I thought that I should help Hakon with his request from the Mishkin post from yesterday. Asking about one of the most serious cases of the systematic silencing of the academic community, this description of Robert Z. Aliber’s visit to Iceland should offer a glimpse of the “silenced-society” Iceland had become.

I translated this from the Special Investigation Committee’s report, vol. 8, pg 225-226.

Robert Alibert’s visit

Gylfi Zoega arranged the Iceland visit of Robert Aliber, professor emeritus in international economics and finance at the University of Chicago in the spring of 2008. Aliber had met Gylfi in June 2007 and predicted a collapse within a short time period. Gylfi had collected money for the visit of Aliber and received donations from the prime ministry, ministry of economic affairs and the Icelandic Financial Services Association amongst others.

He says that the reaction of bankers and some sections of the media to Aliber’s lecture made sure that his message was not delivered properly. Morgunbladid had a decent coverage of Aliber’s lecture, even if the headline had been peculiar and against Gylfi’s advice. He penned an opinion column in the paper the next day to correct different misleading emphasis in the paper’s story and used the opportunity to repeat Aliber’s main conclusions.  Frettabladid had a relatively neutral coverage of the lecture. The opinion columnist Odinn made fun of Aliber in Vidskiptabladid and the banks got the message through that Aliber was not knowledgeable about the situation in Iceland. Vidskiptabladid also mocked Morgunbladid’s coverage, “Odinn has mostly stopped reacting to business headline news on Morgunbladid’s front page, but the headline “The Beginning of a Bank Run” outdid anything he could have imagined. The lecture was based on the former professor’s assumptions, where it emerged that he “suspected” this or that and “guessed” that and the other. He did not provide any evidence for his assumptions but it did not hinder Morgunbladid from making it headline news”.

After the lecture, Gylfi received a call from Gudjon Runarsson, the CEO of the Icelandic Financial Services Association who complained about the lecture. At a meeting few days later, which Thorolfur Matthiason also attended, Gudjon told the two professors that his association would not be supporting any more lectures at the economics department at the University of Iceland. Speaking to the Special Investigation Committee, Gudjon said that this was because he had been mislead regarding the topic and content of the lecture. It had come from a totally different direction than expected. Halldor Kristjansson, the chairman of the association also published an article on its behalf. “The Icelandic Financial Services Association is making some serious reservations regarding the statements of a former economics professor, Robert Z. Aliber in his lecture at the University of Iceland this week. His statements on the Icelandic financial system showed a lack of understanding and seemed to be subjectively based, rather than based on objective research.” In his article, Halldor picks apart the Aliber’s main points of criticism and states amongst other things on his issue number three that “furthermore, the proportion of savings versus loans has been raised and the banks are now less dependant on short term financing. The Icelandic banks are therefore not run as funds but as responsible corporations with strong equity and therefore Aliber’s statement is out of line with real facts.” What Halldor is referring to there is due to the IceSave accounts his own bank Landsbankinn had begun operating. Aliber’s suggestion had been that the banks should be split into investment bank and retail bank units and that the state should only guarantee the latter.

Halldor’s last point is as follows, “My fifth point is that Aliber believes that the Icelandic banks are young and have no capabilities to evaluate risk. Here he is also in breach of the truth. The Icelandic financial system is based on old foundations and has accumulated experience in evaluating risks and business profitability. Aliber also indicates that information about the profitability of the banks’ operations are not available. The banks are listed companies and publish thorough quarterly statements according to international standards. It is important that the coverage of the Icelandic economy and the financial system is of an appropriate quality now that the eyes of the financial world are pointed towards the country. Unsubstantiated exclamations can have serious effects and therefore it is imperative to seek the advice of responsible people to such statements before they are published.”

Gylfi Zoega managed to get Aliber a meeting with Geir H. Haarde and the director of his ministry, Bolli Thor Bollason where he repeated his belief that it was important to split each of the Icelandic banks into separate domestic retail and foreign investment units. Geir showed considerable lack of interest on the subject but preferred general chit chat with Aliber on a common acquaintance from the US, but Aliber had taught at Geir’s alma mater Brandeis University as a young man and was very familiar with one of his former professors.  When asked about Aliber’s visit Geir responded, “He did not talk the whole thing down as he did in his lecture, he was just a nice, old man on a visit“.

IT SHOULD BE NOTED THAT ALTHINGI HAS STILL NEGLECTED TRANSLATING THE WHOLE REPORT IN ENGLISH AND ITS SPOKESPERSONS EVEN COMMENTED THAT THEY FOUND IT UNNECESSARY THAT IT SHOULD. OBVIOUSLY SUCH A STANCE HINDERS ACADEMICS ABROAD FROM DOING MEANINGFUL RESEARCH ON THE CAUSES AND CONSEQUENCES OF THE ECONOMIC CRASH.

Related posts:

1. Landsbankinn Assured The Dutch That Iceland Would Pay
2. Mishkin’s Iceland Fail (Video)
3. CRS: Iceland’s Financial Crisis, November 20, 2008
4. Halldor J. Kristjansson In Canada
5. Iceland: ‘No Promises Over Council Payouts’