Queasy effects of Geir Haarde’s BBC interview

I was watching Geir Haarde’s performance on HARDTalk again. 

Whenever the man mentions the words “Lehman Brothers” and “international financial crisis”, in order to divert attention from his own governments gross mistakes I get sick to my stomach. 

When he tells the world that he didn’t speak to the leader of the country that put a terrorist law against his own, my heart stops beating for a minute. Is he actually being serious or is this a fictional BBC drama? 

When he says he “won’t comment” on anything related to David Oddson yet again my soul wants to escape the country that allowed this man to ascend to the position of prime minister. 

It is clear that the man is just not incompetent as a prime minister but as a living, breathing organism.

Berezovsky: ‘Dirty Money’ Claims

 

“It’s ridiculous to see the hands of the Kremlin in London. Mr Lebedev is a critic of the Kremlin. There is a conflict of interest between Mr Berezovsky and Mr Lebedev.”

Mr Berezovsky claims that Moscow is using Iceland to launder “dirty money” before investing in other countries.

“You remember three months ago the Russian government declared that they would help Iceland.

“Their trick is very simple because Russian, let’s say top level bureaucrats like Putin, like others, oligarchs together created a system how to operate on the West.”

 

 

The above is from the much anticipated SKY television show aired tonight. Watch it here.

The IMF report on Iceland

Indicators of consumption are plummeting, and the deterioration in the labor market is accelerating, with rising unemployment and falling real wages contributing to a considerable contraction in real incomes. Significant import compression is underway allowing a sustained turnaround in the trade balance, as exports continue to benefit from a weaker króna. Meanwhile, inflation has risen from 14 percent in September to 17.1 percent in November, in line with the program.

From the new IMF report on the situation in Iceland

Time’s 25 people to blame for the financial crisis: David Oddson

Still think David Oddson is the prophet who foresaw everything and tried to sound the alarm bells? 

Here is what Time has to say: 

Over the two decades in which David Oddsson held public office, first as Iceland’s Prime Minister and then as the governor of the central bank, he ushered in a new era of free market economics, privatizing Iceland’s three main banks, floating its currency and ushering in a golden age of entrepreneurship. Whoops. Iceland’s economy instead is a textbook case of macroeconomic meltdown: The three banks, which were massively leveraged, are in receivership, GDP could drop by 10% this year, and the IMF has stepped in after the currency has lost more than half of its value. Nice experiment.

Note: When I last checked Jon Asgeir Johannesson was not a controlling stakeholder in Time.Inc. 

Unemployment ascends to almost 9%

According to the latest numbers from the Directorate of Labour, 14.755 people are registered unemployed today. 

That’s almost 9 percent.

Baugur hands over keys of British HQ

Baugur handed over the keys of its British headquarters to administrators PricewaterhouseCoopers today with the majority of staff made redundant with one week’s pay.

From The Guardian

Geir Haarde on HARDTalk

When the history of the still unfolding global financial crisis comes to be written Iceland will get a chapter all of its own.

Last Autumn the so-called Viking Tiger became a failed financial state, its banks ruined, its currency in freefall.

Geir Haarde was the prime minister in the eye of that storm, who quit last month after days of public protest.

As he surveys the wreckage of Iceland’s broken economy is he ready to say sorry? He talks to Stephen Sackur.

From the BBC

Prisoners options

“My situation is such that I am a prisoner of a way too small apartment for the next 35 years”, says Rakel Sölvadottir in today’s Morgunbladid. Rakel bought her apartment in 2004 and has made every payment since. But because of inflation and price-indexation her loans are now 30 million and her apartment’s market value is at most 24 million. Rakel has two children, one with special needs and they are now stuck in an apartment that is too small, even though she has never defaulted on her loans. 

This is the definite picture of a people that have been left to carry the burden of keeping inflation down by themselves. The citizens of Iceland are going to be price-indexed to death. The government, people who own their own homes because they didn’t face the same unjustice when they were starting out has not offered any real solutions to combat the crippling effects of price-indexation on Icelandic homes. 

The options available to home-owners and families at the age of 25-45 today seem to be narrowing down to:

A) Bankruptcy – rather ten years than thirty-five in a prison of debt
B) Exodus – to escape from a country that offers no future
C) Suicide – so that your family can get what price-indexed savings you have in your pension funds to do option B for themselves

So far, it is known that all options have been used by some people.

The public’s values all point towards pity

 

“The public opinion is powerless, because the public’s values all point towards pity. A shroud is wrapped over everything, where care might be the material but carlessness is definitely sown in. ” – Sigurdur Nordal, Skirnir 1925

These words of Sigurdur Nordal which were brought up on Silfur Egils today are apt. At the time they were written to explain the corruption that was allowed to flourish in Icelandic society. 

It is now just over four months since the economic crash and for some reason a lot of people one talks to seem to be thinking the worst is over. Yet all signs point towards the fact that we have only seen the top of the iceberg. 

We now know that there are thousands of empty homes in Iceland because the contractors, financial institutions and the local governments did not care to monitor the massive construction underway in the past few years and the effects it would have on the housing market for years to come.

We now know that the government, no matter which parties occupies its seat does not understand the injustice of borrowers having to shoulder the responsibility of keeping inflation down by themselves, without any help from lenders. What price-indexation has given to the Icelandic public should be tried in court as a crime against humanity. 

We now know that those who owned the banks and the largest companies in Iceland took a lot of money and ran off with it to the Caribbean and Luxembourg. We also know that even though they might lose a company or two, they are in prime position to gain others on the cheap. 

We know that the Central Bank’s interest rates have had adverse effects on inflation for years. In an open economy where foreign loans have been so available, the lofty interest rates have forced businesses to roll the costs of their own borrowings onto their consumers, therefore maintaining high inflation. Icelandic interest rates since the Central Bank set itself inflation goals are the exeption that proves the rule that everything that goes up must come down. 

We now know that there is going to be an ideological nuclear battle in Iceland for the next 5-10 years. The main culprit will be those who became filthy rich during the last few years and a certain elite within the Independent Party. Meanwhile, important issues for whole generations will suffer. 

I predict that we have five years of economic turmoil ahead of us, and ten years of political and social turmoil. They might be necessary for future generations but none of us who are going to go through them are ever going to get them back.

The most important issue

So the most important issue of the Icelandic parliament is underway.  

Bjorn Bjarnason, former Minister of Justice has asked for a report on the effects of president’s Olafur Ragnar Grimsson’s comments in German papers earlier this week. Olafur Ragnar like so many other times put a silver foot in his mouth when he claimed to a German journalist that Iceland would not reimburse the lost savings of Germans, neglecting to mention that it was only his opinion, not an official statement. 

So are Bjorn’s intentions driven by a real concern for the German savers who have been reassured already that they will be reimbursed, or the need to sling mud into the direction of an old political foe?