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LQD: Iceland to go into Chapter 9/11?

by ChrisCook Mon Oct 6th, 2008 at 02:18:23 PM EST

Iceland Prime Minister: we may go bankrupt

Only in Norwegian so far, but the Iceland Prime Minister was just on TV to say that the government is taking control of the banks, but may not have the resources to save them.

He said that it is too risky for Iceland as a nation to bail out the banks, and therefore there is a real possibility that the Icelandic economy will collapse...

Update [2008-10-8 11:46:51 by ChrisCook]:

The Icelandic Central Bank has announced that it has given up supporting the kronur - which was always a bit like resisting tanks with a pea-shooter

The Swedish Central Bank has apparently offered a SK 5 billion loan to prop up Kaupthing's Swedish operation - Kaupthing Bank Sweden AB - where 25,000 Swedes put their money in the last year alone in search of a 5.55% interest rate...

In the UK, Kauthing's UK division, Kaupthing Singer & Friedlander has been put into administration, and the retail deposits of Kaupthing Edge have been shifted to ING

As they say, if something looks too good to be true, then it probably is...

Which sums up Iceland's economy in recent years pretty well...


Display:
Holy shit!

Thank Thor that elecricity is free there. There's a chill in the air.

You can't be me, I'm taken

by Sven Triloqvist on Mon Oct 6th, 2008 at 02:29:50 PM EST
What does "an entire country going into Chapter 9/11" mean?  EXACTLY!

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Mon Oct 6th, 2008 at 02:33:06 PM EST
[ Parent ]
This is TOO FUCKING FUNNY FOR WORDS!!!!

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Mon Oct 6th, 2008 at 02:34:29 PM EST
[ Parent ]
The citizens of Iceland may be forgiven for not rolling around on the floor with you.
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Oct 6th, 2008 at 02:52:18 PM EST
[ Parent ]
OK, let's get serious.

Which country is next?  If Iceland, why not ...?

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Mon Oct 6th, 2008 at 03:10:07 PM EST
[ Parent ]
They are the worst case scenario - a small island, 300k people, minimal agriculture, not much industry. It's almost a modern version of Easter Island or pre-colonial Hawaii - there is no margin for error, no "fat" in the system to absorb overshoots or economic bubbles.

you are the media you consume.

by MillMan (millguy at gmail) on Mon Oct 6th, 2008 at 03:28:15 PM EST
[ Parent ]
Iceland has been behaving like the country that thinks it's a hedge fund for years. It's a big step up to anywhere else.
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Oct 6th, 2008 at 03:28:17 PM EST
[ Parent ]
I forgot.

Is that worthless cock-sucker Milton Friedman still alive?

If he's dead, let's find his grave and piss on it!

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Mon Oct 6th, 2008 at 03:42:25 PM EST
[ Parent ]
It means your ass belongs to the IMF.

You can't be me, I'm taken
by Sven Triloqvist on Mon Oct 6th, 2008 at 02:37:02 PM EST
[ Parent ]
I thought that only happened to third rate helpless banana republics.  Let them put a Russian or Chinese military base there.  Instant prosperity!

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Mon Oct 6th, 2008 at 02:46:17 PM EST
[ Parent ]
Iceland may turn Keflavik over to Russia.  What irony.
by rifek on Thu Oct 9th, 2008 at 03:22:28 PM EST
[ Parent ]
I'd imagine the first impact will be that the currency will be worthless, ie no imports at all. All exports will be traded in euros or bartered. The immediate sequestration and sale of all Icelandic owned foreign assets.

Crikey, no oil =  a sailboat fishing fleet. Or the lease of Icelandic fishing rights to foreign fleets.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Mon Oct 6th, 2008 at 02:46:31 PM EST
[ Parent ]
So, beer anyone?

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Mon Oct 6th, 2008 at 02:47:49 PM EST
[ Parent ]
Nope. Iceland can't grow barley. Hmm, what can you brew with seaweed ?

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Mon Oct 6th, 2008 at 02:50:22 PM EST
[ Parent ]
All manner of foulness.
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Oct 6th, 2008 at 02:53:04 PM EST
[ Parent ]
One could extract iodine which happens to be a reagent for meth.

You can't be me, I'm taken
by Sven Triloqvist on Mon Oct 6th, 2008 at 03:35:00 PM EST
[ Parent ]
You have an interesting store of knowledge there, Sven.

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Mon Oct 6th, 2008 at 03:43:46 PM EST
[ Parent ]
It's called wikipedia...

You can't be me, I'm taken
by Sven Triloqvist on Mon Oct 6th, 2008 at 03:51:53 PM EST
[ Parent ]
Damn it all.

Every Icelander I've met have been Good People.  They don't deserve this.

Hope the Nordic Council steps in rather than the IMF.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Oct 6th, 2008 at 04:03:00 PM EST
I would expect the Nordic Council to step in...or a 'union' with Norway, perhaps...?  
by Solveig (link2ageataol.com) on Mon Oct 6th, 2008 at 04:22:12 PM EST
[ Parent ]
Confession: knowledge of Icelandic public opinion is out of date.  From what I knew (30 years ago!) Norway might be able to pull it off.  Icelandic history under foreign "unions" is not good (= disastrous.)  Countering that is the high regard for Norway in Iceland -- at least there used to be.

As Helen also noted, without the money to purchase oil to fuel their fishing fleet Iceland is in a heap of trouble.  Norway is in the position to help with that.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Oct 6th, 2008 at 08:31:33 PM EST
[ Parent ]
I have never been to Iceland, but I know that the relationship with Norwegians is extensive and friendly - on all levels.  

I'm sure the Norwegians could at least keep their fishing boat operating :-) - but there is more to Iceland than fishing boats, and I'm sure the Norwegian oil/power industry has its eyes on opportunities in Iceland:

Energy in Iceland

Iceland is the only country in Western Europe that still has large resources of competitively priced hydroelectric power and geothermal energy remaining to be harnessed. Although electricity consumption per capita in Iceland is second to none in the world, only a fraction of the country's energy potential has been tapped. Iceland is therefore the only country in Western Europe that still has large sources of competitively priced hydroelectric power and geothermal energy remaining to be harnessed.
 

I'm not worried about the people of Iceland - they will survive...the resilience of this people will take them through this, and they will laugh and tell 'sagas' about the madness of it all to their grandchildren.  

As for a possible 'union' with Norway, I expect Iceland would see that as preferable to joining the EU :-)

by Solveig (link2ageataol.com) on Mon Oct 6th, 2008 at 09:37:52 PM EST
[ Parent ]
Island has the potential to become the 22nd Century equivalent of Saudi Arabia with all the untapped hydro, thermal, and wind power sitting around.  Most of the island is, to put it charitably, useless for anything BUT thermal or wind power plants.  It is geologically active so I'm not sure how the hydro part could be economically tapped.  Outside my pay-grade, to be frank.

If it comes down to a XOR choice between the EU and Norway I expect the decision will be Norway.  There is an obvious 'match' between the Islandic and Norwegian fishing lobbies, tho' may not a progressive match :-).  Either way the prospect of the Islander's fishing grounds coming under control of the Japanese zaibatsu¹, say, fills me with horror.  It's one of the few fishing grounds that hasn't been totally hosed by modern "Resource Management" (scream.)

Love the sögur, BTW.  Just finished reading Morkinsknna last week.

¹  Something on the order of them buying up the Trondelag for its agricultural export potential

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Oct 6th, 2008 at 10:57:25 PM EST
[ Parent ]
As it is difficult to transport surplus energy from Iceland to any conceivable foreign market, they should be able to use geo-thermal and other renewables to run energy intensive operations such as refining of aluminum and other metallurgical operations.  Anything where bottom dollar energy costs are key.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Oct 7th, 2008 at 01:25:54 AM EST
[ Parent ]
There are 3 aluminum smelters operating in Iceland with several more planned.  

Icelanders, being Icelanders, are having a huge argument about the ecological impact (a BIG deal in Iceland, given their natural history) as well as the economy trade offs.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue Oct 7th, 2008 at 02:04:15 AM EST
[ Parent ]
Nice people - thor-awful country. Almost the entire entertainment industry of Iceland is packed into a couple of acres. The architecture is banal, and the landscape deadening apart from the occasional outcrop of magnificence. The only fun I had on visits was relaxing in the Blue Lagoon. Knocking back Black Deaths was not my idea of fun.

OK I tell a lie - when the sun is shining it is acceptable, and since the weather changes every 10 minutes, there are moments each day when Iceland feels nice. But otherwise I'd rather be in Bognor.

You can't be me, I'm taken

by Sven Triloqvist on Mon Oct 6th, 2008 at 04:38:20 PM EST
[ Parent ]
H'mmmmm.

AH h'mmmmmmmmmmmmmmmmmmmmm.

An expat Brit in Finland complaining about someone else's weather.

What's deeply wrong with this picture?

:-)


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Oct 6th, 2008 at 11:00:01 PM EST
[ Parent ]
It appears Russia is replacing the IMFUS Treasury in that capacity, and that the Nordic countries didn't rush to help.

Bloomberg: Iceland Seeks Loan From Russia, Pegs Krona, Takes Over Bank (October 7)

Prime Minister Geir Haarde said at a press conference he was ``disappointed'' that ``we have not received the kind of support we requested from our friends.'' He declined to name countries Iceland may have approached for a loan, adding that the nation ``will absolutely not default on its foreign debt.''


A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Oct 7th, 2008 at 10:20:57 AM EST
[ Parent ]
During the budget debate today in the Norwegian Storting, the Finance Minister, Kristin Halvorsen said that Norway is ready to help Iceland if they approach us.  She did not think it would be right for us to go in without being invited to do so.  
by Solveig (link2ageataol.com) on Tue Oct 7th, 2008 at 10:40:11 AM EST
[ Parent ]
See here:
"We have throughout this year asked many of our friends for swap agreements and for other forms of support in these extraordinary circumstances," Mr Haarde said. "We have not received the kind of support that we were requesting from our friends. So in a situation like that one has to look for new friends."


A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Oct 7th, 2008 at 10:45:46 AM EST
[ Parent ]
Iceland has just become insolvent because the Government can't afford to bail-out its banks.  Supermarket chains report not being able to raise foreign currency to import food.

Ireland has just guaranteed bank deposits to the tune of 400 Billion Euro - almost 3 times our annual output(GDP).  It is clear we couldn't honour those guarantees if they were all called in.

Has the Government just mortgaged our lives to bail-out the banks?  Is it time to stockpile food?

Vote McCain for war without gain

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Oct 6th, 2008 at 05:26:10 PM EST
Perhaps it's time to call a meeting of your local community?  Go door to door?  Become a community again, not just a collection of strangers?

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Mon Oct 6th, 2008 at 05:39:57 PM EST
[ Parent ]

It is clear we couldn't honour those guarantees if they were all called in.

All called in?

The deposits are only in doubt if mortgagees can't make the payments.Then you get a foreclosure/repossession, and - possibly - a shortfall.

It is only to the extent that there is a shortfall that the guarantee will get called in, and even then only after all remaining Bank equity (if any) is eroded.

So, in fact, I think the taxpayers' exposure is way short of the apocalyptic figures bandied about.

Of course, I think there's another way of doing it - a form of Debt/Equity swap - but everyone here knows that already.


"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Oct 6th, 2008 at 06:22:31 PM EST
[ Parent ]
Pardon the hyperbole!

Vote McCain for war without gain
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Oct 6th, 2008 at 07:34:05 PM EST
[ Parent ]
Iceland has just become insolvent because the Government can't afford to bail-out its banks.  Supermarket chains report not being able to raise foreign currency to import food. Iceland has little agriculture of its own.

Ireland has just guaranteed bank deposits to the tune of over 400 Billion Euro - almost 3 times our annual output (GDP).  It is clear we couldn't honour those guarantees if there were major defaults.

Has the Government just mortgaged our lives to bail-out the banks?  What if WE go bust trying to bail-out the banks?  Where is our equity particaption in the Banks we have rescued?  Indeed, where is the equity?

Vote McCain for war without gain

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Oct 6th, 2008 at 07:55:35 PM EST
[ Parent ]
Where is the equity, indeed....

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Mon Oct 6th, 2008 at 08:09:00 PM EST
[ Parent ]
Oh stop it! This is a CRISIS! We're all DOOMED! BIG HEADLINES OF DOOM sell PAPERS!  DON'T ruin our strategy to cash in on DOOM! DOOM! DOOM! DOOM! Buy papers! DOOM!
by Colman (colman at eurotrib.com) on Tue Oct 7th, 2008 at 04:49:11 AM EST
[ Parent ]
[Colman's Crystal Ball of Doom™ Technology]

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Oct 7th, 2008 at 05:09:56 AM EST
[ Parent ]
Anyway, all property, everywhere is worthless, therefore all those debts will be worthless, so we're DOOMED.
by Colman (colman at eurotrib.com) on Tue Oct 7th, 2008 at 04:50:04 AM EST
[ Parent ]
No, the creditors are doomed - but if we bail them out we will be.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Oct 7th, 2008 at 05:07:25 AM EST
[ Parent ]
Nailed it Colman.

Everybody knows the underlying asset (such as a house) disappears poof when the financial instrument (such as the mortgage) goes sour.  This leads to the unsettling experience of people waking up in the morning only to find their neighbor's house - and the neighbors - have disappeared overnight.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue Oct 7th, 2008 at 10:43:25 AM EST
[ Parent ]
Well, what would be the real estate prices in Iceland if everybody there emigrated because of the crisis ?

You might say the value of, say, France, is large enough to cover the debt of French banks - is that true of Iceland ?

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Tue Oct 7th, 2008 at 10:58:27 AM EST
[ Parent ]
According to James Lovelock Iceland is going to be one of the few inhabitable places left in 50 years or so...

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Oct 7th, 2008 at 11:03:48 AM EST
[ Parent ]
Well, with proper actualisation, that doesn't count in the present...

Un roi sans divertissement est un homme plein de misères
by linca (antonin POINT lucas AROBASE gmail.com) on Tue Oct 7th, 2008 at 11:07:48 AM EST
[ Parent ]
True. And in the long run we're all dead.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Oct 7th, 2008 at 11:08:28 AM EST
[ Parent ]
You might say the value of, say, France, is large enough to cover the debt of French banks - is that true of Iceland ?

Yes.  

;-)

I mean ...

[Write and then delete long, convoluted, argument.]

Look, valuation leading to a judgement of the Wealth of Iceland utterly depends on the criteria one brings to the process.  Is the Icelandic culture worth anything?  The fishing grounds are worth something but that 'something' depends on the time horizon used in the Net Present Value calculations.  What about the Value of the untapped hydro, wind, and thermo energy potential?  And so on until boredom sets in.

In my opinion the "Wealth" of Iceland greatly exceeds the mere monetary debts contracted by a small number of Icelanders who used OPM to play financial games.  


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue Oct 7th, 2008 at 12:17:50 PM EST
[ Parent ]
ATinNM:
Look, valuation leading to a judgement of the Wealth of Iceland utterly depends on the criteria one brings to the process.

And not just Iceland.

Which is why property is going 'poof' - there's a little bit of a problem with insurance on loans guaranteed on property which is crashing in value. The property doesn't need to go 'poof' - it just needs to make a massive loss. Which it's well on its way towards.

There will still be some residual value, but like every other market over-reaction, momentum becomes more important than reality. Some people will still want homes, but how much is an empty foreclosed house worth if no one can get a loan for it?

Value isn't created by reality but by confidence and mutual trust in ability to pay. When trust disappears, value goes with it, even when the real economy still has real things for sale.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Oct 7th, 2008 at 01:10:36 PM EST
[ Parent ]
My point was: the houses are still there.  Capable of being used as residences.

The rest is (creative) accounting.  

So far the "creative accounting" has been on the financier's side.  There isn't any reason it cannot be switched to the consumer's side.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue Oct 7th, 2008 at 08:20:18 PM EST
[ Parent ]
...debts contracted by a small number of Icelanders who used OPM to play financial games.  

There was an interview here on SBS where one Iceland's economist told us precisely how many people : 20

Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Tue Oct 7th, 2008 at 11:59:34 PM EST
[ Parent ]
They should be tarred and feathered - instead they will have taken their assets out of the country while the government pegged the currency at 50% above market value and then they'll come to London like the Russian oligarchs and be defended by the chattering classes while they pay no taxes.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Wed Oct 8th, 2008 at 02:17:23 AM EST
[ Parent ]
I agree with Solveig that the position is not as clear as it seems.

Some of the 20 have in all probability been acting as nominees or agents for Russian money of varying degrees of cleanliness.

Norway is well aware of that, which is why they have been circumspect about exactly what form any assistance will take.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Wed Oct 8th, 2008 at 04:34:37 AM EST
[ Parent ]
Dick Fuld Is Punched: Lehman Brothers CEO Got Punched In The Face
Dick "It Wasn't My Fault" Fuld, the CEO of bankrupt investment bank Lehman Brothers, (seen here being heckled after testifying on Capitol Hill) was apparently punched in the face while working out in Lehman gym on the Sunday following the bankruptcy, according to CNBC's Vicki Ward.


Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Wed Oct 8th, 2008 at 09:33:45 AM EST
[ Parent ]
as this isn't happening to the whole Eurozone, and other Eurozone countries have given only much cheaper guarantees (only deposits, but not bank debt).

I think the fact that Ireland is memeber of the Eurozone is clearly an advantage right now. Otherwise the Irish currency would have hugely plummeted. As Ireland would have lots of debt in foreign currency, the Irish economy would be in serious trouble.

If we are lucky the Irish will see 'Europe' more positively after the Euro saved them an even deeper crisis.

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers

by Martin (weiser.mensch(at)googlemail.com) on Mon Oct 6th, 2008 at 08:59:12 PM EST
[ Parent ]
Stockpiling a little food is always a safe idea.

In addition, If you have savings I suggest opening termed accounts in several insured depository institutions of several EMU countries (preferably without capital connections, preferably the bigger countries with larger guarantees, France having the largest one since a while - caution: some, like ING "France", are not insured in France, because it doesn't have a registered french bank subsidiary, it's all operating straight from NL including retail and web).

If all goes well, the cost is only the inconvenience of doing business further from home. If things go crazy, you are insured against monetary chaos in Ireland.

Actually, deposit outflow to the continent are one thing to watch: it will be an indicator of the level of trust that the wealthy retain in the government.

Pierre

by Pierre on Tue Oct 7th, 2008 at 04:19:43 AM EST
[ Parent ]
The government shouldn't try to bail out its banks.

This is like the East Asian crisis of 1997, only now it's affecting OECD countries.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Oct 7th, 2008 at 05:08:33 AM EST
[ Parent ]
One of the most prominent and talented right wing talk show hosts in Boston Mass, Jay Sevrin has made his "escape" country of choice Iceland.  Jay is of course one of those "journalists" who skillfully contributes his own right wing views while dutifully ignoring the blacklisted topics of Murikan "media".
by Lasthorseman on Mon Oct 6th, 2008 at 07:42:24 PM EST
Lot of romantic fluff-n-stuff floating around about Iceland in Right Wing Circles. Most of it is ignorant nonsense.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Mon Oct 6th, 2008 at 08:35:48 PM EST
[ Parent ]
Here is an interesting article on the U.S. situation:
http://www.openleft.com/showDiary.do?diaryId=8876

His/her analysis is similar to the ones that talk about speculation - particularly short-selling - as the salient cause, but he/she takes it down the road toward discussion of solutions. In the end the author cannot quite get specific, but Cookist theory could supply the missing piece.

In any case I would like to read your take on the analysis - either in this thread or elsewhere.

paul spencer

by paul spencer (spencerinthegorge AT yahoo DOT com) on Mon Oct 6th, 2008 at 09:44:23 PM EST
Short selling is not the problem. Please.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Oct 7th, 2008 at 05:10:48 AM EST
[ Parent ]
Iceland has undergone a remarkable transformation in the past couple of decades, from an economy largely based on fishing to one of the richest in Europe, driven by its biggest three banks following deregulation of the banking system. The banks grew rapidly on borrowing and now have assets eight times Iceland's GDP. But the party has come to an end, with the krona losing more than half its value against the euro in the past 12 months, inflation running at 12%, and interest rates at 15.5%.


Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Mon Oct 6th, 2008 at 10:03:16 PM EST
Iceland is just a beginning...we all are at very beginning right now.
There is no point to believe that we (anybody in west countries and even others) somehow will be speared. We will not. No matter how big or small our countries/industries are. During a great depression in 1929 the most industrially developed countries suffered the most. But those who are based on resources and agriculture folowed...We are all in the same boat guys.
Icelanders are just first to fall...next better prepare.
Is it time to stockpile food? Probably not yet. I assume it will be in a next 8 - 12 months. Watch on inflation (not official but one you experience with your wallet).When your actual money is worth less and less every month/day you'll know we are getting closer and closer...
Our (Serbian) situation was similar to this only by consequences. We couldn't believe what was happening and we asked our selves "is there the end to this" and how the hell it will get better. Suddenly they announced that from January 24 1994 our dinar will be stable (compared to foreign currency). On that same day I left Serbia for ever...and dinar suddenly became stable...with Milosevic still on the top and our foreign policy not changed...Suddenly supermarkets were fool on that same day and it was business as usual...Damn politicians, bankers and all those involved in string pulling ...


Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Mon Oct 6th, 2008 at 10:38:33 PM EST
reuters.com: Russia to lend Iceland 4 bln euros -Iceland c.bank


REYKJAVIK, Oct 7 (Reuters) - Iceland's central bank said on Tuesday Russia had agreed to provide the country with loans of 4 billion euros ($5.4 billion).

The central bank said the loans were for 3-4 years on terms that would be 30-50 points above Libor rates.

by blackhawk on Tue Oct 7th, 2008 at 05:49:06 AM EST
that's an interesting twist...

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Oct 7th, 2008 at 06:17:25 AM EST
[ Parent ]
It's what Solveig's been telling me for years...

The Russians have had roots in Iceland which probably date from Soviet era fishing contacts, if not before, and certainly incorporate "Mafia" etc connections.

You don't buy breweries in St Petersburg without the "biznismen"....

is Russian mafia financing Icelandic expansion abroad?

....of course it was....

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue Oct 7th, 2008 at 06:40:03 AM EST
[ Parent ]
...later in the afternoon, Iceland admitted that they had 'exaggerated' when they announced a deal with the Russians.  And the Russians say there is no deal, and that no negotiations have taken place...all according to Aftenposten...    
by Solveig (link2ageataol.com) on Tue Oct 7th, 2008 at 01:25:10 PM EST
[ Parent ]
Relaxing the downward pressure on their currency and making it easier to defend the ridiculous peg at 130 Kronur/€ (ridiculous compared to the last freely-floating exchange rates around 200 K/€) so that it is easier for wealthy Icelanders to get their money out.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Oct 7th, 2008 at 01:39:49 PM EST
[ Parent ]
Just heard that Iceland has frozen bank accounts...no link yet...
by Solveig (link2ageataol.com) on Tue Oct 7th, 2008 at 02:15:54 PM EST
[ Parent ]
LOL!!!!

(Sorry, I don't think you meant that as a joke.  Apologies.)

"Pretending that you already know the answer when you don't is not actually very helpful." ~Migeru.

by poemless on Tue Oct 7th, 2008 at 02:26:42 PM EST
[ Parent ]
In cod we trust

You can't be me, I'm taken
by Sven Triloqvist on Tue Oct 7th, 2008 at 02:29:11 PM EST
[ Parent ]
Yup, corralito, Iceland version.

You prop up the currency, spread false rumours of foreign support, and after all the necessary bank transfers have been made you freeze bank accounts.

Now wait for the peg to drop form 130 Kronur/€ to 250 which is where they should have moved it from 200 to begin with.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Oct 7th, 2008 at 02:36:19 PM EST
[ Parent ]
The Independent is reporting:

Internet bank Icesave today stopped savers withdrawing their cash after its parent company was nationalised by the Icelandic government.

...

It is not known how many UK consumers hold money with Icesave, but it is thought that as many as 300,000 people in this country have savings with an Icelandic institution.

Money is mainly held with Icesave and Kaupthing Edge, the UK retail arm of Iceland's biggest bank Kaupthing.

Maybe that is what you heard?

Nothing about a corralito on the Central Bank of Iceland or Icelandic Financial Supervisory Authority web sites.  Checked the "Usual Suspects" in the US financial news and came up empty.


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue Oct 7th, 2008 at 04:05:21 PM EST
[ Parent ]
I think you are right...it was verbal info I received, and it could have been misrepresented.
by Solveig (link2ageataol.com) on Tue Oct 7th, 2008 at 04:08:22 PM EST
[ Parent ]
[SuperFran Information Retrieval Technology]

Who had already posted the Independent report in the Special Focus Section of European Salon de News, Discussion et Klatsch.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue Oct 7th, 2008 at 04:12:54 PM EST
[ Parent ]
Teaches me not to listen to rumours...!
by Solveig (link2ageataol.com) on Tue Oct 7th, 2008 at 04:23:29 PM EST
[ Parent ]
We should always link to sources and if it is "a friend told me", say so :-)

I also have to apologize for running around in my tinfoil hat.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Oct 7th, 2008 at 04:30:25 PM EST
[ Parent ]
Blackhawk, can you diary this?

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Oct 7th, 2008 at 06:20:41 AM EST
[ Parent ]
I can not find more details or official confirmation from the Russian side. All in all does not make much sense unless, of course, PM Geir Haarde was the first today to congratulate Russian PM with his birthday.

Bloomberg now is saying that according to Deputy Finance Minister Dmitry Pankin there no such decision had been taken.

by blackhawk on Tue Oct 7th, 2008 at 06:28:23 AM EST
[ Parent ]
The unofficial rumour is that a lot of Russian money was earlier lent through Iceland...
by Metatone (metatone [a|t] gmail (dot) com) on Tue Oct 7th, 2008 at 06:26:23 AM EST
[ Parent ]
So the Russian government is bailing out Russian creditors? That would make sense.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Oct 7th, 2008 at 06:27:29 AM EST
[ Parent ]
I do not think it is 'unofficial', it is just that MSM have not been interested.  Aftenposten reports that the Icelandic PM was in Russia during the summer to discuss the situation.  Russia is very much involved in Icelandic finance, and has been since they all of a sudden started 'raiding' in the UK and the Nordic countries.  The Russians are not stupid, they know that the 'centre of gravity' is moving north, and Iceland is perfectly placed as a mid Atlantic financial centre - a sort of 'frozen' Dubai?    
by Solveig (link2ageataol.com) on Tue Oct 7th, 2008 at 07:42:43 AM EST
[ Parent ]

Iceland's central bank fixes currency rate

REYJKAVIK, Iceland: The Central Bank of Iceland has fixed the exchange rate of the country's currency, the krona, to try to stablize the domestic economy.



In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Oct 7th, 2008 at 09:58:30 AM EST
Yay for them.

Bloomberg: Iceland Seeks Loan From Russia, Pegs Krona, Takes Over Bank (October 7)

Iceland sought a 4 billion-euro ($5.43 billion) loan from Russia, pegged the slumping krona to a basket of currencies and took control of its second-biggest bank to stem a collapse of the financial system.
Let's hope the peg is relatively undervalued so that they don't run out of reserves trying to defend it.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Oct 7th, 2008 at 10:16:37 AM EST
[ Parent ]
Um, no such luck:
The central bank said it pegged the koruna against a basket of currencies at a rate equivalent to 130 per euro. Still, traders at UBS stopped trading the currency after markets became illiquid, Kapadia said. According to Nordea Bank AB, the krona traded at 200 to the euro as of 11:39 a.m. in Reykjavik. That's 53 percent weaker than the peg implies.


A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Oct 7th, 2008 at 10:18:43 AM EST
[ Parent ]
Um, the koruna is the Czech currency. The Icelandic currency is the krona.

And this is from Bloomberg???

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Oct 7th, 2008 at 10:25:12 AM EST
[ Parent ]

Iceland attacks `friends' for lack of support

Geir Haarde, Iceland's prime minister, said on Tuesday that the country's "friends" had not offered financial assistance to his country, forcing it to seek a capital injection from Russia.

Iceland earlier revealed that Russia had agreed to provide the country with a €4bn ($5.4 bn) loan as the crisis-hit country set about shoring up its foreign exchange reserves, although Russia's deputy finance minister, Dmitry Pankin, later said no agreement had been reached.

Iceland's currency, the krona, rallied on the news wiping out losses made on Monday and earlier on Tuesday.

"We have throughout this year asked many of our friends for swap agreements and for other forms of support in these extraordinary circumstances," Mr Haarde said. "We have not received the kind of support that we were requesting from our friends. So in a situation like that one has to look for new friends."

((*jaw))

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Oct 7th, 2008 at 10:19:55 AM EST
[ Parent ]
((*jaw)) [Cyrille's Jawdrop™ Technology]

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Oct 7th, 2008 at 10:23:30 AM EST
[ Parent ]
I'll be sure to try that soon ;-)

We aren't short of opportunities these days. But Jérôme got there first.

"The womb that spawned that thing is fertile yet"

by Cyrille (cyrillev domain yahoo.fr) on Tue Oct 7th, 2008 at 12:13:18 PM EST
[ Parent ]
Fixed exchange rate worked real well for us. Not.

500 % interest rates here we come...

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Tue Oct 7th, 2008 at 12:13:07 PM EST
[ Parent ]
For those missing the reference, 500% was the high point of the interest rate when the fixed exchange rate of the swedish krona was defended in the run up to the swedish crises of the early '90ies.

Later the exchange rate was allowed to move freely and dropped some 30% below the fixed one.

The two takes on the defense of the krona is 1) stupidity and 2) giving the really rich some time to convert there assets to foreign denominations on the taxx-payers dime.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Wed Oct 8th, 2008 at 09:42:00 AM EST
[ Parent ]
The Norwegian PM, Jens Stoltenberg called Iceland's PM tonight and said Iceland could borrow 500mill euros from Norway:

Stoltenberg ringte Island - Nyheter - Politikk - Aftenposten.no

Statsminister Jens Stoltenberg (Ap) snakket ved sekstiden tirsdag kveld med Islands statsminister Geir Haarde om landets store økonomiske problemer.

- Allerede i mai snakket vi om den krevende situasjonen på Island. I etterkant av dette ble den islandske og norske sentralbanken enige om at Norges Bank skulle stille en låneadgang på 500 millioner euro, forteller Stoltenberg.

by Solveig (link2ageataol.com) on Tue Oct 7th, 2008 at 03:17:10 PM EST
From just Two weeks ago....(seems like a different planet)

Ten of the best ... savings accounts | Money | guardian.co.uk

1. Icesave's easy access cash Isa

The glory of the cash Isa is that it allows you to take all your returns free of income tax. If you leave your money in a standard savings account, the interest you earn will be taxed at 40% if you're a top rate taxpayer, or 20% if you're a basic rate taxpayer. Not so in a cash Isa. A top-rate taxpayer earning 6% in a cash Isa is getting the equivalent of 10% gross, while a basic rate taxpayer gets 7.69%. You can invest up to £3,600 a year, and many cash Isas allow you to transfer in previous Isa holdings to help you get a more competitive rate.



Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Wed Oct 8th, 2008 at 02:59:40 AM EST
Icelandic Supervisory Authority: Landsbanki Islands hf Nationalized

On 7 October 2008 the Financial Supervisory Authority, Iceland (FME) used powers granted by the Icelandic Parliament with reference to Article 100 of Act. No. 161/2002, as amended, to take control of Landsbanki Islands hf.

The FME has now decided to transfer a part of Landsbanki´s operations to a new bank that has been formed and is fully owned by the Icelandic Government. The decision ensures continued banking operations for Icelandic families and businesses.

The decision means, inter alia, that the new bank takes over all the bank´s deposits in Iceland, and also the bulk of the bank´s assets that relate to its Icelandic operations, such as loans and other claims.



She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Thu Oct 9th, 2008 at 06:15:26 PM EST
Central Bank of Iceland

[Compiled quote from cited pages]

R&I RATING:(BBB-); Downgraded from (A+) Remains on the Rating Monitor with a view to downgrading.

R&I downgraded Iceland's Foreign Currency Issuer Rating to A+ on October 7, pointing out that the repayment risk of private debt could be transferred to the government once all commercial banks are nationalized. Now the concern has become a reality. Total assets of 3 largest banks exceeded more than 9 times of GDP at the end of 2007 and Iceland government has no other choice but to seek financial assistance from the third party to manage its massive current account deficit and stabilize exchange rates.

Fitch Downgrades Iceland to 'BBB-'/'A-'; Rating Watch Negative.

Fitch Ratings has today downgraded the Republic of Iceland's Long-term foreign and local currency Issuer Default ratings (IDR) to 'BBB-' (BBB minus) and 'A-' (A minus) respectively.

 The Short-term IDR is also downgraded to 'F3' from and the Country Ceiling to 'BBB-'. All Iceland's sovereign ratings remain on Rating watch Negative.



She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Thu Oct 9th, 2008 at 06:27:23 PM EST


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