I spent most of last week in the UK. I intended to keep blogging while there but when I ascended from Icelandic soil I experienced such relief at being away for a few days that I decided to use the opportunity to refresh from the most depressing winter of my life, probably most Icelanders’ life.
Coming back things seem to be going where I predicted around Christmastime. The dirt is flowing from all cracks in Icelandic business and politics, exposing some of the country’s top businessmen as nothing short of criminals and some of the leading politicians as inepts.
The highlights.
The sugar tax? Minister of Health, Ogmundur Jonasson is proposing a tax that would increase the price of sugary drinks and candy. All in the name of better dental-health for Icelandic youth. Considering that those products are already priced 63% higher than on average in Europe, one would think that this tax already exists in the form of the volatile Icelandic krona, inflation and tariffs. And still Icelanders consume more than most Europeans of those products. So what is the deal? Just another ideological social issue that the Left Greens feel they must make a stand against without considering the consequences, such as its effect on inflation and the effect on the national psyche of people that are already feeling the pinch everywhere.
The insurance company Sjova. Why did the Icelandic businessmen that bankrupted the country so actively try to acquire insurance companies to go with everything else they owned? Well, turns out Milestone, owner of Sjova, one of the three largest insurers in Iceland brazingly managed to use the strong position company’s claims fund as a collateral for acquiring Swedish insurance and investment vehicle Invik & Co. Sjova itself was effectively turned into an investment vehicle in the last few years, something the Special Attorney investigating the economic crash is reviewing right now. The insurance part of Sjova is said to be a viable business, while its investment part is anything but.
Bakkavor, the company of the brothers behind Exista cannot pay a 20 billion ISK loan and is therefore effectively bankrupt. Meanwhile DV reported on the brothers’ wifes going on a luxury trip with their “champagne club” to Oman, a social circle that counts former Kaupthing chief Sigurdur Einarsson’s wife as a member. While Icelanders are being advised to tighten their belt buckle, take the bus and eat more porridge, it is nice to know that somewhere it is still 2007. The story of how the Bakkavor brothers started their escapades abroad comes to mind. When they realised that a business they wanted to buy was out of their reach they came up with the wonderfully innovative plan of calling Siggi (Sigurdur Einarsson). And he said no problem guys and the three amigoes proceeded to weave an intriguing web between Bakkavor and Kaupthing.
And the state which sold Exista the national telephone company in 2005 in the name of healthy free market competition, which lead to higher phone bills and worse service, is becoming the owner of its competitor Teymi which operates the Vodafone franchise in Iceland and the “low cost” telephone company Tal. This is thought Landsbankinn, Teymi’s creditor which is assuming control of the business loaded with debts. So now the state is in the peculiar position of competing against the business it sold four years ago and being accused of granting Teymi an unfair competitive advantage over Siminn which says it can pay its own bills. Ah, the wonders of capitalism!
More later on a couple of more issues, including fashion queen Karen Millen’s foray into the exciting world of Icelandic Savings & Loans.
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