“Students interested in economics and finance should closely follow this new Iceland saga, for it is the most dramatic story yet to illustrate how reckless bankers let loose in a free market can destroy entire economies.” – Uwe E. Reinhardt November 3, 2008
The new prime minister, Jóhanna Sigurdardóttir, has no time to lose in turning the economy around. But all is not dark: below the now-collapsed hedge fund that Iceland’s banks had become, the country’s economic base remains strong.
Baugur Group HF, the Icelandic owner of stakes in U.K. retailers from Hamleys Plc to Iceland Foods Ltd., asked for protection from creditors after talks with Landsbanki Islands Hf broke down.
Baugur and its subsidiaries applied in a Reykjavik court to enter a “moratorium process” to protect its assets and “all creditors,” according to a statement today, after Landsbanki decided to end talks aimed at restructuring the company.
From Bloomberg
Jon Asgeir Johannesson describes today’s moratorium actions of Landsbankinn against Baugur as a kick in the balls to visir.is. This means that Britons will get some of the best companies owned by Icelanders for next to nothing.
“I am sure Philip Green is dancing in his living room now that he will become owner of a large part of our businesses for a cut-down price”.
A couple of bloggers have pointed to the eerie fact that David Oddson and Jon Asgeir Johannesson are finally facing the music in the same week.
Photo: Not my views but just a sample of how easy it is to brand things
It is all too easy to polarize concepts and perceptions.
Are you to the left politically? If you aren’t you must be to the right?
Do you want David Oddson out of politics? Then you must be for Jon Asgeir Johannesson’s domination of the retail market.
Against whaling? Must be a left-green.
Against high-income tax? Must be an Independent Party member.
Did you protest? Must be a communist.
You didn’t protest? Must be a capitalist.
Do you like Björk? Must be against aluminum production.
Coffee or tea person? You cannot possibly like both.
Are you a Liverpool fan? You cannot really appreaciate the genius of Cristiano Ronaldo.
Somewhere in the last century our world was split in two. For and against. Nothing in between. Left and right. That was the world that shaped so many of our current political leaders and social commentators. Not just in Iceland but pretty much everywhere.
I’ve tried to divorce myself from this. On some issues I would traditionally lean right, on others to the traditional left. What it brings me are my own opinions. And the result is that the left-leaning arm of family thinks I am a card-carrying Independent Party member and my friends to the right think I am a downright communist.
It is just so easy to brand the other side when you confront other ideas than your own. When I expressed my concerns about the business-ethics of Bjorgolfur Gudmundsson and Bjorgolfur Thor in 2007, my then boss told my I was a communist. Cue the end of any meaningful conversation.
I criticize the Independent Party a lot in this blog. But I have voted for them as recently as 2006 in the local elections. Its just that in my opinion they messed up. And as the ruling party for the last 18 years they have to confront criticism. I voted for the party, but it doesn’t mean I gave up my right to criticize the party and that I cannot change my mind.
I have been more forgiving towards the new government because I will give it a chance, like I’ve given previous ones. Mess up in my opinion and I will reserve the right to be critical. I hold the power in the way I cast my vote, you are just borrowing it.
The ability to change one’s mind is one of the best virtues I can imagine in people. It means they are willing to think critically about their preconceptions. One of the worst ways things can go is the way it has in Gaza. It is hard to talk sense into any people who swear by a talking bush or expect a glorious afterlife.
There are still many talking bushes to the left and right in Iceland. Now is a chance to weed them out.
Apparantly everyone is losing money on the Icelandic Economic Miracle (Trademark of Hannes Holmsteinn Gissurarson), even the Queen.
Kaupthing Singer & Friedlander moved its office in 2006 to the building which also houses the Apple Store in London, and it happens to be owned by Queen Elizabeth. The rent is 3 million GBP per year but no payments have been coming since October.
Never before have so many come to the Icelandic Housing Fund for assistance because of difficulties with home payments.
More than 300 homes have sought the fund’s assistance per month for the last few months.
Former Eimskip CEO, Baldur Gudnason is taking the company to court over payments owed to him totalling 162 million ISK.
Baldur’s control of Eimskip ended in disaster with the company posting a then Icelandic record-loss of almost 100 billion ISK. Obviously the board therefore saw fit to grant him a severance deal of 50.000 Euros for 24 month.
The lesson should be to screw up in style if you are going to screw up at all.
Straumur Burdaras posted a 105 billion ISK loss on the last year, a new Icelandic record leaving Eimskip’s loss of almost 100 billion in its wake.
Straumur’s assets depreciated almost 93 billion ISK last year and its loss after taxes in the last quarter was 86 billion ISK.
The big question these days is how much or little grace will accompany David Oddson’s exit from the Central Bank?
Johanna Sigurdardottir has sent him and the other governors a letter asking for their resignation, otherwise ways will be found to remove them. The reasoning seems straight-forward, collapse of the economy and complete lack of trust in the Central Bank, in Iceland and abroad.
It is tricky, David’s government made it into a law that Central Bank governors are hired for seven years. Then he made sure he was hired once he had left the government.
No wonder his methods are likened to the ones of the mafia.
