The most beautiful moment

A friend said today that the protests in Reykjavik when the Parliament building was besieged was the most beutiful moment he’d ever witnessed in Iceland. 

Finally, people made a statement. Finally the ruling elite was pushed out of power. 

He recalled telling the story of how after some idiots had started throwing things at the police, other protesters formed a shield around the police. The next day, after a half-hour of protests the police lowered their own shields and moved out of the way. No one stormed the building. 

He said he’d talked to one of his friends in the police who’d said that most of his co-workers had wanted most to turn away from the protesters and towards the parliament themselves. 

Maybe this is the good side of living in such a small country, it is hard to throw rocks at your former classmate from 6th grade or raise a baton at your grandmother. The police themselves have had to suffer from massive budget cuts in the last few years and have families themselves and home-loans that have left them in a hard place.

In spite of a few skirmishes both sides can be proud of their overall performance and behavior, the protesters and the police. Even if some find it convenient to paint a different picture.  Things could have gone terribly wrong.

Iceland Turns Hard Left

Geir H. Haarde and David Oddsson may be among the first political casualties of the international financial crisis, but they are unlikely to be the last. It looks like other nations are also entering interesting times.

From Hannes Holmsteinn Gissurarson’s column in the Wall Street Journal

Still in limbo

We are still in a relative limbo as of now. 

The new government has taken office and it seems like the general mood is “OK, we’re not sure what to do about you but we’ll give you a chance to show what you can do”. 

The removal of the Independent Party from the government was necessary, not only for the country but the party itself as it had become degenerately unable to do anything. There were too many cobwebs holding its pillars together, so they were unable to move on so many issues that needed adressing. 

Of course they are crying their eyes out in the media and in their blogs but the fact remains that apart from those old enough to still be credulous about the old left-right politics, most are now turning a deaf ear to what the party has to say. 

Gisli Marteinn Baldursson, one of the young puppies brought up by David Oddson’s rule talks about the new government inviting us to a party that’s sour from the beginning. But most people do not think of the current situation as a party, but more the day after when you have to clean out the mess left by the spoiled teenagers you left in charge of the house. And the hangover is immense. 

Johanna Sigurdardottir being the new prime minister will buy this new government more time than any other could dream of in this situation. People and businesses need solutions, justice and to see things are being done. Already, the new government is acting on many levels, including the necessary removal of the Central Banks’ board and governors which the Independent Party could not bring itself to do because of blind loyalty within the party to the man in the hot seat, whose grace allowed them to rise to offices of influence themselves. 

The Independent Party, which does not tire of pointing out the fact that the new ministers have about a century’s worth of Parliamentary experience between them so they could hardly be said to be representatives of new times, could become more influential in its opposition role. It will allow the party to regenerate, although it could go down the road of retreating to the trenches of the same families that have held control of the party for generations. Member of Parliament Bjarni Benediktsson is now being touted as the new leader. His family alone has about a century’s worth of parliamentary experience. 

Although things are currently in a bit of a “wait and see” mode, we are surely in for some interesting times.

Iceland stranded in more ways than one. Eventually the fiscal drugs fail and the patient dies

Somewhere along the line, Iceland’s three major banks forgot such home truths as that, with 25 times leverage, a four per cent in decline in asset value wipes out your equity. It’s a simple thing, but even bankers get absent-minded. And now they are all defunct.

Iceland’s government, as most, liked to regulate the little things to death, while leaving the greater fiduciary questions to the pleasure of the free market — the opposite of a government’s traditional role.

From the Calgary Herald

Iceland’s new PM asks central bank governors to resign

Iceland’s new prime minister on Monday asked the country’s three central bank governors to tender their resignations in the wake of the country’s economic meltdown, she said in an interview.

“I have requested that they resign immediately and enter discussions on their departure,” Prime Minister Johanna Sigurdardottir said in a televised interview with Iceland National Radio.

“I sent them a letter this afternoon,” she added.

From AFP

Landsbankinn’s tax fraud division

 

Former chief of the Icelandic Tax Office, Indridi Thorlaksson voices his concern about the fact that the former head of Landsbankinn’s tax division, Kristjan Gunnar Valdimarsson was registered as the manager of four limited companies registered in the Caribbean island Tortola.

Tortola is a popular hiding place for those who do not want to pay their share to the society they make their money from. Morgunbladid tells the story of  Proteus Global Holding S.A., Kargile Portfolio Inc, Peko Investment Company Ltd. and Marcus Capital Ltd. which bought shares in Landsbankinn and held onto them until the bank’s employees wanted to use their share-options. At some point, all of these companies were amongst the 20 largest shareholders in the bank. 

“I think it all points to the fact that they are evading tax” says Indridi. He thinks by keeping the shares in Tortola profits were made from currency fluctuations, which therefore should have been taxed. But as the companies were registered in Tortola, they didn’t have to pay tax, but just 300 USD in renewal-fees.

FSA was warned not to allow Kaupthing to take over Singer

 “[The FSA] should have been alerted further by the fact that both the heads of risk and compliance of Kaupthing Singer & Friedlander were subsequently dismissed for voicing their concerns about the way the company was being managed and specifically about its attitude to risk.”

Former Singer & Friedlander chief Tony Shearer to The Times

FSA failed to heed doubts about Kaupthing

“When Kaupthing bought British bank Singer and Friedlander, its chief executive told the regulators the deal should not go through.”

From Channel 4 News (with video)

Iceland’s Warning to the World

Nowhere else in the world, so it seems, is the crisis as visible as in Iceland, nowhere else is it so concrete. The small size of the country also means that every citizen can easily calculate how much debt has accumulated in his or her name. Before they were nationalized, the three large banks had amassed arrears of $166 billion (€130 billion), equivalent to 10 times Iceland’s gross domestic product. That comes to an additional $527,000 for every man, woman and child. An Icelandic plumber or fisherman who has a wife and two children to feed would thus all of a sudden find himself $2 million more in debt. How can the current generation ever work off this debt?

From Der Spiegel