“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
More videos here
“Some of you may not realize that Argentina, a country rich in natural resources with a generally well-educated population, has undergone an economic collapse since 2001.
The primary reasons for this collapse are corrupt politicians, and fraudulent banking institutions that colluded to put the country into massive DEBT!”
As office sales go, it takes some beating. Jón Ásgeir Jóhannesson, the founder of Icelandic retail investor Baugur, is trying to sell thousands of pounds worth of designer furniture from the company’s head office to former staff members, many of whom were suddenly made redundant when the chain collapsed into administration last month.
From the Telegraph
Jon Asgeir Johannesson and Gunnar Sigurdsson, the boys behind the troubled retail group Baugur, may be moving on. The Icelandic duo are understood to have registered a new company in the UK and even found office premises for the venture. No news yet on what the pair are planning, but the company does have a name. And “Carpe Diem” – seize the day – is certainly a fitting moniker for the opportunistic entrepreneurs.
From the Independent
The discussions around the family dinner table in the Buiter-Sibert household are about to become even more fascinating for the adults and even more mind-numbingly tedious for the children. My wife, Anne Sibert, has just been appointed an external member of the provisional Monetary Policy Committee of the Central Bank of Iceland (CBI).
From Willem Buiter’s blog at the Financial Times
They keep falling, reminding us that this crisis is maybe just beginning. Here is the press release regarding Straumur Burdaras Investment Bank from the Icelandic Financial Authorities:
In spite of its strong capital position and the support of funding banks Straumur Burdaras Investment Bank hf. (Straumur) believes that its liquidity position is no longer strong enough to sustain its activities.
The Icelandic Financial Supervisory Authority (IFSA) has therefore decided to assume the powers of a meeting of the shareholders of Straumur and immediately suspend the Board in its entirety. Further, the IFSA hereby appoints a Resolution Committee, which will take over all authority of the Board of Directors.
As a result of this Straumur is closed.
According to a statement from the government of Iceland dated 6 October 2008, all deposits of Icelandic commercial banks are fully secured. Straumur is a licensed commercial bank and is a member of The Depositors’ and Investors’ Guarantee Fund.
Further to this, William Fall, CEO of Straumur, has tendered his resignation for the company, effective immediately.
UPDATE:
The reason for Straumur’s fall was that they needed 18 million Euros from the Central Bank to pay off creditors today. The Central Bank denied the request and it is believed it was the new CB Governor, Sven Harald Oygaard who was instrumental in this decision.
“The bank was allowed to try to work its problems out but it has become clear that it is unable to do so anymore”, said Gylfi Magnusson, Minister of Business Affairs to Vidskiptabladid.
Icelandic pension funds stand to lose 1.3 billion ISK in stock from the nationalization of Straumur. Their losses are even bigger because they purchased the stock at a much higher price.
Iceland’s economy shrank only a modest 0.9 percent in the fourth quarter, data showed on Friday, masking the full effects of a financial meltdown because of the nature of the way the numbers are calculated.
In an ironic twist, the failure of Iceland’s currency could be seen to have had a positive effect on gross domestic product (GDP). The currency’s problems in October prompted a sharp fall in imports as Icelanders were unable to buy goods from abroad.
From Forbes
