Taxes will rise in the new year. Income tax by 1%, local taxes can hike further.
But it seems like capital gains tax will not rise.
Which is how the people who caused the crash make most of their money.
Take that stupid citizens of Iceland.
Archive for December 11th, 2008
Last night I saw the movie Religilous, Bill Maher’s take on religion. It confirmed to me how political parties and religious groups are alike.
In a scene in the movie, Maher interviews two former Mormons who explain why so few dissent from the Mormon church in Salt Lake City. It would be social suicide where you would lose your friends and family.
It has struck me hard how steadfastly people stick to dogma once it has been imprinted on them. Invariably you will have discussions with people who have lost jobs, businesses, cars and their savings and they criticize the economic situation as it was some natural disaster which could not have been averted, like an earthquake or a flood. And they will confirm their undying belief in the Independence Party, Geir Haarde and David Oddson.
The Independent Party is the Mormon Church of Icelandic politics. You can never leave.
Left/Greens are similar in their undying faith in their leaders and holders of special truths. Only they can really know the suffering of women, the earth, the poor and the weak. Sort of Jewish in a way.
Samfylkingin is sort of the protestant church, centrist and easy to enter. As with protestant churces it is even easier to leave behind once you have had enough of it.
The Progressive Party would be the Catholic Church. Backwards, against progress and mainly interested in harvesting as much wealth as is possible and give it to the few who control the church to live lavishly.
The Liberals? Crazy enough to be Scientologist’s but not friendly to aliens that is for sure.
One thing is certain, we are in desperate need for an enlightenment.
The scale of what confronts Ms Hjaltested and other Icelanders is only just becoming clear. According to the IMF, the failure of the banks may cost taxpayers more than 80% of GDP. Relative to the economy’s size, that would be about 20 times what the Swedish government paid to rescue its banks in the early 1990s. It would be several times the cost of Japan’s banking crisis a decade ago.
There has been a debate on whether or not high-ranked employees of the banks that collapsed are the right people to be in charge of the new banks that were built on their ruins.
The argument goes that they are in positions to hide or destroy evidence that could possibly be incriminating of themselves or former management. That they are also in positions to take advantage of the situation.
Which seems to have happened in Landabankinn where a now former employee transferred 100 million ISK to a foreign account shortly after the collapse of the bank.
The new management has sent the case to the police for investigation.
That should probably be an isolated incident, right?
The focus has been on FL Group and Glitnir’s ways of doing business lately. Morgunbladid reveals today what everybody suspected, that this is standard business practice amongst those who were lucky enough to own the banks, so much that it could be called the Icelandic way (my suggestion).
When you are in control on both sides of the table, as Bjorgolfur Gudmundsson and Bjorgolfur Thor were in a brilliant deal (from their perspective), it becomes easy to wheel and deal with other people’s money.
Translation from Bjarni Olafsson’s excellent article:
On September 22nd 2004, KEA sold its 27,1% part of Kaldbakur to Kaldbakur itself at 7,9 per share. The purchase was therefore worth 3,74 billion ISK. These stocks were then sold forward to Samson Global Holdings, owned by Bjorgolfur and Bjorgolfur Thor, for the same 7,9 per share.
Two days later, on September 24th, it was announced that Kaldbakur and Burdaras would merge. A deal had been struck with Kaldbakur’s three biggest shareholders, Samson with 27,1%, Samherji with 25% and Baugur 24,8%, that they would be reimbursed in Burdaras stock.
It caught people’s attention that Burdaras bought the Kaldbakur stock for 9,16. The stock that Samson had bought for 3,74 billion was therefore sold to Burdaras for 4,34 billion and Samson made a profit of 600 million ISK in two days.
Bjorgolfur Thor who owned Samson with his father Bjorgolfur Gudmundsson was the Chairman of the board at Burdaras at the time.
It is also worthy of note that through this deal, Samson got 2,97% in Burdaras for the beforementioned 4,34 billion at a price of 14,36 per share. That day Burdaras on the other hand was trading for 15,00. So if Samson would have had to buy these shares on the market the same day it would have cost them 190 million kronas more.
Samson therefore made almost 800 million on this deal. Firstly by selling Burdaras the Kaldbakur stock for 600 million kronas more than they had paid for them two days before. Secondly by acquiring 2,97% in Burdaras for 190 million kronas less than if bought on the market.
Kaldbakur and Burdaras were both public companies, listed on the Stock Exchange and each of them had thousands of shareholders. Bjorgolfur Thor was the Chairman of the board of Burdaras, courtesy of Samson’s 16,84% share in the company and therefore sat on the both sides of the table.
So business as usual for the “oligarchs”, at a considerable cost for other shareholders.
The revelations coming out regarding FL Group and its merry management team are getting wilder by the day. Palmi Haraldsson who one day was caught price-fixing as the head of the national coalition for vegetable producers and the next day turned up as billionaire investor, seems to have a hobby which is collecting shelf-companies to buy and sell in each other and borrow to inflate the values of his public companies.
Today we learn that the CEO of TM, one of Iceland’s biggest insurance firms bought stock in Glitnir and FL Group on behalf of the company for 2,5 billion ISK last January, without consent of the board. Seems like the decision was taken by its then new owners who still hadn’t secured approval from the Financial Authorities (yes, them clowns again) to exercise their control.
The new owners at the time? FL Group of course.
