It might turn out otherwise. With Breivik having reminded us that muslims are not Europe´s chief source of terrorism, Norway having reminded us that not all nations are either with or against, and right wing dogmatists proving on all sides of the Atlantic that they know nothing about financial management, his legacy might be to serve as a reminder of what populist, nationalist, conservative ignorance will get you. Chaos and terror, just as bad as it is when served up by the left wing extremists they decry.

Related posts:

1. Olafur Ragnar’s Legacy: A Lost Symbol Of Unification
2. Election Will Move Iceland to the Left

Having been hit by the worst economic crisis in modern times, Iceland applied for full European Union membership in 2009. As a member of the European Economic Area since 1994, Icelandic society had undergone radical changes towards modernity through the subsequent effects of globalization and a policies with a libertarian emphasis on a free market economy. But a corrupt political elite privatized many of the state‘s institutions around the turn of the century, including banks which were sold to individuals with little experience in banking but close ties to the coalition parties in government. The three major banks all went under in the span of less than a week in October 2008.

The parliament elections of 2009 saw the ousting of the dominant right wing libertarian party, the Independence Party and a first ever clear majority for a leftist coalition between the Social Democrats and the Left Greens. Having recieved most of the popular votes and running on a mandate of applying for EU membership, the Social Democrats formed a government with the Eurosceptic Left Greens with an application as a high priority. Icelanders for EU membership claim that it offers an economic and defensive shelter for the small nation through the European Central Bank, the Euro and the ESDP and that Iceland‘s place in a globalized world is within Europe. Those against membership claim loss of sovereignty and independence, as well as strong resentment against the union itself, arguing that Iceland‘s future is best assured outside it or through bi-lateral agreements with nations from Canada and the USA to even India and China, even proposing unilateral adoption of their currencies.

Following an economic crisis where the nation‘s wealth is being redistributed, interest groups in society are fighting for power. Budget cuts, higher taxes and a prolongued debate with the UK and the Netherlands over the IceSave agreement have enabled opposition politicians and various demagogues to use nationalistic rhetoric to bitterly divide the nation on matters where it must be united.

Thus the economic crisis has spawned a social one which will shape Iceland‘s destiny in the 21st century, which could prolong the economic crisis locally and globally it could perhaps mean the stalling of further EU enlargement to the west.

Related posts:

1. EU Membership – The Time and The Place of the Social Democrats
2. Congratulations! Tax Queen Emerges Victorious From The Economic Crisis
3. Iceland warms to the EU

The Court ruled that the currency loans which many Icelandic housholds had borrowed at their chosen financial institution for car loans and mortgages were illegal. According to Icelandic law, it is illegal to tie loan contracts to indexes such as a currency index. Still for the best part of the past decade, this is exactly what all Icelandic financial institutions and a large part of the public did.

While the krona was strong, it sure paid off. Interests were much lower than anything on offer through the consumer price-indexed loans available in the krona. But when the krona halfed in value in one year the loans naturally doubled, leaving many people unable to meet their payments. The government‘s unvillingess to take charge of the problem left many people in situations where their cars and homes were repossessed or they were constantly barraged with collection letters from their banks threatening bankruptcy.

So you would think that the people who suffered this terrible fate would be relieved with the Court‘s decision. But no, now they are demanding, on the back of the verdict which implies that other parts of the loan agreements are still valid, that they should keep the interest rates promised with the foreign currencies.

This would mean that not only would they get rid of the mountain of debt which has been hanging over their heads for the last couple of years. They would also hold loan agreements carrying rates which have been absolutely unavailable to regular citizens in Iceland for a long while. They would benefit greatly from these contracts.

There are many who have pointed out that this is obviously unfair for several reasons:

1) That people should not be able to pick and choose the clauses which are purely beneficial to themselves when two parties make a contract, any more than financial institutions should.

2) That the financial institution would obviously never have entered into an agreement at those rates in the first place and by enforcing those rates on them they are being treated unfairly.

3) That the currency loans were supposed to be the risky option available in the consumer loan market in the years they were taken. Surely people were only told to expect fluctuations between 15-30% but they were supposed to gain on the lower interests in turn. A huge majority of people elected the (still grossly unfair) less risky option of krona mortgages and car loans tied to the consumer price index as their income was in the same currency. Yet again, the risk takers are rewarded in the Icelandic economy.

Those who borrowed in the foreign currency obviously see things differently. Their point about the financial institutions being the experts who should have known is spot on. And their rage against the financial machine is completely understandable after the tough stance the financial institutions have shown against the households in trouble. But their claims of having been the responsible borrowers by staying away from the krona loans are at best hollow. Sure there were many people lured into these ridiculous loans by car-salesmen trying to make a deal. But there were many as well who made well considered decisions before jumping aboard and should have known the risk. Do not attempt to convince me otherwise, I worked in a retail bank division between 2004-2008 and I heard some of the customers demanding to get those loans and boasting afterwards that their mortgage was declining so rapidly. I know of cases where banks pushed these loans, I also know of cases where the customer pulled all possible strings to get them. I know several cases personally where people fully knew the risks, yet decided to take these loans. None of them complained over these loans before October 2008.

It is obviously astonishing that after the popularity of the currency loans that they were illegal and the criticism of the government that was and its supervision authorities is wholly justified. But there is grave danger hidden in these loans being made to stick at the ridiculously low rate so that a certain group in society benefits on the plight of others, even if those others are the unpopular financial institutions. We need to get rid of unfair contracts, not encourage them while ignoring a bigger picture.

The Central Bank and Financial Authority have instructed the financial institutions to use the Central Bank’s rates, without CP indexation. But the fair step would be for all of these contracts to be turned into consumer price indexed krona loans, except for those who could realistically have been taken originally without. What people have overpaid or lost should be reimbursed. Any excess damages should be settled by arbitration or the courts. Borrowers should then take the fight to the government and demand a viable solution for the future. For now such a solution would be demanding that Iceland turn towards the EU. The Social Democrats have brought that to the table already and membership and eventually becoming part of the Euro would see enormous benefits for the nation‘s households.

If the other parties have any credible solutions they should put them on the table immediately instead of goofing around their broken ideological carcasses. Icelandic borrowers and households deserve something better than the demagoguery provided by the Independence Party, Left Greens and to a lesser extent the Centre Party at the moment. The reason people took to the illegal currency loans was simple. The Icelandic krona is unable to provide its citizens with financial security. Its side effects are astronomical interest rates and intolerable fluctuations.

There is a risk associated with the low interests being allowed to stand and the borrowers benefitting from them. They can not be allowed to walk away scotch free without a care in the world for the broken system that needs to be fixed. And believe me, I know some people who carried such loans, were set free because of connections at the banks and afterwards could not care less for the rest of their fellow citizens‘ plight. Together all borrowers must take a stand against the injustice of the consumer price indexation which drove so many towards the illegal loans. Asking for rates unavailable to everyone else is akin to profiteering from a disaster.  In all fairness, uniting and taking a stand once and for all would be the right thing to do.

Related posts:

1. The Currency Loans Were Legal – The Dark Side Of The Government’s Inept Solutions
2. The Currency Loans: Iceland’s Great Shame
3. Loans of the Icelanders

In the Special Investigation Report, former Morgunbladid editor Styrmir Gunnarsson says that Iceland has been a “disgusting society”.

“I have followed this for fifty years. This is a disgusting society, it is all disgusting. There are no principles, there are no ideologies, there is nothing. It is just opportunism and power struggles”.

Styrmir Gunnarsson edited Iceland’s largest newspaper in this disgusting society and called people into his audience in the power of the influence he wielded. He helped women like Jonina Benediktsdottir to try to knock down business blocks which were unfavourable to those in power. His closed off clique included ministers such as Bjorn Bjarnason and pseudo academics such as Hannes Holmsteinn Gissurarson. Along with the former, Styrmir has now formed the European Watch website where Morgunbladid’s methods are being put to their best use,  only telling half the story, the one that fits the people who support the clique in the most handsome ways. Hannes Holmsteinn has in fact recently informed his countrymen of how special interests are guarded through gifts of money to the party which is most willing to defend them.

There is a power struggle in Iceland. The guardians of special interests who lost their powers because they built their houses on sand are now fighting fair and foul to protect their gold from the sea and regain the power. No costs are spared, the methods they use are telling half-told tales through the European Watch, publish books on the mad siege theory, spew venom and spite towards honest men like economist Thorvaldur Gylfason who disagrees with them, and fund charities like Morgunbladid and AMX.is and dress them up like real media.

Libertarian government employees on pension do not have to worry about the future rather than a book-salesman in Selfoss or a young farmer with a skewed vision of the world, as long as the disgusting society lives on. They conquered, controlled and divided the disgusting society between them and their friends. Unlike former president Vigdis Finnbogadottir who signed the EEA agreement taking the interests of the future generation before her own, the chosen ones from the disgusting society could care less about the future generations of Icelanders. Whether they are cast aside in the world community or live by hedge fund risks  in their household finances, they don’t care as long as the disgusting spoils are theirs.

The rest of us have to ask ourselves is to what degree are the disgusting ghosts of the past supposed to determine Iceland’s future?

Related posts:

1. Enemies Of The Nation
2. A Critical Point In Our Future And This Is What We Get
3. Iceland: Future of Hope (Video)

According to some Facebook statuses and discussions you get the sense that too many people think that the president’s veto means that Iceland has an option on whether to pay the IceSave debt or not.

If only things were that simple.

The whole affair has been one of misunderstanding, mishandling, demagoguery and cries of wolf. Icelandic politicians have sunk even lower than anyone thought possible after 2008. The government failed to keep its enemies closer during the whole thing, by offering them a role they could not refuse a broader agreement could possibly have been reached. They also sent a burned out ex-politician to handle the negotiations, a man who was laughed at in Britain and the Netherlands, and it shows how desperately inwards Icelandic politics are.

The opposition has used any means necessary to strike some mean blows at the government. A member of parliament from the Progressive party had the nerve to tell me that she was for an agreement, just not this one, without explaining how a better one could possibly be attained. Around the same time she participated in the most blatantly organized filibustering in the history of Althingi. It was all about a power game. Hit the trenches and try to hurt the other side as much as possible. The end result has been a divided and bitter country on its knees. You could see the shock in the opposition eyes early today at what had happened before they managed to retract into the mud. And leave it to the Movement to celebrate the president’s speech with tears in their eyes and glee on the afternoon radio shows. The people who were aptly described as thinking of everyone else as being idiots but themselves.

The president’s decision to veto the bill was the cherry on top of the mudcake. For one thing, he ran away like a dog with his tail behind his legs once he had muttered some explanations which raised more questions than  answers. Who were the members of Althingi who had convinced him that there was a majority in Althingi for a national referendum? What did he discuss with the InDefence group? Was he really that ticked off after the Aramotaskaup which had portrayed him as a lapdog for the moneymen which left Iceland hanging that he felt the need to dress up in a folk hero cape?

And what is this thing about a national referendum being the best possible form of democracy? California is bankrupt and dismissive of civil liberties because of citizen referendums. And Swiss citizens do not hesitate in constraining the liberties of minorities in their referendums. It appears that these  tools of  ”direct democracy” are most appealing to politicians in need of a quick image fix. Is Olafur Ragnar Grimsson really serious when he says that Icelandic voters are equipped en-masse to interpret Basel II directives, EEA agreements, ECOFIN reports and international agreements in a well-balanced and objective manner? Shouldn’t we focus more on restoring the credibility of our representative democracy than introducing demagoguery to a divided, hurt and scared nation? Icelanders need to pay more attention to politics and who they are voting for instead of asking for a national referendum on things large and small. Otherwise people like Gudlaugur Thor Thordarson keep getting voted into Althingi, paid for by Landsbankinn and FL Group.

If the president really believes that there is a gap between Althingi and the nation on this issue, will he also ask for a national referendum on household debt where there is at least as much of a gap? Setting aside the question of why Icelandic politicians seem so concerned about the state being treated fairly by its creditors, while remaining oblivious to the same claims by its citizens with their home-and car loans doubled, what would happen if we continued down this road of the ultimate demagogue and followed a proposal made by another one today? Ogmundur Jonasson wants Icelanders to be able to vote on whether to raise taxes or not. Have these people gone mad? Where on earth are you going to find a nation in which the majority votes yes on tax hikes? Which is exactly what the nation needs right now. What next, letting kids vote on what is for dinner, McDonald’s or fish? Oh, sorry McDonald’s isn’t available anymore because Iceland is a disaster zone. A cause of celebration for some, but an indicator of things to come for Iceland, fewer choices available all round and some medicine swallowed in a hard way.

The Dutch and the British government should also take a long, hard look at themselves. Are these countries going in hard because they can? Much has been said about the Icelandic government’s lack of PR in these two countries but it can hardly be said that Alistair Darling, Gordon Brown and Wouter Bos have set the Icelandic media alight with their citizens’ case. Why haven’t they been here? They only come off as brutes who are ready to kick the small kid when he’s down, again just because they can. Do they understand the plight ahead for Iceland’s citizens, 98% of whom did not bankrupt the country but are being left with the whole bill plus tips?

What does Wouter Bos have to say about the Dutch National Bank’s failure to stop Landsbankinn from offering their IceSave WMD in the Netherlands in the spring of 2008? It appears as if the DNB did not do its job properly of screening the Central Bank of Iceland’s  ability to pay in the event of a bankruptcy. One look at this graph explaining its foreign currency reserves should have had alarms ringing all over Amsterdam, Eindhoven, Rotterdam and the Hague. But no, the failing bank was allowed access to the savings of Dutch citizens. How do the Dutch politicians explain this? Or do they only know loud words and threats?

The same goes for Gordon Brown and Alistair Darling. ”According to very senior sources at the regulator, the FSA had worries about the liquidity of Kaupthing’s British subsidiary before Christmas 2007. It did nothing to stop the establishment of the Edge accounts in the April, eight months before its eventual collapse, because the regulator thought it would help the bank’s cash position.” said the Telegraph on January 2nd. What is Britain going to do when its own banks start the eventual collapse of their own banks takes place? This year, next, ten year from now, economists such as Daniel Gros have told Britain to pray that the giants in their own back yard don’t implode. What will be the UK’s position if Barclays runs into trouble? Sounds far fetched? How many people believed Lehman Brothers would be history 20 months ago?

The IceSave affair is an almighty failure to communicate by politicians in three countries who only know power plays and partisan games when they should be talking and reaching agreements. In this they have failed and they have failed in communicating to their citizens the larger ins and out of IceSave.

While Iceland is classified as junk and Britain and the Netherland get ready to throw it out with the garbage, nothing is resolved for hundreds of Dutchmen who banked with IceSave in good faith, charities and local municipalities in the UK who invested in the glorious Icelandic banks are grasping thin air and the citizens of Iceland are nowhere close to start the rebuilding they sorely need.

Because nothing ever gets built from trenches.

Related posts:

1. What Have You Done?
2. IceSave: A Straightforward Matter?
3. No Vote In IceSave Referendum

A regular reader to this site, Vilhjalm A. has pointed out the unique situation home-owners in Iceland are facing because of the consumer price indexation attached to all mortgages in ISK:

An unnormal country

In normal countries there is an element of risk for both the borrower and lender. The lender can borrow at, for instance, 1% from a central bank and lend out at 4-5% to consumers — the lender makes a decent return of several %, but there is always a chance that inflation will go to above 5% and wipe out this profit. In the case of ARMs (adjustable rate mortgages tied to inflation) the lender is guaranteed a profit but a much smaller one (unless the lender defaults – always a possibility in most countries).

In Iceland the risk is entirely removed for the lender. The lender always collects his profit, and not just 1-2% (as in ARMs) but the full amount of 4-5%! Plus, since mortgages are non-recourse and there is no chance of real personal bankruptcy or bankruptcy court loan modifications (ie cramdowns), the lender in Iceland NEVER loses money (unless the borrower leaves Iceland forever or dies completely broke). This is obviously terribly unfair.

Furthermore, in normal countries this bargaining between lenders and borrowers over mortgage rates serves to keep inflation in check. If inflation goes to an unreasonable level (say 7%) the individual banks will collectively put pressure on the central bank to take steps that reduce inflation (such as cutting back the money supply). In Iceland there is no incentive for the individual banks or the central bank to reduce inflation, and so as we have seen, inflation continues out of control.
And what is worse, the “inflation” that is used to measure mortgages rates is measured by price inflation, not wage inflation.

The Icelandic system can only work in “boom times”, when there is price appreciation for houses and wage increases driven by economic growth and low unemployment. But now Iceland has housing-price depreciation (with a huge surplus of housing), stagnant wages, increasing unemployment, negative growth, and price inflation (due to the collapsed ISK) — a toxic stew for anyone who has a home mortgage.

The Icelandic government has various options to help its citizens: make all home loans recourse (the “give back the keys” solution), write-down mortgages to fair market value, implement a Zingales-type potential profit for debt swap, write-down eg 20% of mortgages or for those in financial trouble, change the bankruptcy laws to allow cramdowns or wipe out unpayable debt, eliminate indexing. At the very least the government should change price-indexation to wage-indexation. Instead, the government does nothing. All they offer is a delay in repayment, in the hope that a miracle will occur and the situation will improve in the future.

The current government was elected on a promise that they would erect a “fortress” around Icelandic households. They got the mandate they were seeking but what happened then is beyond belief. Minister of social affairs, Arni Pall Arnason announced a government solution so inept that it could only have come from the very same bankers who ran the Icelandic economy into the ground.

Permanent Poverty

Ingolfur Ingolfsson of spara.is has explained the solutions well and I’ll mix in his explanation from DV where the headline was “Permanent Poverty” with mine:

With the government’s plan you are actually borrowing back parts of the mortgage. You borrow the difference in monthly payments now compared with January 2008. All those whose mortgage is in ISK are automatically assumed to approve this solution. The monthly payments will be the same they were in January 2008, but the difference is stored in an account payable at the end of the mortgage’s expiration. Your mortgage is then extended to pay off the difference, but only for three years, at which time the financial institution “might” write off the rest. (A customer at Kaupthing who approved the solution noticed that when signing the papers for approval, nothing was said about that three year period. He demanded that it would be put in writing, which the bank did on his papers, but probably not on the papers of others who did not notice that the three year clause was missing). Those with foreign currency loans can also enter into this kind of an agreement.

During this time the consumer price indexed mortgages assume interests and inflation and the lifetime of the mortgage is extended. People are taking two kinds of risks. The first one is in the price indexation which is added to the capital because of inflation. The other is the risk connected to the development of the wage index and employment rate but the payments on the adjusted mortgages will be tied to the development of both of those. If for example the wages of large groups in society rise, then it will be reflected in everyone’s monthly payment which rises accordingly, even for those who didn’t get a pay rise.

The wage index has risen faster than the consumer price index in the last 20 years. From 1989 – 2009, wages have risen 255%, while the CPI has risen 197%. That is historical data though with vague indications for future developments. But if the forecasts of official institutions regarding developments in inflation, wages and employment will come true, then by 2013, the payments of the adjusted mortgages will become higher than they otherwise would.

The solution is therefore akin to the short term solution of peeing your pants to keep warm when lost in a blizzard on top of an Icelandic glacier.

If the wage index does not keep up with the consumer price index in the next thirty years, then people will pay less than otherwise. Wages have to rise slower than consumer prices and therefore this means permanent poverty for the mortgage holder. It will be more and more expensive to live because the wages do not keep up with prices. If this is what happens then something will be written off in the end, but if the wages do grow faster than consumer prices then one day you will end up paying as much as if you hadn’t accepted the solution. You also pay back what was supposed to be put off to the end.

In simple terms, the bank becomes a satisfied subscriber to any pay-rises you get in the future.

The Household Interest group has harshly criticized this action by the government. This means that Icelanders are being turned against each other. People who fight for higher wages will not receive support from their own community because if they are successful, everyone’s payments go up. This is likely to create tension in the society.

In fact, if unemployment goes down, then your payments go up, even if your individual situation does not change. A mind-boggling situation for any economy and society.

Inept bankers’ solution

So earlier I said that this plan could only have been developed by the same inept bankers who ran Iceland’s economy into the ground. Well, that is exactly what the government did. They formed a committee, whose most visible member has been Yngvi Orn Kristinsson, formerly a top manager at Landsbankinn. During an unpleasant meeting with Yngvi the other day, his explanations bore the air of someone who considered him having been negotiating with the financial institutions as someone in a weaker position. Funny for someone who made the most of his career at Landsbankinn to personally amass hundreds of millions and then have the gall to demand 230 million ISK from its solvency committee this week. After being part of the Landsbankinn management team which ran the Ponzi scheme called IceSave, Yngvi backtracked when his claims were made public into saying that he was making the claim so that the Dutch and British did not get a dime, beyond what they have already gotten. Then he said he would give the money to charities (ignoring the UK charities which are suffering because of his bank).

Yngvi and his committee came out with this inept solution after negotiating with his peers, then he drove off on his SUV. The Household Interest group was never called to the table as a party with interests. They only received an announcement of the plan after it had been decided.

Inept government

The previous government was inept, but this one is going the same way quite rapidly. The general feeling is that since the crash, the savings of those who own money were protected, while those who owe money were left to hang dry. Steingrimur J. Sigfusson, the finance minister thinks he should leave the banks alone to tend to their own affairs, after assuming a huge debt on their behalf. The result is a new banking system which is re-distributing the wealth, on the backs of the taxpayers, who are already paying through the teeth, through down-sizing, taxes, less purchasing power, unemployment, wage cuts and less service.  The call for the end of price indexation has been landing on deaf ears.

From the US comes the Zingales Plan and Joseph Stiglitz has declared support for such an action. Instead of listening to world-renowned economists and try, the government prefers to listen to men like Yngvi Orn Kristinsson, whose position within Landsbankinn made him a main accomplice in an Enron scale bankruptcy. Icelandic households are truly expected to carry the whole burden of the economic collapse, most of them did not cause.

Related posts:

1. Discussion On Household Debt Held Hostage By Progressive Party
2. No To Useless Government “Solution”
3. What Is Missing From The “Definite” Household Debt Solutions?

David Oddson
used to be prime minister with

Geir Haarde
the current prime minister as financial minister representing the Independent Party where

Kjartan Gunnarsson
used to be the CEO and the party’s representative on the board of the nationalized Landsbankinn which was privatized to the lowest bidder

Bjorgolfur Gudmundsson

a member of the Independent Party who kept

Kjartan Gunnarsson
on the board of Landsbankinn and hired

Sigurjon Arnason
a member of the Independent Party as the bank manager who initiated the IceSave scheme in the UK while Landsbankinn’s business was monitored by the Central Bank of Iceland whose govenor was at the time was former prime minister.

And that was it. The essence of the Iceland that collapsed into the cold autumn of 2008.

I had a run-in recently with an economist who’s been working on saving the banks from the taxpayers. This economist who has been working on behalf of the government has no qualms about maintaining that write-offs in household debts would plunge Iceland into a deeper recession with a 50% tax rate and disastrous effects for the pension funds.

Meanwhile rumours of write-offs and re-organization for the well-connected are everywhere. Magnus Kristinsson, 50 billion, Karl and Steingrimur Wernerson 45 billion, Bjarni Armannsson 800 million, the owners of World Class Gym 1 billion, Morgunbladid 3-4 billion, Sjova, Baugur… Can someone tell us how Baldur Gudlaugsson, an average career-bureaucrat could amass hundreds of millions in Landsbanki shares? A business genius or just David Oddson, Geir Haarde and Kjartan Gunnarsson’s old friend?

There are few glorious winners and deserving heroes hiding in the North Atlantic Ocean these days. The Icelandic economic miracle was really the fairy tale of the Emperor Without His Clothes. The players who came out on top were the equivalent of diving, doping cheats. They now refuse to hand back their undeserved medals.

You get the drift.

For quite a while now, I have been absolutely sick to my stomach writing about David Oddson‘s and Hannes Holmstein Gissurarson, Bjarni Armannsson and Brynjolfur Bjarnason, Hreidar and Sigurdur, Olafur Ragnar, Karl Wernersson, Hannes Smarason…I should have written more about Hannes Smarason. I get mad when I read up on Halldor J. Kristjansson, Finnur Ingolfsson, Halldor Asgrimsson, Valgerdur Sverrisdottir and the Exista brothers. I want to throw sharp, heavy things at  cute little puppies when I hear about Jon Asgeir Johannesson, Halla Tomasdottir, Arni Sigfusson and Arni Pall Arnason.

But for me, the economic disaster is no longer about money but identity.

I have lost enough money. My mortgage has soared, its value no longer matches its capital. I have lost pension and some savings and I lose everytime I shop for anything in Icelandic kronas anywhere on Icelandic soil. I have lost two jobs, I have lost income and I have lost through high interest rates. I have lost government service and I am paying more for less all over the place.

Like most ordinary Icelanders I am a big, bloody economic loser.

Broken identity

But that is only money. I used to live abroad. And I have many friends and acquaintances abroad. And I read a lot of foreign media. And the verdict isn‘t good. Iceland kind of sucks.

Iceland is broke, bankrupt, doesn‘t pay its debts, doesn‘t accept responsibility and it is cold and dark.

Iceland is home to greedy, irresponsible, nepotistic, naive and corrupt people.

The legacy left behind by David Oddson, Halldor Asgrimsson, Olafur Ragnar Grimsson, Geir Haarde, Ingibjorg Solrun Gisladottir and the leading lights of their generations is that Icelanders find it more difficult to find pride in their country anymore. That has been taken away.

The national identity is broken. There are gaps and divides opening up everywhere. Left and right, extremists and non-extremists, haves and have not, those who took part and those who claim they didn‘t.

Any seriously contemplating Icelander who attempts to look at the events of the past couple of decades will surely realise that the national identity needs a rewamp. But what is needed is not so much a make-over as a massive construction.

Fruity little elfs

But Iceland is hardly in a constructive mode right now. Instead, the nation has become a parody of itself. Thirty-five percent of Icelanders have caught the Stockholm syndrome and would love nothing more than to bring the Independence Party back into power. The RUV news magazine last Sunday broke new ground on not investigating anything to do with the economic collapse. The people who lead the protests of last year have either fled the country or become parts of an unchanged system. Normal Icelanders are walking around like fruity little elfs popping happy pills, priding themselves of not watching news or reading newspapers because they “make one sad and angry“.

The fruity little elfs are shocked and scattered. They are organizing group hugs in Laugardalshollin and writing columns about looking forward not backwards, turning the other cheek etc. Meanwhile Hannes Holmsteinn Gissurarson has the gall to compare himself to the jewish persecuted by Hitler and billionaire Sigmundur David Gunnlaugsson thinks he is the victim of McCarthyism.

A friend asked if there had been any progress? Yes, the Independence Party is not in power, that is progress. People are laughing at, not with the Progressive Party, that is also progress. Eva Joly and the SFO are on the scene, that is positive. There is open, harshly debated discussion on meaningful matters within the government, that is progress.

But this is just one of those periods when you get sick of it all. I’ll get over it but these days it is nice just to concentrate on the good things in life. Where there is no room for David Oddson or Sigmundur David Gunnlaugsson.

Keep checking back, even if posting is a little less frequent these days.

Related posts:

1. The Icelandic Discourse in A Nutshell
2. Connecting the dots…Part I.
3. Photograph Of A Severely Sick Society

Who’s got a seat at the table when the government decides how to tackle household debt? Is it you?

No, it is a group of middle aged economists and officials whose livelyhood has been dependent on looking out for the interests of industries and corporations. Then they drive off in their SUV’s to their comfortable homes. It is not you.

There is no seat at the table for the Households Interest Group, and there is no seat for you. You cannot afford lobbyists and therefore you cannot buy government policy. You’re not FL Group and you´re not Landsbankinn. You cannot afford a Gudlaugur Thor or a Steinunn Valdis. The politicians are unavailable to you.

Who’s there to compare the figures with the write offs that are granted to failed businesses and to risky businessmen? Is it you? Did you grant a 50 billion write off to Toyota-owner and fish-magnate Magnus Kristinsson alone, when it supposedly takes 200 billion to give all the households some breathing room? Was it really you? No it was Landsbankinn, where he’d previously managed to waltz in and borrow that money. It wasn’t you. You did not have a seat at the table.

Who’s there to write off debts for Bjarni Armannsson when he says it would be irresponsible treatment of money to pay the debts of his business? Is it you? No it is Birna Einarsdottir and the rest of the people who used to work for him. With friends like that, Bjarni doesn’t need to talk to you.

Who called us up to warn us about the banks falling? Who managed to get their stash away? Was it you? No, you weren’t at the table so you couldn’t warn us like someone warned Gudbjorg Matthiasdottir. Someone at the table advised to sell her 3,5 billion share in Glitnir. Then Glitnir wrote off 4 billion in debt for her before she bought Morgunbladid. Did you warn her? Why didn’t you warn us? Oh, you weren’t at the table. There was no room for you.

Who’s there to point out to the government that increased financial breathing room for individuals and small businesses could bring about the most fantastic businesses in the nation? Start ups that could follow the lead of CCP and bring home the bacon through innovation. It is not you. You don’t have a seat at the table because they are all taken by aluminum companies, Chamber of Commerce, fisheries and agriculture. There is no seat for you.

Who is going to stand up to all this? Who is going to demand a seat at the table? Is it you? We backed you when you went after the VR Pension Fund chairman position and we cheer you on when you fight our cause. We elected four of you when you said that the nation would get to have its say, but we won’t do so again because you lied. Who else is going to fight their way to the tables where we are not invited? Is it you? Or will you remain quiet until they cut off the TV and the Internet? And then only rise up to demand a seat by the TV and access to the Internet? Is that really the you that you’ll tell your grandchildren about?

Who’s there to argue that unemployment, exodus and social unrest are more destructive in the long run than fair renegotiation of debt? Not you? Then in the long run you’ll be dead, then, now and always buried in debt.

Related posts:

1. On both sides of the table
2. Bjarni Armannsson: It Would Be Irresponsible Of Me To Pay
3. You can write Iceland off

1) Don‘t trust anyone in Iceland. Even the people you are working for. We are all too interconnected. Everyone has an agenda. Be open for sources that don‘t want to go through the filter around you. Set up a simple website and an email account abroad, on a foreign server and invite Icelanders to send you email. Have a foreigner you trust go through the email.

2) The judicial system is probably unequipped to deal with the magnitude of what you are dealing with. Icelandic lawyers and judges have always known they don‘t get very far in life without connections in the political arena and the business world. It starts in law school and they are all tainted somehow. An objective court could only be formed with foreigners. So be prepared for a disappointment at the courts, even if the cases built by the special prosecutor‘s office are rock solid.

3) Speak often and speak loudly. Make our plight known to the world. The government isn‘t doing it, the opposition is unable to, and there is a lot of spin out there. Regular comments or opinion columns in the world‘s media can move mountains, because under the veil of silence people are desperately trying to get things back to the way they were.

4) A regular update to the Icelandic people would be of great help because people need anything right now to convince them that things are being investigated. The feeling in Iceland is one of despair as it looks like the people most responsible for the economic crash are going to be the first ones to get back on their feet.

5) You are in for the long haul as you probably know. You have a lot on your plate and we respect that and are grateful you are here. Involve others of similar pedigree as yourself from abroad. Make the information you gather accessible to them, so that it is in safe hands if things go from bad to worse and the door slams in your face (say if the Progressive Party or Independence Party get back the reins). The UK’s SFO involvement is a great step.

Related posts:

1. A Positive Eva Joly (Video)
2. Eva Joly With A Bang
3. Eva Joly – “Iceland has been dealt with in a very rough manner”

He makes no mention of the responsibility bestowed upon him as the lender to provide the borrower with healthy horses instead of limpering and diseased ones. If he fullfills that obligation then it is easy to return the ten horses. If not then the borrower is at a terribly unfair disadvantage.

In civilized societies, consumers are guaranteed the right to return faulty products in exchange for money back or products that work. Seeing the capital of a mortgage grow by 25% in three years, in spite of 25% of the original amount being paid onto it, indicates that the product is faulty, even dangerous.

It should be the right of consumers to return the product or at least get one that works.

Related posts:

1. The Bankruptcy Of Households On The Marketplace Of Ideas
2. Price Indexation – The Devil’s Economics Discussed
3. Why do we have price-indexation?