The problem that wasn’t solved

priceindexation

Today the government announced it plans to help families and homes in Iceland to deal with unemployment, rising inflation and disappearing value of their assets.

It did not include a solution to the worst problem. Price indexation of home loans.

Graphically it makes the most sense. A short while ago you owned a home worth 20 million ISK with loans of 16 million ISK. Next year if forecasts hit close to the target you will own a home worth 11 million ISK with loans above 20 million ISK.

This is why almost everybody is hurting and people will bleed.

One solution would have been to offer refinancing in loans without price indexation.

But Geir Haarde’s government is rather known for offering the opposite of solutions. Today when a newscaster commented that Iceland’s reputation had been badly hit he seemed stunned.

Not for the first time this year.

If he were a character in a horror movie he would not have survived the first scene.

In reality he is the delusional man with the axe.

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