular.
He only posts when facts that are unflattering to Brown and Darling are being disucsed. When he says garbage and other ad hominem you know you’ve hit a nerve.
If you listen to Geir speech he tells of more facts that are damning regarding Brown Darling and Kaupthing case and I’m surprised others here haven’t picked up on it.
Look starting at 24:16 in the YouTube.
( It shows how you cant trust even IceNews to understand the real important things being said and have to do your own research. )
On the fateful week Tuesday he reveals that Kautphing was paid the loan of EUR 500 million for 4 days to bridge its short term gap in financing. (from Icelandic Central Bank.)
This loan given on the Tuesday and to be repaid on the Friday.
Darling and Brown intervened on the Wednesday and took Kaupthing Singer and Frieldnader despite the fact that this money was on its way ( and other monies too ).
Collateral was a bank FIH Erhvervsbank A/S in Denmark, which the Central Bank of Iceland owns now because the loan was NOT repaid by Kaupthing.
I will let the more sensible people here think about what this fact means in the whole narrative of what happened to Kaupthing Singer and Friedlander.
One thing that the FSA in Isle of Man complain about bitterly was that unlike Bradford and Bingley problem in UK they never received warning from UK FSA about Kaupthing Singer and Friedlander.
The most obvious reason is that UK FSA did not decide until the DAY that Kaupthing Singer and Frieldmabder needed to be taken down. Because it was not insolvent. It was a political decision by Brown Darling to take it. Not one based on actual insolvancy.
Darling and Brown decided that they did not want Kauthpging Singer and Friedlander ( a UK bank) to survive so that they would crush other news in the UK media about own UK owned banks.
And also to make for sure there was no way that Kaupthing Singer and Friedlander could be part of the UK bank bailout scheme.
And as part of this they got a nice GBP 550 million or so of UK people money from Isle of Man as part of it. This was a side effect they had not expected in they opportunism but comes as a nice bonus to them.
A slight correction. Under EU law they could not be stopped by foreign governments/regulators. The Icelandic government could do what it wanted to the banks.
Bromley,
I only saw this comment of yours today. It is totally spot-on. You are exactly making the point.
Except Brumley .. problem is Icelandic FSA and Central Bank could not do any thing in breach of the EU directives we have fully incorporated here as part of EEA.
Despite my harsh criticism of Icelandic FME ( FSA ) about not responding to systemic risk — Landsbanki was careful to keep within all the ratios, etc.
You should read Chapter 3. of Kaarlo Jännäri report as linked to here ( The Kaarlo Jännäri Report on Banking Regulation and Supervision in Iceland Recommendations and Conclusions March 30 2009 ) :
http://www.icenews.is/index.php/2009/07/01/iceland-icesave-deal-“there-is-no-plan-b”/comment-page-1/#comment-84412
It is one that will challenge you very forcefull assertions that you make in this regard of “do what it wanted to the banks”.