The Icelandic government’s economic advisor Tryggvi Thor Herbertsson, on a leave from his post as CEO of Askar Capital Investment Bank and two years after his whitewash report on the Icelandic economy with Columbia professor Mishkin, with some interesting promises to the BBC on October 4, 2008.

What happened next? The Independence Party’s voters elected Tryggvi as an Althingi MP.

Also in the beginning, a certain someone who says he tried to warn everyone about the impending disaster.

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And Hannes Smarason of FL Group fame personal debts to Landsbankinn amount to half the IceSave amount owed to the Brits and the Dutch according to the latest calculations. Of course without proper collateral or what?

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But if you happen to own or control a business which has been bankrupted in Iceland in the last couple of years, the way back to 2007 is made easy by the country’s banks, accountants and business laws. Through those channels, twisting and turning is made strikingly less hazardous.

DV reports that the owner of Leonard, one of Iceland’s most prestigious stores handling jewellery and fine watches transferred the operations onto a new social security number and signed an agreement with his wife that she would assume control of the new company. Last week he was declared bankrupt himself. But through this manoeuvre the couple has managed to get rid of the old debts but still keep the store.

This is not an exceptional case, but a blueprint for why so many of the most reckless business people of the last decade are still heading the companies they’ve run into the ground.

This is why Geir Haarde and David Oddson used to say their aim was for Iceland to become a “business friendly” country.

I for one don’t understand why business schools bother with explaining basic rules in finance and economics to their students anymore. Why are they still teaching that “those who assume the greatest risks also should reap the greatest rewards because they can also incur the greatest losses”?

Why don’t they just teach students how to create two business entities and shove debts into one and assets into the other? You keep your assets and the debts fly off to “money heaven”.

Wasn’t that also how IceSave was supposed to work for Landsbankinn’s owners and management team?

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Like other countries which have run their economies into the ground – including Greece as a good example -  Iceland must take responsibility for itself. So even if the Icelanders voted no and every last one of them had banged pots and pans in the streets of Reykjavik, the global community has to remain steadfast. If the Icelanders can not agree with the Dutch and the British about payment terms, then they naturally can not expect further loans from either the IMF, the Nordic countries or progression in the EU talks.

It must be noted for fairness sakes that the Icelanders have underlined that their position is not one of not paying, but about the details. And Netherlands and the UK have listened. When Iceland voted no anyhow, the two countries had already offered a better deal, which the Icelandic leadership had already rejected as not good enough. It does not bear witness of either humility or sense of reality.

From Denmark’s Berlingske Tidende (in Danish)

Berlingske noting that Icelanders seem to lack the understanding that actions have consequences.

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- Steingrimur J. Sigfusson, Finance Minister of Iceland two years after an economic collapse all but wiped out the Icelandic financial sector after years of “hot money” flowing into the country because of exorbitant interest rates imposed to battle inflation.

He is crediting the arsonist for bringing a bucket of water to the fire.

What he is really celebrating is Iceland moving one step closer to the developing world and  improving our “competitiveness” through a worthless currency. Never mind the comparative loss of wealth to citizens in the developed world.

A classic argument for not joining the EU and improving the livelyhood of Iceland’s citizens.

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It is quite a bit strange to hear people say that they would still vote for the Independence Party today, even after its Icarian flight of the past two decades and its nepotistic distribution of the wealth of the nation.

But it so happens that there are sensible, moderate people lurking in the party’s backrooms. They just have to start claiming their party back from the fanatic right. It is time for them to build from the ground what many Independence Party members think their party is about, a democratic party favorable to independent business owners and individual rights, and weed out the frentic big government, oligarcich  Friedmanites (yes, the irony but that is what the party had become).

The party attempted to confront the need to reform itself  in the wake of the 2009 elections and produced an interesting self-examination and plan for a new beginning.  But by stirring fresh and old wounds alike, the still hypnotic Great Leader managed to stir up enough hate and venom at the party’s convention that it put those plans to a halt.

David’s heir, Bjarni Benediktsson has appeared too frail to go to work on claiming the party back for its people from the special interests of fishing quota kings and fanatic republicanite ideologues.  A large part of voters of the party have been had for fools for too long now and would doubtlessly celebrate a lead from a leadership who is not afraid of the world around them, who attempt to distribute the wealth in the most efficient directions and is committed to building a prosperous nation instead of self-serving billionaires.

The old ghosts could be pushed out to the fringes where they belong with the Progressive Party. At a time when Iceland is divided because of those interest groups, a reformed Independence Party migh just hold the keys to a successful reconstruction. The moderates need to step out and claim their place, if they don’t they risk unsettling their country even more. But that place will not be theirs unless they stop the rot.

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Steingrimur J. Sigfusson asked the nation how it thought an agreement could be made with a saboteur on our very own negotiating team.

Of course Sigmundur David Gunnlaugsson, chairman of the Progressive Party and founder of the InDefence pressure group would never have dreamt up a more favorable situation. Half of the nation had bought his spin and handed him the spin necessary to demand a clear path to the power tables. Preferably before the congressional report on the economic crash due out soon.

I hate to say I told you so, but I did and Icelanders were played by a snake oil salesman and too many of them bought it. He has divided the nation and now humbly offers to lead it from distress.

The enemy does not have Iceland’s interests at heart. It is all about the money (did we mention how he became a billionaire through an unholy alliance of politics and business) and the mandate to lead Iceland during these turmoilous times when the wealth and debts of the nation are distributed.

Iceland’s enemy number one has revealed himself and his name is Sigmundur David Gunnlaugsson.

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But instead it is not a cause for celebration but a large milestone in the farcical power play which has taken place between the four largest political movements in Iceland since 1944.

Yes, a farce. “Isn‘t that what this whole thing really is”, asked a Dutch journalist yesterday after surveying the scene? It is a sad day.

The media has a lot to answer for

The media has a lot to answer for. Instead of allowing people like law professor Bryndis Hlodversdottir and political science professor Svanur Kristjansson to explain to the nation why this isn’t good democracy, the media has instead handed the microphones to red-faced, unbalanced Sigmundur David Gunnlaugsson, chairman of the Progressive Party whose political career has revolved around kicking up as much mess as possible around IceSave. It makes for a better TV than a balanced approach and it creates pressure on the government he opposes.

In his wake you can see the pressure group InDefence whose members include Progressive Party players and someone who was recently kicked out of the Central Bank for bypassing the currency restrictions which are supposed to be holding our economy together. And the rabble rousers from the Independence Party who are glad the spotlight isn’t on them.

Why isn’t the referendum good democracy? Well, the question is useless as there is a better offer on the table. The information to make an enligthened decision have not been easily available. And the consequences of a yes or a no are unknown. And how do you vote on whether your nation should pay its debts or not? Of course nobody wants to pay. But that is what three governments have now promised Holland and the UK that we are going to do. The rest is just details, isn’t it? And we can argue endlessly over details can’t we? Did the government or the opposition ever tell us what their goals were regarding payment terms, interest rates and such? What exactly is an agreeable agreement to Iceland?

So far, no details have been good enough for the opposition, which includes the Independence Party who would have agreed to a less favorable agreement a long time ago if only they were still in government. And to some people it seems like any deal is a bad deal because then the spotlight will turn towards other matters?  Could it be that Iceland’s enemies are not abroad, in Amsterdam or London but actually in Reykjavik, Blonduos and Akureyri? So far, the problem hasn’t been about Iceland’s democratically elected government not reaching an agreement with the UK and Holland. It has been about not reaching an agreement with the opposition. The opposition, coupled with a few Left Greens who think that Iceland’s future as a self sustainable country in the vein of Cuba is viable, has stalled, filibustered, argued and kicked up a storm at every turn. Some academics have suggested that every month stalled has cost Iceland 70 billion ISK or so, a large chunk of IceSave. Are the small details really worth it or are more sinister forces at work here?

For the opposition’s part, the longer this thing drags out the more turmoil there will be in Icelandic society. And who will the voters blame? Well, of course the people in government. And then the way is clear for the opposition to resume power. And don’t think for a minute that they would not try to negotiate with the Brits and the Dutch.

Olafur Ragnar Grimsson. The cheerleader of the business-vikings who raped and plundered Iceland. (Finnish president Halonen not included)

The political elite has a lot to answer for

The political elite  has a lot to answer for. Olafur Ragnar Grimsson, a lame duck president, paralyzed by his constant smooching with the money-men of yesterday, has suddenly turned the tables somehow to making some foreign journalists believe that he is at the forefront of a fight against capitalism. Don’t be fooled. It was just about his own legacy, and the trouble the four parties have created by constantly refusing constitutional reform which would sharpen his role and responsibilities. They never did because they don’t want to limit their own powers. It is a diabolic merry-go round.

The people have a lot to answer for

The people have a lot to answer for. We have voted for bad politicians and we have voted for a bad system. And we have been fooled into all sorts of bad positions because we are hapless joiners who too easily take sides with demagogues and snake-oil salesmen to easily. The mob has allowed the political elite to maintain its grip on society. Recently it has mindlessly signed petitions for InDefence and Thjodarhagur, honked horns with a slightly facist New Iceland and gathered at an Anthill for a Nation’s Meeting without asking who is behind all these groups and what is their purpose. And now it will flock towards a referendum where one of the options is out of the question, and in many cases not having a clue what they are voting for. Iceland not paying any debts. Count them in.

So what will happen tomorrow? A big no vote of course. And what does it mean? Some people think it is a message of some sort which will improve the negotiating position of Iceland. But really?

Three likely scenarios

a) The government keeps going and attempts to find a solution with the UK and Holland on the grounds that “people are against paying these debts”. Why would the UK and Holland see that as an argument? Those countries can wait. The IMF loans could wait as well. The government is backed into a corner and has little options but to resign.

b)  The government keeps going and attempts to find a solution with the UK and Holland on which the opposition can agree to. Which is unlikely, because the opposition can wait until things are so tight that it can assume power on a wave of discontent.

c) The government resigns. The current opposition resumes negotiations and quickly finds an “acceptable deal” with minor adjustments which they will take credit for. The new opposition kicks up a storm. Then what? A new national referendum on that deal?

Bjarni Benediktsson and Sigmundur D. Gunnlaugsson. Opposition party leaders and billionaires.

It is really a whole big mess. And it does not make one proud of being an Icelander. What is currently taking place in Iceland has nothing to do with democracy. It is cold hard realism which has everything to do with power and money.  Consider who is leading the opposition. Two, middle aged men who have become filthy rich through the cosy relationship between politics and business in the last few decades. They want people to think that this is about democracy, independence, justice and standing up to the man.

And the real enemy within escapes the attention meanwhile and grows stronger from the strife.

It is a sad day. The first national referendum of the republic since its beginnings and it is for the political elite, by the political elite and benefits the political elite. There could have been so many other more apt matters and issues for the nation to deliberate on, the fishing quota system, support for the war in Iraq, constitutional reform. But no, instead we get this farce.

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It is all about internal, Icelandic politics.

Those who will vote yes are voting for the government to stay on (Social Democrats and those who still think Steingrimur J. Sigfusson is the leader of the Left/Greens).

Those who vote no are voting for the Independence Party and the Progressive Party (People who would absolutely love for it to still be 2007).

A few naive souls will vote no because their life values commend them that anything to do with banks and business is something you should say no to (mostly Left/Green naivists and people who look like they are roadies for Jimmy Buffett).

The rest of us refrain from joining the circus.

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“Would you like the EU to take the credit for our victories?”

Does this video imply that we can claim victory if Germany, France or Spain wins the World Cup in July? Or that we can claim victory no matter who wins Eurovision? And does this mean that people in Spain take great pride in Norway’s gold medals at the Winter Olympics?

Well…although I am dumbfounded that someone could be so incredibly stupid to think that EU membership would lead to this, I am sure that this is just the beginning of the most ridiculous national debate in history. And I would not bet against the standard being lowered even further.

Of course the people responsible for this wish to remain anonymous. Iceland’s worst enemies are truly not outside the borders, they are hiding within.

…oh, and the Independence Party has added ten MP’s in the latest polls.

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