Moving to economicdisasterarea.com

This site has developed in interesting ways. Unfortunately the wordpress.com system limits what I can do with it so now it is moving. 

The new URL is  www.economicdisasterarea.com 

It is currently similar to what it is like now but will change radically in the next few days. 

Thanks for reading, keep doing so and welcome to the new site.

APRIL 9, 2009 UPDATE: THE NEW SITE IS UP AND RUNNING

The End of Mainstream Economics: An Interview with Gunnar Tómasson

Egill Helgason’s interview with economist Gunnar Tomasson in English at Mises.org. Very insightful and educational.  

Egill:

Does this mean that generations of students have been brought up on nonsense ideology? For this is ideology, of course.

Gunnar:

Yes, nonsensical ideology. The root of the problem goes back to a point made in the mid-19th century by John Stuart Mill, one of the sharpest minds of all time, in an overview article on unresolved methodological aspects of economics. Mill viewed economics as a branch of logic and noted that the least error in the premises of any logical argument would infect with like error the whole superstructure built thereon. A seemingly small error is embedded in the premises of modern monetary economics. Paul Samuelson noted it very briefly in his Ph.D. thesis in 1942 and said it didn’t matter. Today, this small error is destroying the world’s monetary system.

Egill:

I remember that you have mentioned in your writings both leverage and currency speculation, the lack of supervision and other things in that connection.

Gunnar:

The things we are now witnessing in world financial markets have in fact been ongoing and evolving ever since the fall in the early 1970s of the Bretton Woods system, which was established by the victors at the end of World War II to prevent recurrence of monetary problems associated with the Great Depression. The fall of the Bretton Woods system ushered in anarchy in the international monetary system. At the time both Paul Samuelson and Milton Friedman were columnists for Newsweek and both applauded the new world monetary order. I wrote to both of them at the time and expressed a different view. But there is no point taking on founding fathers of so-called schools where people simply take it on faith that their gurus know what they are talking about. Paul Samuelson is the one who laid the theoretical foundation for this systemic anarchy. Milton Friedman then provided the emperor’s new clothes, dressing it in the garb of neoliberalism. That is how these two leading figures in American economic thought were united in unleashing on the world community the system that has now collapsed.

A letter to a brother abroad

 

The current image of Iceland by Halldor Baldursson. The last whale, the last puffin, lots of elves and Eidur Gudjohnsen who can’t get a game at Barcelona.

By anonymous Icelandic woman, aged 33 (not the same one from the previous post) 

Dear brother,

This is our reality today. Be happy you left Iceland a few years ago and consider yourself lucky to have exited at exactly the right time. I wish I had had the same sense as you. Now I’m stuck here and I cant leave. And this is why:

In our beautiful country, the following facts are our day-to-day reality:

• To serve very few – actually only a number of people – a 15 year marketing of Icelandic healthy food products, such as our lamb, fish and dairy products has been thrown out the window so that those very few can hunt and kill a few whales for “experimental” purposes. Im referring to the fact that one of the largest importer of Icelandic products in the USA, Whole Foods, has threatened to stop trading Icelandic products altogether and already has stopped promoting it in their stores. All thanks to the experimental hunting, which by the way is totally useless since there is almost no market for the meat, and we already know what they supposedly are researching. Others are already following Whole Foods example. And I say this even though I know that the whales are becoming overpopulated and are actually hurting our fishing territories badly and should be kept at a bay in terms of numbers in our fishing grounds. But it’s just not worth it any way you look at it. – This leads me to the other catastrophic result of the whaling being the masses of tourists from around the world who already believe (thanks to our friends in Green-Peace) that the whales can’t be killed cause they liked the movie Free Willy so much… This results in a dramatic decrease in tourist visits to Iceland and whale-watching, just when this country so desperately needs foreign currency more than anything… Shame on you ex-minister of fisheries, for imposing those laws on us 5 minutes before your sorrow-ass government was made to resign due to scandals upon scandals… upon scandals. 

• Another fantastic fact is that we – the Icelandic nation – are still under terrorist laws imposed on us by the British Government and are therefore regarded in the same category as the infamous TALIBANS of Afghanistan.

• The average Icelandic “Jón” today gets harassed all over Europe and even spat on like a criminal and is subject to endure shouts from random people on the street like “GIVE ME MY MONEY BACK!”  – even as they are innocently having ice-cream on a street corner in Amsterdam, spending some of their extremely expensive euros they bought for their devalued and outcasted currency the Krona. 

• Over half of Icelandic households now have to face negative cash-flow, which means that their assets are worth less than the debts those assets are financed with. That’s depressing as hell. Let’s especially give an applause to the now-resigned fantastically incompetent government and of course, the star of the year – PRICE INDEXATION. 

• The special DA (District of Attorney) appointed to investigate the mind-boggling crimes committed in the last years during the so-called ÚTRÁS (i.e. the era of fantastic over investment via debt and hard-earned assets of the Icelandic nation) – the sociopathic banking boys (THE SMARTEST GUYS IN THE ROOM) and their friends from the Icelandic business life, now answers to the name Winnie the Pooh – and rightfully so, cause he is up to his ears in poop but he wouldn’t be able to catch a kid stealing candy in a candy store. He is the laughing stock of this nation which by the way is still in outrageous denial of the exponential problems that lie ahead that it is beyond grasp…. Hopefully Eva Joly will turn things around for us, after being summoned to the scene of the crime by a TV talk show host… (WTF?)

• While it is evident that it is virtually impossible to stay here – unless you are heavily wired into the “right” political party and/or the right business blocks who now are each scrambling to acquire as much of the pieces off the bankrupt table… Then it is equally impossible to get out of here… The real-estate market is completely frozen – except if you are ready to do some trading with apartments/houses i.e. get another asset instead and therefore minimize the flow of cash that exchanges hands at each given time. This actually keeps up a false price of properties but at the same time, there is no money available to purchase for so this is really the only mean to get rid of a property – but you get stuck with another instead. So don’t even think about selling and getting the hell out of doge… You can’t even turn in your keys like you can in the USA – the debt will trail you to the end of the world and back.

• In the same way, the already undeveloped and unsophisticated rent-market in Iceland is being trashed by – again – the same institutes as got us into this mess – namely the banks. It is estimated that between 7.000-10.000 properties are almost finished or already finished but not sold in the Reykjavik and vicinity area – and most of the contractors that built those properties are now bankrupt. The people who run the banks now – namely the State of Iceland, for now at least – have now again decided to go into a business they know nothing about (i.e. the privatization of the banks in 2003, given to people with NO know-how of running banks) – and have founded real-estate companies WITHIN all the major banks. There they now store all the properties taken over from bankrupt contractors and individuals and since those properties can’t be sold now – they are being dumped into the rent market and deliberately and outrageously undermine the existing rent-market. 

• That’s why you can’t win in any situation here at the moment – if you are one of 15.000 who have lost their job’s in the last 6 months, then you can’t keep your apartment, you can’t sell it and you can’t rent it out.  

• This is how fantastic it is to be an Icelander today. We have a new term that describes this well: Helvítis fokkings fokk. I’m sorry but I can’t translate that into English, it just wouldn’t do it justice. 

• Well… I could go on, but if I would, I would probably throw myself of the nearest rooftop when I hit SEND and you’ll probably do the same upon receiving my email, and we don’t want that. You know I love you all dearly and I’m happy that you don´t have to endure this, but it is important you guys know what is going on here, so that you keep being happy where you are and by no means start planning your return here any time soon. 

• I love this country more than anything and I am so proud to be (correction – I USED to be SO proud to be an Icelander) – but that all has changed so dramatically now. What hurts the most is that once we would get a special treatment almost anywhere in the world – just for being from Iceland. We had amazing Good-Will anywhere we travelled. That Good-Will has now been taken away from us and we are left with just the debts and the shame of being the citizens of this corrupt state. That hurts. I want my good-will back, I used to get so much free stuff while traveling, just for being an Icelander. Now I get charged extra, and they won’t take my credit cards! This sucks and I want to leave.   

• Iceland is – and always will be the best place in the world. Seen from a distance. 

 

Hallelujah

The Independent Party and the Alliance Party had their conventions this weekend with the accompanying hallelujah’s!

No need to watch them that closely as most of the brainpower in Iceland seems to reside outside of the parties at the moment. 

This site will be undergoing some changes in the next couple of weeks and maintenance will be low meanwhile. Please be patient.

Being an Icelander

“It is shit being an Icelander these days!”

– A young Icelandic woman

Disappointment & lack of trust but balls chained

In my relatively short time in the universe I have banked with four banks. SPRON, Landsbankinn and Kaupthing in Iceland and Citizens & Northern Bank in Pennsylvania.

The money my grandparents gave me as a gift when I was baptised disappeared in SPRON because the government of Iceland could not curb inflation in the early eighties. 

I will pay the student loans I got at Landsbankinn early in this decade a couple of times over because the government of Iceland could not curb inflation.

The home loan I got at Kaupthing has grown by 16% in two years because the government of Iceland could not curb inflation. It will have doubled within a decade. 

I did not have any trouble banking at Citizen’s & Northern. No money disappeared there and no debts grew exponentially.

I went to the bank today and withdrew part of my pension. In the current economic situation I don’t trust Icelandic banks, an Icelandic government or an Icelandic currency to keep my money safe for when I grow older.  

If a girlfriend had put me through such a disappointing relationship as the Icelandic banks and society have, I would have broken up with her a long time ago. 

But in this relationship my balls are safely chained to the floor.

Iceland still asking for loan-Russia official

Iceland is still asking Russia for a loan of up to $500 million and Moscow has asked for more information before making its decision, a Russian Finance Ministry official said on Thursday.

From Forbes

Icelandic terrorists

 

By Paul Nathan

I’m behind Iceland 101% – or at least the vast majority of decent hardworking citizens that form the bedrock of the country – and it sickens me to see the growing exodus of people.

Having fashioned the nation out of adversity, this modern day calamity is not the usual Act of God, but more like many acts of Godliness – dishonesty and greed – brought upon the people by a minority of criminals, who have succeeded in ‘terrorising’ their own people.

Gordon Brown should never have inherited the top job in the UK, and should never have deployed anti-terrorism legislation against a nation of farmers, fishermen, and more recently bankers, but he did so out of necessity.

No one thought for a moment there was an Icelandic version Al Qaeda plotting away, but the reality was that it was done out of expediency.  It would have taken too long to pass a mandate through the British parliament, in order to stop the massive outflows of currency. 

Anyone reading any media anywhere knows, a small bunch of criminals were operating the Robin Hood principle in reverse.  Cleaning out as many organisations of their assets, equity and savings, and shipping them abroad as fast as they could before the ultimate collapse.

Rather than moaning about the United States & Britain, and marching on the British Parliament to proclaim the obvious, it’s about time Icelanders confronted their own demons and focussed on the core issue.  The acute problem was caused by a few rogue Icelanders.

Naturally, its hurtful to be labelled a terrorist, but all the charities, councils, and hospitals who have lost everything, would happily be called anything, if it could bring back years of their work, prevent a horrible future, and stave off bankruptcy and consequential deaths.

So who are the real terrorists?

The intellectual terrorists who inhabit the Independence Party, were given jobs at birth, and have no remorse for the emotional and financial carnage they’ve caused?

The financial terrorists who have drained their country dry, as well as many others, and still have the temerity to address the nation, proclaiming their innocence?

The great tragedy is that apart from all the tangible destruction, there are much greater reverberations, such as all the damage in confidence and trust to a hitherto impeccable reputation, and the incalculable damage to the very fragile fabric of society.

Iceland needs to focus on dealing with the domestic terrorism confronting it every day.

The devalued Prime Minister of a devalued Government

You would think that Icelandic MP’s would have had the guts to stand up to the architects of the ruin in this manner now that this country is in a worse shape than the UK. 

But they won’t. Instead, foreign minister Ossur Skarphedinsson has decided to hand Valgerdur Sverrisdottir a position as a leader of new council on international development.  This is on the same weekend that Morgunbladid publishes its findings on the privatization of the banks when Valgerdur was Minister of Commerce and states that the whole thing was designed to get the banks into the hands of people loyal to the Independent Party and Valgerdur’s Progressive Party.

It should be noted that Ossur Skarphedinsson is in the Alliance Party, a rival political party. Aren’t there any qualified people within his own ranks? The position is unpaid but it would look good on the CV of a quite a few people. Besides, isn’t it odd to hand such a prestigious position to a person who was instrumental in privatizing the banks and then sat herself on the board of Gift, a company most people didn’t know existed anymore but was an investor for the group that got the banks? A business that used to be an insurance company that people thought had folded but had billions to spend in money from its customers, who were the rightful sharholders. Money that bought the large owners of Kaupthing like Olafur Olafsson, the Exista brothers and Kristjan Loftsson, the one whose interests in whaling are more important than the nation’s reputation, their way into billionaire heaven. 

The question is, why don’t the Alliance Party, Left Greens, Progressive Party and Independent Party just form a single party? Or are the Icelandic political parties just like the shell companies that the banks created to hike up the value in their own stock, all the same but different in the name just for show?

SPRON customers safe as bank buckles under Baugur & CB press release

According to RUV.is sources, the transfer of all customer funds and loans from SPRON to New Kaupthing has now been completed. All assets are fully insured according to law.

SPRON debit and credit cards will continue to work and SPRON customers will have continued access to their online banking services for the next few days until their access to Kaupthing internet banking has been set up.

From Ice News

Today the FME has intervened in the operations of SPRON and Sparisjódabankinn on the basis of the Act on Authorisation for Treasury Disbursements due to Unusual Financial Market Circumstances, no. 125/2008.

Press release from the Central Bank of Iceland regarding the restructuring of Iceland’s savings and loans.