The long-awaited reply from British Prime Minister Gordon Brown to a letter sent in August by his Icelandic counterpart, Johanna Sigurdardottir has been received in Reykjavik. The letter evades Sigurdardottir’s request for a personal meeting.
Brown’s letter is dated 13 November and has since been released publicly by Iceland’s Prime Minister. It can be seen here. The letter came a day after a response to a similar letter, also sent in August, to the Dutch PM.
In his letter, Brown says: “The Bill currently being considered by the Althingi will ensure that the loan arrangements are legally sound. This is an important step for all of us, and I welcome your Government’s commitment to ensuring that the guarantee is legally binding.”
Sigurdardottir responded to Brown’s letter again on the 17 November, and that letter can be seen here.
In her letter, Sigurdardottir explains her opinion that Iceland is undertaking to repay British and Dutch Icesave depositors by its free will and not in a legally binding framework.
She states that the country will not sacrifice its own development and economic recovery and stresses that Iceland’s willing compliance with the Icesave loan agreement is dependent on future developments, whatever they may be.
Interesting to read the two letters. However, it’s not obvious what she is trying to achieve in her second letter. Is she simply trying to educate him about the contents of the agreement that the two sides have already agreed…
Domestic consumption. Brown’s letter makes it quite plain that he’s simply not interested.
On a lighter note, given the recent problems Brown has had with his handwriting, it must be pleasant to find a leader with worse writing than his.
>Brown’s letter makes it quite plain that he’s simply not interested.
Nor should he be!
how on earth has it taken him this long!
Fool.
Johanna is just playing the full with the icelandic public opinion, the new agreement has removed all those “amendments” set in Augusts, hat Johanna is saying, is: “yes, we accepeted everyting you want , because we have no choice, but not because we were required by law”. That doesn’t change the fact that once its signed… well, its signed.
Brown, a disorganized man operating in a sort of haze and is always reacting to situations rather than being innovative and proactive, precipitated Iceland’s financial crisis. He took, solo, the easy way out in dealing with the nexus of Britain’s investments and Iceland’s indebtedness, giving to consideration to the harm this would cause the people of Iceland. If he was capable of shame, he would be ashamed. But I think not. The ill manners demonstrated by the long time he took to reply to a letter from another head of government give, in my view, the measure of the man. This goes beyond personality though. The UK government has a history of mendacious behaviour. Who remembers when Tony Blair, without warning, decided to sell off, for no understandable reason, the UK’s gold reserve, thus wrecking, for a time, the economy of the newly independent South African government of Nelson Mandela? And how many people are aware that Prime Minister Margaret Thatcher by subtefuge, got several Commonwealth countries including Canada’s to sign an agreement robbing British pensioners who had immigrated of large chunks of their already meager pension? And that several countries, including Australia waking up too late — to what has happened protested to Thatcher and all subsequent British Prime Ministers, to no avail?
To the people of Iceland I say, bonne chance. As individuals and as a nation, your prospects are good. Individually you will be better off in many ways than millions of Brits.
Iceland is on a good path in the effort to solving its economic problems.
The Queen wrote those two letters….which kind of freak would ever consider that Brown was really able to write down that stuff by himself ? Impossible.
The love letters so far…
Johanna: I’m bending over and am waiting for you, so take me any way you want me, big boy.
Brown: Yesm I’m glad you’re so willing but, sorry, I’m married.
Johanna: What did you think I was saying – I’m not an easy girl!
It’s been so long that I’ve forgotten, but I think the only real change was the removal of the expiry date.
Yet another fine example of icelandic diplomacy which has brought the country in trouble in the first place.
See – http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ayt.ktCcJmEY
@ Jimbo (the original Jim):
You could have not said it better, that is in fact whats going on.
@Brown. The other Brown may well be disorganised, I couldn’t say. Seems unlikely given where he’s managed to get to, but possible. However, you’re incorrect on a number of points:
1. The UK government did not act until Landsbanki had already closed it’s doors. Therefore they did not precipitate the crisis.
2. The UK government’s duty is to the UK people. No one else. Now, in so far as it advances the cause of the UK people, the UK government may choose to be friendly with other governments, but this was clearly not one of those cases.
3. I believe that it was Gordon Brown who sold off the gold reserves, and there’s a very real chance that that was a silly thing to do. However, see point (2) regarding the UK government’s duty to South Africa. The market decides the price. It is odd to suggest that the UK should not have sold it’s reserves just to maintain the market price.
“The UK government’s duty is to the UK people. No one else.”
As a member of many international organisations (NATO, UN, etc, etc), the UK has many duties to non-UK citizens. I wouldn’t be too righteous about the UK’s behaviour last autumn: the UK’s initial application of legislation was too broad – it should have been applied to only Landsbanki, not to Iceland’s Central Bank as well.
>As a member of many international organisations (NATO, UN, etc, etc), the UK has many duties to non-UK citizens
Not really Jim. Ultimately, in theory, if the government decides that honouring any of those obligations is not in the interest of the British nation then they can (and should) ditch them.
On the freezing order, IIRC from last time we talked about it the freezing order itself was absolutely fine and clear, but the safe-side interpretation taken by others was unfortunate. There does seem to have been a total lack of communication, but at the end the only thing one can say is that those with the most to lose should work hardest.
Bromley86 – NATO’s founding principle was that member states were obliged to mutual defense in response to an attack by any external party. I cannot think of a stronger obligation than that…
“NATO’s founding principle was that member states were obliged to mutual defence in response to an attack by any external party. I cannot think of a stronger obligation than that…”
Outside that scenario (a military attack) the obligation to non-UK citizens is absolutely nothing. Why Icelanders think the membership of Nato counts for anything is a mystery, the purpose of Nato was a defence against the Warsaw pact – which not longer exists.
And why is it that Icelanders claim that the UK has ’some sort of responsibility’ to look after their citizens while at the same time refusing any responsibility for non-Icelanders even though they have signed agreements to do so?
Bromley #86
1]. In the blogsphere I do not get into arguments or exchanges with ignorant people with opinions, but on my post here I am right on ALL my facts.
2]. Also, moral considerations and political responsibility are important, or all nations would act on the basis of ‘Begger thy internatonal partners,” the way China now does.
3]. If Brown’s objective is to act on behalf on the UK at all cost, and damn every other nation, then he is not doing so well. is he?. I was recently in Europe and the people of the UK are, generally speaking, worse off than the people of any other G8 country!! Poor people in the UK are in dismal state, and only dirt poor Americans are worse off than they are.
Finally, the UK is sliding into a financially disasterous state. As for Iclanders, “They who laugh last, laugh the best.”
And by the way, I remember things between the UK and Iceland all thge way back to the ‘Cod War.’
C. ALEXANDER BROWN
“In the blogsphere I do not get into arguments or exchanges with ignorant people with opinions, but on my post here I am right on ALL my facts.”
Your world must be a simple one. Your original post was full of opinion and no sentence that could be considered as a fact. It’s not shameful to be ignorant of the difference between opinions and facts, but your attempt to claim the debating high-ground is somewhat ironic.
I can’t argue with the accurate mendacity description. I don’t know about Thatcher robbing pensioners, I wouldn’t put it past her.
But it is generally accepted that Brown (immune to all expert advice) selling off over 1/2 the UK gold reserves, was due to Brown’s impatience with an inert metal sitting in a vault not earning any interest.
@Mr Brown, in Canada and Germany :
”
Iceland is on a good path in the effort to solving its economic problems.
”
Really ? Wat path? How?
Please tell us. 320.000 icelanders are very interested.
Niels said:
“Really ? Wat path? How?
Please tell us. 320.000 icelanders are very interested.”
———————————————–
There is no good path, there may well be better paths, but Iceland’s response has gained regard even amongst longtime critics of neo-liberalist economic theory. regards to eg. the sudden harsh devaluation, currency restrictions.
Has any other small country, who have had to face such a sudden and brutal collapse, acted with more positive effect?
Knowless,
The devaluation was NOT a decision by icelandic autorities but just the effect of market forces.
In fact , Iceland tried to pegg the krona to the euro when the kreppa started but had to give this up almost immediately since it was impossible to maintain.
http://en.wikipedia.org/wiki/2008%E2%80%932009_Icelandic_financial_crisis#Currency
In fact we cannot even talk about a devaluation since as we all know, the krona is kept alive artificially by the currency restrictions.
Same thing about these currency restrictions: they are necessary since otherwise there would be imediate collapse.
These restrictions have a very negative effect on foreign trade. The recent departure of McD is an example of this.
You seem to think that Iceland did fine crisis management?
http://www.voxeu.org/index.php?q=node/2498
This already legendary article by the man wo predicted the kreppa tells otherwise.
I really suggest you to read it, Knowless.
I was expressing amazement at the fact that somebody thinks Iceland is ‘on a good road’ . In fact it is the first western country to go into depression as a result of the world wide crisis:
http://en.wikipedia.org/wiki/Economy_of_Iceland#Growth
Iceland has a ruined banking sector, many individuals (especially those who had loans in foreign currency) cannot handle ther debts. Unemployment is high, many people have left, there is the Icesave debt, the threat of international isolation, dependency on foreign loans and the goberment does not seem to have a clue….so I repeat: Wat path? How?
>Has any other small country, who have had to face such a sudden and brutal collapse, acted with more positive effect?
Ireland?
Ireland?
Exactly what positive effect has happened in Ireland?
Surely not their first decision to pump in Eur 4bn of State revenue into the black hole of Anglo Irish Bank, the developers bank, developers that bankrolled the Governing political party- Fianna Fail?
It’s ironic that the leading critic of the Ireland’s path to self destruction over the past 6 years, David McWilliams, has pointed to Iceland’s decisive approach in taking a few important decisions head on as a contrasting example of how Ireland has dithered and dragged indecisiveness before finally stumbling on their final solution, borrow Eur 60bn. to bail out the banks by buying up the bad debts at close enough to their full over inflated value.
Ireland being in the Euro zone, can not act as they would normally have done, devalue their currency.
Niels said:
Knowless,
“The devaluation was NOT a decision by icelandic autorities but just the effect of market forces.
In fact , Iceland tried to pegg the krona to the euro when the kreppa started but had to give this up almost immediately since it was impossible to maintain”
Devaluation is by its nature a response to something serious. It is a standard approach done in Iceland before, to respond to an economic collapse.
“These restrictions have a very negative effect on foreign trade. The recent departure of McD is an example of this.”
Pray tell how foreign trade has been effected negatively by reversing the balance of trade to exports, by reducing imports.
What has the departure of McDonalds got to do with anything except to emphasise that a foreign company whose strict policy to use imported products is no longer viable and their departure is a small boost to local suppliers and local economy.
“In fact we cannot even talk about a devaluation since as we all know, the krona is kept alive artificially by the currency restrictions.”
Currency restrictions are a normal response by the Iceland CB in response to an Economic collapse. Please tell how any currency could survive if every Tom Dick and Harry could buy up all available foreign currency for the purpose?
Currency availability has to be pegged to the balance of trade. The question is, has the current exchange rate been artificially maintained by taking huge foreign currency loans?
“You seem to think that Iceland did fine crisis management?”
I never said Iceland made fine crisis management, I referred to the 2 most important decisions, devaluation and currency restrictions. If you have a better idea of what a Government could have done when faced with a collapse then please say so and refer to where such decisions have worked.
“This already legendary article by the man wo predicted the kreppa tells otherwise I really suggest you to read it, Knowless.”
I am not referring to prevention, that horse had had already bolted. The question is the response after the horse has bolted.
“I was expressing amazement at the fact that somebody thinks Iceland is ‘on a good road’ . In fact it is the first western country to go into depression as a result of the world wide crisis”
I never said Iceland was on a good road, I said there was no good road and there may be better. The Icesave burden is crippling.
If you have practical suggestions for a better road please be expressive. Please use practical examples.
@Knowless,
You obviously did not read the article by Buiter since that is not about prevention but it also clearly describes the mistakes made by Iceland.
You asked for examples and I already gave you one.
You seem to think that devaluation is the correct way to respond to a crisis, it is NOT.
Devaluation makes exports cheaper but imports are made MORE expensive. Especially for a country like Iceland which does not have an equal balance of imports / exports (You know just as well as I do that Iceland needs to import most of its commodities) devaluation has very negative effects.
I will quote the great von Mieses and I hope you will bother to read it :
”
The much talked about advantages which devaluation secures in foreign trade and tourism, are entirely due to the fact that the adjustment of domestic prices and wage rates to the state of affairs created by devaluation requires some time. As long as this adjustment process is not yet completed, exporting is encouraged and importing is discouraged. However, this merely means that in this interval the citizens of the devaluating country are getting less for what they are selling abroad and paying more for what they are buying abroad; concomitantly they must restrict their consumption. This effect may appear as a boon in the opinion of those for whom the balance of trade is the yardstick of a nation’s welfare. In plain language it is to be described in this way: The British citizen must export more British goods in order to buy that quantity of tea which he received before the devaluation for a smaller quantity of exported British goods.
”
You said:
”
What has the departure of McDonalds got to do with anything except to emphasise that a foreign company whose strict policy to use imported products is no longer viable and their departure is a small boost to local suppliers and local economy.
”
The departure of McD is simply an example that foreign companies will leave Iceland because of the currency restrictions. Now McD is not a company that many people will be tearful about but there are other companies as well whose services cannot be replaced so easily.
It certainly is NOT a ’small boost to the local economy’ .
Moreover you forget that at the moment foreign investors will simply not do any business in Iceland BECAUSE of these restrictions.
I would like to repeat something you did not adress: the devaluation was NOT a decision by the icelandic government (which tried to pegg the krona to the euro, remember?) and you are right about one thing: foreign loans are being used in order to keep the krona at its current level: without it a rate of 300 krona to 1 euro would be the most probable result.
You are being very negative about Ireland but they have one very important thing: the EURO.
In times of crisis devaluation of your currency or keeping a dead currency alive with restrictions does not help, what helps is having a STABLE currency .
There is only one solution for Iceland, as I see it: adopting the euro.
Well Niels you have not offered one sensible alternative to the path Iceland has taken nor have you offered one example of a small economy, brought to its knees, taking a different path.
It is easy to be negative about Ireland because it the economy there has been on a disaster road for 6 years. You do not know your stuff about Ireland apart from some superficial overview. Being stuck in the Euro zone meant that Ireland could not take corrective measures re their currency over the past years which they say would have curtailed some of the serious reasons why they got into their mess. Being in the Euro zone did not help Ireland one bit while it slid down that de-regulated path to where it is now and high wages, high costs, piss poor infrastructure is a big reasons why multinational companies are flooding out lately. That country is not cost competitive anymore.
As for the great von Mieses
“However, this (devaluation) merely means that in this interval the citizens of the devaluating country are getting less for what they are selling abroad and paying more for what they are buying abroad; concomitantly they must restrict their consumption”
That is palpable nonsense, the export products are sold as per market price abroad, in Iceland’s case, eg fish is sold to the foreign market at foreign currency prices. That foreign currency is banked in Iceland, at least according to the law regarding currency restrictions.
Reduction of purchases of imported non-essential goods is a positive thing when a currency collapses.
“The departure of McD is simply an example that foreign companies will leave Iceland because of the currency restrictions. Now McD is not a company that many people will be tearful about but there are other companies as well whose services cannot be replaced so easily.
It certainly is NOT a ’small boost to the local economy’ .
That does not make sense
What are you arguing for, that the kronur be impossibly kept at an artificial low rate to benefit the likes of McDonalds?
If a company like McDonalds has a policy to import all its ingredients to make a product for sale to the locaL market and export its profits. When the rate of exchange makes that operation no longer viable and it is replaced by a company who will use locally grown ingredients, how is that not a small benefit to the local economy?
It is absolutely astonishing that you do not see the need for currency restrictions at a time when a currency collapses. Relaxing currency restrictions is a process which should take a few years.
You have offered nothing except some theory which might effect a positive change to attract foreign investment.
I asked you specifically to offer examples of measures taken by small countries where their economy collapsed.
You have offered zilch.
“There is only one solution for Iceland, as I see it: adopting the euro.”
Unfortunetly it can not be done Niels, there is a thing called Maastrict treaty and because of its terms and conditions there was never a possibility for Iceland to adopt the Euro.
Inflation can never be over 1,5 % of averige inflation for the 3 EU states with the lowest inflation.
Long term interests can not be more than 2% higher than the averige in the 3 most stable countries
State deficit can be no more than 3% of GDP.
The total state debt can not exceed 60% of GDP.
Must be member of Exchange Rate Mechanism, ERM II for at least 2 years without devaluation of currency and exchange rate of currency within specific window.
there are more problems but i dont see the point in going on about this, not one person in Iceland believs the Kr could be replaced with Euro.
About the Irish, they dug this hole they are in them selves, i felt sorry for them until they turned their backsides to the EU in the Lisbon treaty voting, the Euro is not helping the Irish, nor does the EU, maybe the Pope could help them out, if he can get time off from running the biggest pedophile organisation in the world.
There is only one solution for Iceland, as I see it. But, first, a question: How much is Iceland worth?
Axel,
You are right about the Maastricht criteria.However there have been ocasions where territories from outside the EU, not meeting these criteria, have been allowed to start using the euro: Montenegro and Kosovo.
These have been political decisions and since these are small territories (like Iceland) nobody in the EU bothered about it.
Perhaps for Iceland a similar solution could be found.
Iceland could also try to adopt the canadian dollar or the chinese yuan.
The main thing is having a stable currency whic can be exchanged freely.
Well, the great economist Knowless has stood up to correct one of the most important scientists in this field. Don’t you think it is a bit pompous?
You said:
”
As for the great von Mieses
“However, this (devaluation) merely means that in this interval the citizens of the devaluating country are getting less for what they are selling abroad and paying more for what they are buying abroad; concomitantly they must restrict their consumption”
That is palpable nonsense, the export products are sold as per market price abroad, in Iceland’s case, eg fish is sold to the foreign market at foreign currency prices. That foreign currency is banked in Iceland, at least according to the law regarding currency restrictions.
Reduction of purchases of imported non-essential goods is a positive thing when a currency collapses.
”
Let us suppose that a basket of cod is 900 kr. in Iceland and 10 euro in the EU.
The EU is selling Iceland a basket of goodies, (nearly) all the things you can buy in an icelandic supermarket. The price for this basket is 10 euro in the EU and 900 kr. in Iceland
The exchange rate is 90 kr. to 1 euro, as it was before the kreppa.
We will leave transportation costs and taxation out of this example.
Now because of the crisis the krona loses value and reaches a value of 180 kr. to 1 euro.
Consequently this will mean that 900 kr. is now equal to 5 euro meaning that a basket of icelandic cod is now worth 5 euro.. Consequently a European can now purchase for 10 euro TWO baskets of cod instead of one before the depreciation of the krona.
In other words, the purchasing power of Europeans with respect to Icelandic cod has doubled.
What about the daily shopping for the icelandic citizen? From now on they will have to pay 1800 kr. for the basket of goodies in stead of 900 kr. before the crisis.
So the purchasing power of icelanders has halved with respect to european goodies.
That is the consequence of devaluation.
This is VERY basic economic knowledge, Knowless.
In order to prove that I am not making this up, you can visit http://mises.org/story/1345
I got this example (adapting it to Iceland) from this article written by Ph. D. Frank Shostak.
If you read this article, which discusses some basic concepts about inflation you will perhaps be able to understand the articles of Buiter too.
Moreover, if you consider the reduction of imports a good result of a devaluation you are not thinking about the fact that Iceland very much depends on imports of all kinds of products, making the situation much more complicated. I raised this in my previous post and you seem to have overlooked this.
Knowless, you said:
”
It is easy to be negative about Ireland because it the economy there has been on a disaster road for 6 years. You do not know your stuff about Ireland apart from some superficial overview. Being stuck in the Euro zone meant that Ireland could not take corrective measures re their currency over the past years which they say would have curtailed some of the serious reasons why they got into their mess. Being in the Euro zone did not help Ireland one bit while it slid down that de-regulated path to where it is now and high wages, high costs, piss poor infrastructure is a big reasons why multinational companies are flooding out lately.
”
I immediately admit that compared to you I do not know anything about Ireland. Off course Iceland has a much better infrastructure, how could I forget.
Without the euro the results for Ireland would have been even worse. The country still has a stable currency and can take full part in the world economy.
Apart from this it is an illusion that a small state with its own currency has much leverage in using monetary measures to stimulate the economy.
Even the Netherlands (one of the bigger economies in the world) depended very much on the DM before the euro and the guilder was obliged to follow the movements of the DM. There was no independent monetary policy before the introduction of the euro.
And I would also like to say that the fall of the krona was not a devaluation since a devaluation is a deliberate policy by a financial authority. In the case of Iceland the krona simply went down.
Knowless, you said:
”
That does not make sense
What are you arguing for, that the kronur be impossibly kept at an artificial low rate to benefit the likes of McDonalds?
If a company like McDonalds has a policy to import all its ingredients to make a product for sale to the locaL market and export its profits. When the rate of exchange makes that operation no longer viable and it is replaced by a company who will use locally grown ingredients, how is that not a small benefit to the local economy?
It is absolutely astonishing that you do not see the need for currency restrictions at a time when a currency collapses. Relaxing currency restrictions is a process which should take a few years.
You have offered nothing except some theory which might effect a positive change to attract foreign investment.
I asked you specifically to offer examples of measures taken by small countries where their economy collapsed.
You have offered zilch.
”
You are just repeating your argument not going into what I mentioned:
“there are other companies as well whose services cannot be replaced so easily.”
What if IKEA would leave?
Did I ever say that I do not see the need for currency restrictions? They are necessary as an emergency measure but emergency measures should be very temporary since they are harmful in the long run.
The icelandic government should make it clear how they want to repair the economy and having a stable currency and free access to the world market is essential for that.
The only things I can see is that they cut spending and raise taxes. In times of crisis this is not the right path.
You seem to be very fond of the question which small country with a similarly collapsed economy took other measures. Can you mention one country which managed to shoot itself in the foot to the extent that Iceland did? I can’t.
Still I can mention you one example: Finland in the early 90-ies.
Finnish economy suffered greatly from the fall of the Soviet Union, its main trading partner and Finland went into a deep crisis.
In stead of cutting costs the finnish authorities started to invest heavily in education and high tech. As a result Nokia emerged as a very succesful company whic brought great prosperity and advance.
http://www.etla.fi/files/633_dp811.pdf
You appear to be very confused Niels.
The question is the response to the crash.
I have have asked you for suggestions on how Iceland could have acted differently.
I have also said that the Iceland’s imperfect response has gained some respect from some economic opinion who have bothered to examine it.
A big part of the response was the devaluation of the kronur and the relatively stable value since one year. The stability of the exchange rate is primarily due to the action taken on currency restrictions which are needed to keep it stable. Have you a problem to accept that whatever economic sense was left in the country, this achievement has been positive in the face of a worthless currency collapse and probable fall out of that on a nation?
I further say that if this currency stability has been achieved without draining reserves/borrowed reserves, then it is remarkable.
There is enough to firefight without the the extra burden of Icesave which alone is worth the equivalent of about Eur70bn for the Irish economy or Eur 800bn for the UK economy.
As has been done in the past collapses, currency restrictions will not be lifted for some time, length of string time.
Niels said: “I immediately admit that compared to you I do not know anything about Ireland. Off course Iceland has a much better infrastructure, how could I forget.”
I do take it that you are not being sarcastic and have actually experience what has passed for infrastructure in Ireland?
Knowless,
I must admit that I was being a bit sarcastic regarding Ireland.
I have been there only once and roads were not too good but still better than in eastern Europe.
Still, the irish at least have trains running. That would also be a good thing for Iceland.
Infrastructure is vastly superior in Iceland despite its sparse population.
Internet/ telecommunications, hospitals/schools/roads/electricity and the all important attention to maintain all the above throughout both seasons.
Planning is notable by its complete absence in Ireland whereas with any new housing project in Iceland, most of the infrastructure is planned well in advance, implemented in logical stages and finished (ie until the money ran out).
Knowless, Niels is write in his quoting of von Mises in that it is apprent to every body that the current Red Green coaliton did not care about economic recovery but EU at any cost wen in April 2009 they did announce ++ more ++ stricter exchange controls.
We can see why Exchange controls were needed early on as it was a form of cushion given the over the water fall kick that happened to banking ststem and currency end of 2008.
But they should have been phasing them out by now.
Instead Red Green government did waste time on EU application and they pet projects instead of actual negotiations one IceSave and really fixing problems of the banks.
Yes it is true that Ireland, Spain, Greece and Eastern Europe countries with problems are dieing a slower death with the Euro and seeing their unemployment rise to 10- 20% etc and we will most likely see sovereign default of Spain or Greece in 2010 because Germany will not bail them out.
But Iceland does need its exchangecontrols dismanteld as soon as possible. And that could be by now, but not with this government.
Until they are gone as Niels does say investment of people that want to invest is stalled and despite lip service a month ago to making it possible for investors to put money in to get it out –that was nonsense response.
It makes my blood boil.
And also the blood of Red Greens ++ own advisors ++ such as Mats Josephson :
http://www.icenews.is/index.php/2009/11/28/icelandic-president-urged-to-say-no-to-icesave/#comment-103688
But at least our banks are not at any way as bad shape as UK banks like RBS which have yet to see they bottom of they black holes ( or Spanish banks with they lying balance sheets about their bad loans in the coastal properties )..
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/6755491/UK-backs-167bn-of-overseas-bad-debt.html
Wow..!! What an interesting discussion. I am so glad I lucked onto this website.
I am no economist, but I would urge careful consideration on the possible consequences of any moves on the matter of changing exchange controls.
I can say this about Ireland. The “Troubles” occupied its political leaders for long periods, indeed for decades, and distracted them from paying sufficient attention to the economy of the country. Indeed, in retrospect we now see that the high technology boom caught them by surprise and did not really come as a result of any economic development programmes. Once established, they thought it would go on forever. In this latter, Ireland was not unique.
Peter Lynch, the legendary former investment manager of America’s Fidelity Investments(1977 – 1990) wrote; “Some people neglect their flowers and water their weeds.” A simple but profound adage, applicable not just to investments, but also to live. And of course the governance of nations.
So, stalwart people of Iceland, what are your flowers and what are your weeds?
Knowless,
As for being ‘very confused’ , I was merely replying to te remarks you made in your post of dec.6th.
You have said:
”
The stability of the exchange rate is primarily due to the action taken on currency restrictions which are needed to keep it stable. Have you a problem to accept that whatever economic sense was left in the country, this achievement has been positive in the face of a worthless currency collapse and probable fall out of that on a nation?
I further say that if this currency stability has been achieved without draining reserves/borrowed reserves, then it is remarkable.
”
This is a very important point, the question is: has this been achieved without burning thru reserves (like the IMF loan)?
Frankly, I do not know. In previous threads Easy brougt arguments to the table suggesting that the IMF loan is bein used for maintaining te kr.
Basically the icelandic krona is not a freely convertible currency at the moment. This is a situation which cannot last for years.