The amazing fall of David Oddson

 

Dont worry, Ive got it all under control

Don't worry, I've got it all under control

 

 

In his letter to Johanna Sigurdardottir, David Oddson resorts to the tactics of an eight year old who sees nothing wrong with his own actions and instead cries how horrible everyone else is.

The most amazing statement he makes is the one where he celebrates the fact that the government cannot find any professional reasons for his dismissal, and that there can be found no mistakes he might have made in the job. Therefore the motives for his dismissal are purely politically motivated.

Let us humour the eight year old and run through a list of his professional mistakes. A list that is supposed to originate with member of parliament, Helgi Hjorvar of Samfylkingin.   

1. The Central Bank is bankrupt. Its management lost 150 billions which it lent to shaky customers, the banks. This is equivalent to half a million per every Icelander. 
2. The Central Bank didn’t build its currency reserve in accordance to the growth of the financial sector, even though it was advised to do so, by economist Thorvaldur Gylfason for example. The bank’s preparedness when the crisis hit was meek. 
3. In the spring of 2008, the bank refused a loan from J.P. Morgan for a larger amount and which carried better rates than the assistance from the IMF. Again, total underestimation of the need to be prepared. 
4. The bank didn’t tend to its role to keep financial stability and did not use its available tools to restrict the growth of the banks. Actually it lowered the benchmark for the commercial banks’ reserves. 
5. The Central Bank has almost never managed to meet its goal of inflation since it was set in the beginnin of the century. 
6. The bank underestimated the obvious effects of a strong currency on spending and investing, therefore inflation. 
7. To keep the nation’s currency reserve in Englend after the Icesave-problems were clear and risk it being frozen can be likened to being on a ship in a war on sea with a captain who left the gunpowder on land. The oversight is a matter of national security.   
8. It is unacceptable that the management of the Central Bank had heard of the Icelandic banks’ problems from officials in London last February. It should not be too much to ask that the bank should have realised this itself before.  
9. With the information that the Central Bank says it had recieved in London last February, it is unbelievable that it lowered the requirements for the commercial banks’ reserves in May.  
10. If the Central Bank had such good information about the commercial banks’ situation from London, the bank’s report on the financial stability of Iceland from May is seriously misleading information.  
11. It is unprofessional that no action plan was in place in case of a financial crisis.
12. The raising and lowering of interest rates did not inspire confidence.  
13. It was unfortunate and unprofessional that the Central Bank competed with the commercial banks for capital. 
14. It was unprofessional to keep quiet when news broke that the Central Bank was not included in the agreements between the other Nordic Central Banks and the US Federal Reserve. Not being included was bad enough, but the silence increased fears and uncertainty and undermined the confidence in the system in a most dire time. 
15. The decision about nationalizing Glitnir was a disaster. It was so wrong that the government hoped the bank would collapse soon so its liabilities would not have to be met. How does this speak of the credibility of the Central Bank. 
16. Shaky actions in currency matters further reduced credibility of the bank. The decision to fasten the currency to 175 will be recognized as a terrible mistake, and in fact the bank’s “steadfastedness” only lasted for two days, because the faith in the Krona was so far off from the realities of the currency market. It has fallen by tens of percents since then. 
17. An interview in Kastljos with the central bank governor did not help in protecting the largest company in the country, Kaupthing from falling. 
18. The Central Bank’s untimely statement regarding a loan from Russia was disastrous. It both corrupted the possible loans that Geir Haarde’s government had begun talks about, and also the international reputation of Iceland. 
19. Aforementioned interview in Kastljos, which the Wall Street Journal amongst others published, reduced the credibility of the Icelandic financial system in a sensitive moment. Especially the quote that was translated into…”Iceland is „not going to pay the banks’ foreign debts”.
20. It is most unfortunate that the Central Bank governor should have threatened the chairman of the largest company in the country that he would bring him down.
21. It is most unfortunate that the Central Bank governor should spread unsubstanciated rumours about the finances of certain individuals and the reasons for the terrorist law.  
22. It is most unfortunate that the Central Bank governor should unilaterally talk about confidential meetings he had with the heads of the government and the deals with the IMF.  
23. It is  most unfortunate that the Central Bank govenror should think it appropriate to lesson the Central Bank governors’ of other states on manners. 

Add to this the fact that the very reason David Oddson is Central Bank governor is that he himself got him that job. It was in his time as a prime minister more than anyone else’s that the role and position of Central Bank governor was demeaned by appointing a series of politicians who’d lost their groove elsewhere. That one of his predecessors includes Finnur Ingolfsson, former minister for the Progressive Party in David Oddson’s government, who then resigned and became a billionaire on the privatization of the banks overseen by David Oddson himself speaks volumes about the dignity associated with the job, as opposed to professionalism. 

David Oddson is the ultimate eight year old who won’t go to bed while the grown ups have to clean up after his birthday party.

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2 Responses to “The amazing fall of David Oddson”


  1. 1 Sebastian. February 9, 2009 at 11:23 am

    It’s Odd really Odd, I hear now noise of the protesters trumpets so before Friday the 13. he will fall – http://www.youtube.com/watch?v=-OiV_5kEt6A 😉

  2. 2 Vilhjalm A. February 10, 2009 at 8:34 am

    This list omits Oddson’s most disastrous mistake: failing to “ring-fence” the banks so as to protect the Icelandic government and Central bank for liability for the banks debts, both the Icesave money and the money borrowed by the banks from foreign creditors (i.e. the 20 billion euros loaned by the Germans).
    Also, giving any suggestion that the banks were being nationalized as opposed to being forced into bankruptcy administration by the government.
    This could have been done various ways. T.d. explicitly stating that the Central Bank would not act as parental guarantors for bank loans and deposits; requiring the banks to be incorporated as investment banks vs. deposit banks; separating deposit banks and investment banks into separate entities; requiring Icesave-type deposits to be done in a legally separate entity, preferably registered in Britain, Netherlands, Germany etc.
    Perhaps these things could only be done by act of Althingi, but Oddson could have advised them to take actions to safeguard the government.
    Iceland might have been able to survive the crash of the currency and the economy. But paying for Icesave and possibly the bank loans is a death-blow. Game over.


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