Economic Disaster Area » News

Grapevine: A Government Spin Fail

Dadi — Wed, 28 Jul 2010 10:27:58 +0000

Grapevine yesterday published an email sent from the assistant of the minister of education by mistake to an American journalist, exposing how the government tried to gain special favours with a journalist.

“It basically amounts to the government (or certain government advisors) trying to control local discourse by putting a spin on an announcement they’re making. It’s what all governments do, everyone knows that, but seeing the plan laid out like that certainly puts things in a certain perspective.”

From the Grapevine

The best thing about getting rid of the inept bureaucrats and yes-men which hung onto the Independence Party from government was that now the inept bureaucrats and yes-men from the Left Greens are free to strut their stuff on the taxpayers’ expense.

Iceland’s Big Problem = Asbjorn Ottarsson Millionaire MP

Dadi — Sun, 24 Jan 2010 12:04:58 +0000

According to DV.is Asbjorn Ottarsson, Independence Party MP paid himself and his wife 65 million ISK in dividends from their fishing company Nesver in 2008.

The company lost 574 million ISK in the same year and had a negative equity of 157 million ISK.

This is one of the 63 people who is supposed to provide a guiding light out of the economic crisis.

Johannes Bjorn: Speech At Austurvollur 23.1.2010

Dadi — Sun, 24 Jan 2010 11:29:37 +0000

It is clear as dayligth that the political and financial elites which control the “four parties” decided early in the economic collapse to sacrifice the indebted households in the country. This was done while a fortress was erected around owner of capital and the criminals who bankrupted the country.

Most things indicate that the politicians decided to fool the public by stalling for as long as possible. To issue statements which provided temporary hope, but turned out to be nothing but a longer nooze.

Let’s be clear about one basic thing: currency loans, paid out in Icelandic kronas are absolutely illegal and consumer price indexed loans are both morally wrong and against the laws on natural ways of doing business. Individuals who have been entangled in this net of debt and ask for correction are not asking for pity or special favors. They are simply asking for the laws of the country to be followed. The question is really about whether we live in a country which follows the rule of law or in a banana republic.

In the 36. article in laws number 7 from 1936 it says “A contract can be set aside on the whole or in parts, or change if it were deemed unfair or against good business practice”.

In the same laws it also says, “A contract is deemed unfair if it is against fair business practises and skews the balance of rights and responsibilities of the parties, against the consumer”.

The law is clear and a recent ruling in the favor of a financial institution in the District Court of Reykjavik only shows how the co-insurance of those who hold the reins of power has reached intolerable heights and that justice in Iceland has no relation to the systems of the countries which we want to compare ourselves with. The word “banana republic” comes to mind again, but what can you expect in a country where the servants of the judicial branch are without exception chosen according to political measures.

The consumer price indexation of loans is one of the biggest crimes in recent times. In the decades before 1980 there was anarchy in the Icelandic financial market. Inflation grew rapidly and the ruling elite either did not understand what was going on or didn’t want to. Instead of using realistic solutions, for example to halt the lending of the banks with higher reserve requirements, the system was put on auto-pilot with the consumer price indexation. This was a tactical acknowledgement by the ruling elite that they did not know how to control the economy.

The consumer price index is illegal because it is not in the spirit of normal ways of doing business. How can it be justified that only one party is liable for all the risk of everything that can go wrong in the future? When the banks offered people consumer price indexed loans in the years before 2008, the “experts” from the banks provided payment plans which indicated a 3-5% inflation in the next few years. This makes the terms of consumer price indexed loans void because laws on confidentiality and respect in contracts state that it is illegal to use a contract because of things that were supposed to be but are no longer applicable.

The fact that the financial sector itself ruined the country and drove the currency down into the mud with the accompanying inflation emphasises the illegality of consumer price indexed contracts.

In short, the financial sector ruined the economy and is fully responsible for consumer price indexed loans having risen rapidly and currency mortgages doubling. And now the same system kicks people while they are down and demands that they not only pay the extortion, but keep paying for houses and cars they’ve already taken from them. This is the most outrageous shamelessness of all times. It should be a primary demand that people who walk away from assets that are loaded with debt are free to go. The members of Althingi who stand in the way of this change have frozen hearts and are not human beings in the common understanding of that term.

The elite which has made its bed in the fortress and thrown people out gets away with its dark magic in the shadows of secrecy which has plagued Icelandic public administration for so long. Even if the assets of tens of thousands of Icelanders have been taken away, the secrecy and co-insurance continues. Where exactly are the lists of all the politicians who received bullet loans and other unusual benefits from the criminal gangs which bankrupted the country? Why can’t the people who have to pay for the crime not get concise information about the write offs in the banks?

Icelandic politicians have the tendency to behave like Danish bureaucrats around 1900. As a class, they are un-democratic and arrogant. They don’t hesitate in keeping away the most important information away from the people. Energy prices to foreign companies, something which has to do with all future construction of the country, are secret. Old contracts with the World Bank and the IMF, which shaped the industries of Iceland for decades are also secret. Remember that the government originally wanted Althingi to approve the IceSave agreement without reading it over. Everything else is of similar vein.

Much needs to be changed if people really mean to resurrect the country. The old secrecy must disappear and the buraucracy must be shaken to the core. The options are simple. Either we have a totally changed system where new brooms sweep out the corruption … or disaster of huge proportions. The livelyhood of the public cut down and massive exodus. People’s sense of justice has been abused as far as it is possible.

If the government continues down the same road then we have an altogether worse Iceland coming in a few years. Oppressionary interests, unreal payments of foreign debt and unemployment will cause even more bankruptcies and more complex difficulties. This is an untolerable vicious circle and a development which must be stopped. The knot must be untied by removing the price indexation of loans, change the currency loans into Icelandic Kronas on the price they were at 15 months ago and drive the Central Bank interest rates down.

Oppressionary interest rates are evil. While most businesses in the Western hemisphere have access to cheap money, which they need in these times of recession, wounded and dying businesses in Iceland have to pay more than a third of their turnover in interest rates. Only economists suckling from the state would think of defending such a suicide mission.

This might be understandable if some economic policies were being tried out here for the first time, but decades of experience have shown us that the oppressionary interests do not work. They ignite the flames of inflation in a small economy because competition within the state is too small. The oppressionary interest rates do not support the currency either. They only let the world know that there is something terribly rotten in the state of Iceland.

Fifteen months after a few criminals, with the help of the political elite, ruined the lives of tens of thousands of Icelanders, the state prosecutor came alive and prosecuted a bunch of youngsters for attacking the Althingi building. This is a nightmare and with it comes a certain danger. When people have to fight windmills, continually wrestling with a Kafka-esque course of events, there is a real danger of them losing their will. That can never be allowed to happen.

Let’s be clear that most all progress is made when people conquer certain difficulites, and it is almost natural that all troubles create opportunities.

An old Chinese tale tells of a farmer who owned a horse, which ran away from home. When the neighbors came to offer their condolences the farmer asked “how do you know this is bad news?” The neighbors shook their heads and left but the next day the horse returned with a wild horse. Now the neighbors arrived to congratulate the farmer but he looked at them bewildered and asked, “how do you know if I have been lucky?” A bit later the farmer’s son was taming the new horse which threw him off and he broke his leg. The neighbors returned yet again to offer their condolences and again the farmer said “how do you know that this will turn out badly?” The neighbors left speechless but the next day a warlord came by the territory and gathered round all the young and healthy men available and sent them to war.

The banking collapse has given us a golden opportunity to create a better society. We have tolerated for too long an incorrigible executive power, a limp Althingi and a judicial system which is political to the core. If we stand together then the elites will lose their grip of the system and we reap a better society, a more just society, a country of which we can be proud.

Méndez-Pinedo: Without social justice there is no future for Europe: Open letter to the EU institutions from Iceland

Dadi — Mon, 11 Jan 2010 13:47:57 +0000

Exceptional circumstances call for exceptional thinking, approaches, measures and solutions. No matter what the future departs, Iceland is still an independent nation with a voice. The Presidential decision to submit the entry into force of the new law to national referendum has called world-attention. Icelanders need to stand together and get the world to understand their point of view. Icelandic referendum will affect the future of the European integration and the internal market. Social rights and social justice must be part of the Europe.

As Jacques Delors has pointed out (El País, Dec. 2009), this crisis has shown how Europe is missing a historic opportunity to show leadership in the world and lead the citizens into a better future. It is no wonder that President of the European Commission J. M. Barroso had a hard time in the European Parliament (EP) being re-elected for a second term. Critical and angry new elected Members of the EP accused him of creating a Europe for companies and not for citizens. In order to be reappointed, he promised 500 million Europeans a new “social Europe”.

Méndez-Pinedo’s blog here

No He Didn’t! President Asks For National Referendum

Dadi — Tue, 05 Jan 2010 11:18:04 +0000

The political farce continues. The president of Iceland has just put his own personal gain above the interest of his nation.

He has asked for a national referendum on the IceSave bill.

What is the nation going to vote on? To pay or not to pay?

If I were asked if I preferred to pay my debt or not then of course I would say no. But what are the consequences?

What does this mean for the government?

Is Olafur Ragnar Grimsson now an Independence Party hero?

What does this mean for the rebuilding of Iceland? What is the reaction from the IMF (which he apparently did not consult beforehand) or the UK and Netherlands?

And then he doesn’t have the courtesy to answer the nation’s questions completely.

First word that comes to mind is demagoguery.

More later.

2009: A Year For Nothing

Dadi — Fri, 01 Jan 2010 15:58:45 +0000

A brilliant recap of 2009 by reporter Magnus Geir Eyjolfsson from Pressan.is

The IceSave issue finally closed yesterday with the historic vote of Althingi, ending one of the most humiliating year for politics ever, in an appropriate manner I must say. Never before has such a large group of people embarrassed itself as thoroughly and disappointed its people as much as those who fill Althingi’s chambers today. The men’s national football team doesn’t even come close.

The start of the year 2009 promised so much. A limp government was chased out by the people which had empowered it. A New Iceland was supposed to rise from the ashes but as I have said before, this New Iceland is one of the worst sort of nations that can be found anywhere in the world.

A leftist government was voted in which was totally natural as it was the Iceland of the Independence Party which was flushed down the drain. The new government claimed it would be emphasise “nordic welfare”. And that was the first mistake of this government. Someone should have called their PR people and tell them that you don’t promise nordic welfare when the largest budget cuts and tax hikes in the history of the nation are approaching. So the government made false promises right in the beginning. It gave hope based on nothing. Instead it should have called itself the “Ajax government”, or something in that manner to indicate to the public that it was there to clean up the mess left behind by other parties.

Tsunamis do not only wash what it can find on the shore into the sea, but also leve behind all sorts of junk. The same happened in the Althingi elections this spring. We got rid of lots of incompetent people, but unfortunately more junk washed up on Althingi. Few people have ever been as disappointing as the new MP’s we got. The Citizens’ Movement exploded in a short period because three of its MP’s were already trading favors, something they promised they’d fight. The results of the elections were as sad as they could possibly be as far as the quality of new MP’s goes.

Little has been heard of the new MP’s for the government parties but the novices from the opposition have not exactly enhanced the respect of Althingi. Experience has tought me that people who cannot open their mouth without screaming and disreputing others are off balance. MP’s do not refrain from using words such as “liar”, “treason” and “evildoers”. The paranoia is so strong that you would think that these people are on mescaline. The crew around the Progressive Party’s chairman is especially bad. Those people are off-balanced.

The only thing people wanted when the election was over was that everyone should now work together for the nation, not the political parties. And the parties failed on the first exam which was the EU vote. The Progressive Party did a total U-turn, even if the bill fitted its emphasis’ perfectly. The monster of opportunity simply dwelled to shallowly within the party. The Independence Party had its own interests at heart even if Thorgerdur Katrin and Ragnheidur Rikhardsdottir stayed true to their conviction. The attack they had to endure from their own party, not least the extreme-right was at best disgusting. The EU isssue showed us who really hold the reins of the Independence Party.

The government blew the issue badly by not reaching out for a bi-partisan conclusion. It is given that EU membership won’t be approved without the Independence Party. Bjarni Beneditktsson and Steingrimur J. Sigfusson have already said that any agreement with the EU is a bad agreement in their mind. The EU bus caught a flat before taking off.

To top the whole craziness, David Oddson was pulled up by the fishing-quota billionaires who bought Morgunbladid. There he attempts to write history in his favour, totally excluding any hope of peace and togetherness within the society. I am absolutely sure that we would laugh out loud if we read in the news that the Central Bank manager of Zimbabwe would be made editor of the most respected newspaper in the country. Does no one see the madness?

Which brings me to the next issue which is the attitude within Iceland towards the outside world. It seems like there has been an agreement made within the country that the economic crash in Iceland was due to the unfairness of other nations. Each and every trace of self-examination which was evident at the begining of the year has disappeared. Foreigners are cursed and the blood of business vikings is called for, but nobody seems prepared to examine what exactly went wrong here in Iceland.

The IceSave issue has not helped. It was badly managed, by both sides, government and opposition. I have changed my mind several times myself, because I fear the consequences of what happens if we pay, as I do if we don’t. Only time will tell, but I, along with most Icelanders I dare say are first and foremost ecstatic that it is over for now. And I think that we have done what was right in the end.

Hopefully, MP’s will use their New Years Eve break to carefully think about what they can do to make Iceland bearable again. Althingi’s Investigation Committee’s report will hopefully lead to a decent cleaning out. That, along with the mountain of cases forming on the desk of the Special Prosecutor, is the last rope the nation can cling onto if it wants real reform. Fact is that the situation is not as bad as we feared in the beginning. But while this reckoning is missing, the nation cannot move forward. To move on without it would be like prescribing ibufen for a brain tumor.

We have already spent one year in vain. Let’s not let another go to waste.

Magnus Geir Eyjolfsson – reporter, December 31, 2009.

Sense of Sovereignty: How national sentiments have influenced Iceland‘s European policy

Dadi — Fri, 11 Dec 2009 01:27:20 +0000

This paper asks why Iceland had until July 2009 chosen to participate in the European

project through the EEA and Schengen agreements but not with full membership in the EU. It

analyses if and how ideas on the Icelandic nation and its sovereignty affects the stance

Icelandic politicians have taken towards the European project. Icelanders’ struggle for

independence in the 19th century created a special kind of nationalism which gives

prominence to the sovereignty of the nation as a whole.

Economically, however, Iceland feels the same need as other European states to participate

in European co-operation, which can explain its membership in the EEA. The agreement

brings Iceland into the European single market, but at a cost: Iceland has de-facto agreed to

adopt the EU’s legislation within the boundaries of the agreement, and thus a transfer of

decision making and domestic governmental power to the EU. This dilemma, between economic

interests on the one hand and ideas on the sovereignty of the Icelandic nation on the other, has

created a kind of a rift between the emphasis on the free and sovereign nation and the reality

Iceland is faced with in the co-operation.

The inheritance of the independent struggle still directs the discourse Icelandic politicians

use in the debate on Europe. A strong emphasis on sovereignty has become the foundation on

which Icelandic politics rests. Participation in EU’s supra-national institutions falls, in a

way, outside the framework of Icelandic political discourse, which highlights Iceland’s

sovereignty and stresses an everlasting independence struggle.

This paper asks why Iceland had until July 2009 chosen to participate in the European project through the EEA and Schengen agreements but not with full membership in the EU. It analyses if and how ideas on the Icelandic nation and its sovereignty affects the stance Icelandic politicians have taken towards the European project. Icelanders’ struggle for independence in the 19th century created a special kind of nationalism which gives prominence to the sovereignty of the nation as a whole.

Economically, however, Iceland feels the same need as other European states to participate in European co-operation, which can explain its membership in the EEA. The agreement brings Iceland into the European single market, but at a cost: Iceland has de-facto agreed to adopt the EU’s legislation within the boundaries of the agreement, and thus a transfer of decision making and domestic governmental power to the EU. This dilemma, between economic interests on the one hand and ideas on the sovereignty of the Icelandic nation on the other, has created a kind of a rift between the emphasis on the free and sovereign nation and the reality Iceland is faced with in the co-operation.

The inheritance of the independent struggle still directs the discourse Icelandic politicians use in the debate on Europe. A strong emphasis on sovereignty has become the foundation on which Icelandic politics rests. Participation in EU’s supra-national institutions falls, in a way, outside the framework of Icelandic political discourse, which highlights Iceland’s sovereignty and stresses an everlasting independence struggle.

By Eirikur Bergmann

Read full paper here

Krugman: Double dip warning

Dadi — Thu, 03 Dec 2009 09:39:28 +0000

I’d be more sanguine about all of this if there were any indications that private, final demand is taking off — consumers, business investment, whatever. But I haven’t seen anything suggesting that sort of thing.

The chances of a relapse into recession seem to be rising.

Paul Krugman in NY Times

Google Zeitgeist: Iceland 3rd Most Searched Word Regarding The Economy In 2009

Dadi — Wed, 02 Dec 2009 11:46:44 +0000

According to Google Zeitgeist, Iceland was the third most searched word regarding economic issues in the year 2009.

It’s the Economy

crisis

cash for clunkers

iceland

california

recession

obama

unemployment rate

green

great depression

inflation

The full list in the It’s the economy section

1. crisis

2. cash for clunkers

3. iceland

4. california

5. recession

6. obama

7. unemployment rate

8. green

9. great depression

10. inflation

Iceland In The Desert – The Dark Side Of Dubai

Dadi — Sun, 29 Nov 2009 12:02:17 +0000

The ubiquitous cranes have paused on the skyline, as if stuck in time. There are countless buildings half-finished, seemingly abandoned. In the swankiest new constructions – like the vast Atlantis hotel, a giant pink castle built in 1,000 days for $1.5bn on its own artificial island – where rainwater is leaking from the ceilings and the tiles are falling off the roof. This Neverland was built on the Never-Never – and now the cracks are beginning to show. Suddenly it looks less like Manhattan in the sun than Iceland in the desert.

The Independent