In an interview with Channel 2 radio, Jon Baldvin Hannibalsson, the Social Democrats leader who signed the EEA agreement on Iceland’s behalf in Oporto in 1992 claims that there is no debate on the issue in Iceland. What is being discussed has nothing to do with Europe, it is only for local politicians chasing rural votes. “There are ministers in this government who speak like idiots and talk nonsense. And they are digging from under those who are supposed to negotiate on national interests”.

On fisheries and agriculture minister Jon Bjarnason’s claims that Iceland is already being assimilated into the union, Jon Baldvin says that these are things Iceland already should be considering with or without the EU. “We don’t have a ministry of agriculture and there is really no minister of agriculture in Iceland. It is just the Producers Organization and Farmer’s Association who control what is done.” Industries should not be producing their own statistics as is done in Iceland.

Jon Baldvin also said that the idea put forth by the Independence Party and supported by several Left Greens to retract the EU application was absurd. “This is the best way to destroy the little that is left of Iceland’s reputation”. It is without precedent in international negotiations that people behave with such stupidity.

Steingrimur J. Sigfusson is in a tough spot according to Jon Baldvin. He is by far the best politician Iceland could possibly have right now. On the other hand his government is paralyzed because he has not had the time to control the crackpots in his party.

Related posts:

1. Texting Away The EU Debate
2. Silly Debate On IceSave
3. EU Membership – The Time and The Place of the Social Democrats

The award is called the Kjartan Gunnarsson Freedom Award and it was presented by the youth association of the Independence Party at the party’s headquarters.

Kjartan Gunnarsson you may recall was the CEO of the Independence Party who simultaneously sat on the board of Landsbankinn, the bank responsible for IceSave. You might also remember how the Independence Party government of David Oddson handed Landsbankinn to its preferable owners, Bjorgolfur Gudmundsson and Bjorgolfur Thor.  And you might not have forgotten about the 25 million ISK donation that Landsbankinn gave the Independence Party days before it enacted new campaign financing laws.

Amongst the guests, Independence Party MP Petur Blondal, the proud father of one of InDefence’s most active members.

It hardly gets more absurd than this crowd.

Related posts:

1. Independence Party = Enron
2. An Independence Party Split?
3. The Independence Party’s Successful Projection Of Baugur and IceSave

It was the government, the supervision authorities and Landsbankinn amongst others according to a big interview in Frettabladid today.

The governments of David Oddson and Geir Haarde also know who to blame.

The banks, their owners and management.

Bjorgolfur Thor has said that Jon Asgeir Johannesson is very much to blame. And in some cases the Geir Haarde government. And his own CEO’s.

Jon Asgeir Johannesson has blamed the governments of David Oddson and Geir Haarde and the supervisory authorities.

Jonas Fr. Jonsson of the Financial Authority blames the banks, their owners and management.

All of them are correct.

Related posts:

1. The Icelandic Discourse in A Nutshell
2. Top 10: Who’s To Blame For The Icelandic Crash
3. The Independence Party FL Group/Landsbanki Scandal

But with reserves of unsold whale meat mounting and a minuscule market for the meat, it is quite reasonable to oppose whaling on economic grounds. The business case has always been puzzling, but it might not be a question of money for meat but something more real-political.

The real reason why Iceland is still whaling is because  politicians and businessmen who want nothing to do with Iceland in the EU find it convenient.

Outgoing fisheries minister Einar K. Gudfinnsson of the Independence Party poured the poisoned chalice on his last day in office before his government was chased out by its citizens for general ineptitude. The Left Greens inherited the ministry and have not reversed the course. The current fisheries minister Jon Bjarnason is a staunch anti-EU politician.

The guardians of the old system do not let go so easily.

Iceland’s whaling is going to lead to confrontation in membership talks with the EU. The EU is going to demand that Iceland stop hunting whales and the anti-EU lobby is going to shout from every rooftop about lost sovereignty and a bullying empire when it does.

And that is why Icelanders still hunt whales.

And confuse them with fish like Kristjan Loftsson, the primary whaling lobbyist:

“Whales are just another fish”

Related posts:

1. Why Whaling In Iceland?
2. Why whales?
3. Questions on whaling

Earlier this week, a Social Democrats insider Andres Jonsson pleaded to the “moderate section” of Independence Party to meet them on the issue of the EU.

It is understandable that some of the Social Dems should cast their glance to the right. It is not far off politically from their own position and they probably believe that it is easier to get things done with “moderate” Independence Party members than with the “wild left” of the Left Greens. Planned shake ups in the government indicate that room has to be made for Ogmundur Jonasson. With Iceland a political and economic china shop, the Social Dems are obviously hesitant to let that bull in.

The trouble is that the “moderate section” of the Independence Party is still as paralysed as the Left Greens and the Centre Party as far as reform within their own party goes. Only a few elders and a couple of “unruly” members have yet to stand up to the corruption and xenophobia which David Oddson and co. have installed in their ranks. The so-called moderates are in some cases badly damaged themselves, like former minister Thorgerdur Katrin Gunnarsdottir or stuck there through emotional, social and nepotist ties like Benedikt Johannesson and Thorsteinn Palsson.

Letting the Independence Party in without a serious clean up instigated by members of the party would be a big mistake. Reykjavik city mayor Jon Gnarr of the Best Party has now explained why. He ran on a novel platform where all the “animals in the forest were supposed to be friends” and offered an olive branch to Hanna Birna Kristjansdottir, the Independence Party leader by including the opposition party on a scale never before seen.

Last night in the “Mayor’s Diary” on Facebook, Jon Gnarr wrote: “I feel like I am naive, can not handle this or do this in a beautiful way. I doubt that I can work with the Independence Party. I feel like I am showing humility, but all I get in return is hot shot arrogance or lack of interest. Should I also stop smiling or keep trying to make friends with these people who do not respect me or what we are trying to achieve.”

People who think anything different would happen with the Independence Party in a coalition government are more naive than Jon Gnarr. Besides, have the other parties not learned anything from the past twenty years? The original Social Democratic Party became a deflated balloon after being in cohort with David Oddson from 1991-1995. The Centre Party used to be able to claim half and half of the corruption spoils with the Independence Party and scored around the thirties a decade ago but is so badly damaged that it can hardly claim a tenth today. The Social Democrats were seen as the antithesis to the Independence Party until 2007, when it became too impatient to wait anymore for its place at the power tables and joined hands. Imagine the clout the Social Democrats would have had in the clean up after 2008 if Ingibjorg Solrun Gisladottir had refused Geir Haarde’s kiss of death?

Bad things happen when good people let the Independence Party assume power.  Jon Gnarr is not a politician by trade, which is encouraging in these times. But the tension between the Social Democrats and the Left Greens could inadvertently open the door for the unreformed Independence Party.

Some people still fail to see the difference between affectionate word and kisses of death.

Related posts:

1. The Icelandic Discourse in A Nutshell
2. The War Begins
3. The Independence Party’s Successful Projection Of Baugur and IceSave

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

The scariest movie of the year?

“Excuse me, you can’t be serious. If you would have looked, you would have found things”

Related posts:

1. CNBC: Iceland Strikes Deal to Clean Up Banking Mess (Video)
2. Mishkin’s Iceland Fail (Video)
3. Joseph Stiglitz At The University Of Iceland (VIDEO)

But it is hard to top the comment a very pretty girl at the University of Iceland made during a lecture early this summer.

Responding to a Christian theologian denouncing the greed society which Iceland had become in recent years she asked whether greed was an uncomfortable issue for the church? “After all your rituals revolve around greed, like the confirmation. That is how you entice teenagers to enrol.”

At age 14, Icelandic teenagers accumulate large amounts of cash and a wealth of possessions for attending confirmation.

The wedding season is just over. When Icelandic women try to top each other in flash statements of love in front of God.

At a wedding this summer, foreign guests commented on the priests flash car and found it hard to believe that he was a state employee, with more than double or triple the salary of policemen, nurses and firemen.

An outdated flock the lot of them.

We should listen more to pretty girls.

Related posts:

1. And God Taketh…
2. Estrogen Will Not Cure Greed and Stupidity
3. Religilous

Tyler Durden at ZeroHedge points out this video of Columbia University economist Fredric Mishkin who has changed the title of his 2006 pen-for-hire paper on Iceland’s economic state from Financial Stability in Iceland to Financial Instability in Iceland.

Some time ago we penned a post, titled”Mishkin On Iceland: “Nothing Is F*#&ed Here Dude” which discussed the former Fed director’s March 2006 analysis “Financial (IN)stability in Iceland”. Those interested in our original observations of Mishkin’s horrendous analysis (of what proved to be the first bankrupt European country of the new century, but certainly not last) can find them at the original link. Yet continuing with the Duderino references, today, new shit has come to light, which once again confirms that not only is the Fed populated by the most intellectually incapable and corrupt people, but that anything coming out of Columbia University (and the Ivy League in general) is not worth the paper it is printed on. Watch the attached clip to see a former Fed director go from comfortable, to fidgety, to stuttering, to thoroughly discredited, to in dire need of diaper change, in under 2 minutes. Last but not least, here is the soundbite of the year: “You have faith in the central bank.” No further comment necessary.

Why would a noted professor who wants to be taken seriously do such a thing?

Probably because he should try to distance himself as far away from the reality that his report was commissioned by the Chamber of Commerce in Iceland as a false reply against an avalanche of criticism which hit Iceland financial world in 2006. Mishkin got paid $124.000 to write the report with then Independence Party economist for hire Tryggvi Thor Herbertsson. If Mishkin had done any independent research he would have quickly been aghast at the foreign debt accumulating, the bubble forming

My belief is that he actually only lent his name. The wording of the report looks suspiciously like it originated from the Chamber of Commerce’s spin machine. It would be

interesting to hear how much time Mishkin spent on the report, which documents and statistics he researched and who he spoke to.

Like Transparency International and the damned ratings agencies, Frederic Mishkin failed enormously in getting below the surface of Icelandic politics, history and financial markets.  Danske Bank, Merrill Lynch and the IMF did not. They rung the alarm bells.  Robert Z. Aliber and Robert Wade did as well. The analysis of the former lead to the chairman of the Icelandic Financial Services Association threatening professor Thorolfur Matthiasson that he would never get any grants from the group again for bringing such a man into Iceland.

Hopefully Mishkin held on tight to his $124.000. Within three years they had doubled in value in Iceland.

Let us hope Mishkin’s students grill him on the subject if anyone is still listening.

Here is a check-list which they would be well advised to bring to class.

1. How much time did you spend on the report?

2. Which documents and sources did you use to reach your conclusions?

3. Did you know that your co-author Tryggvi Thor Herbertsson was a trusted member of the ruling Independence Party?

4. Did you know the IP had appointed its former head as Central Bank governor, with no background in economics at all?

5. Did you understand the close ties between the movers and shakers in the IP government, the Central Bank, the Financial Authority, the Chamber of Commerce and the banks? If so how could you reasonably claim academic integrity behind the report?

6. Did you understand the power struggles between the Central Bank governor and some of the largest owners and executives of the Icelandic banks?

7. Why did you report contradict noted researchers at Danske Bank, Merrill Lynch and IMF? Was the report made to order?

8. Why did you not reveal the large payment you received from the Chamber of Commerce in the report? Did you get any other amenities paid for, such as reindeer hunting trip in Iceland with your co-author?

9. Why did you change the name of the report on your CV from Financial Stability in Iceland to Financial Instability in Iceland? How would you react if your students did such a thing?

10. As a professor how would you grade the report in light of recent events in Iceland?

The report:

Related posts:

1. Mishkin for sale
2. MP’s Two Million ISK Payment For Mishkin Report
3. Frederic Mishkin’s Role In Iceland’s Collapse

A cup of coffee in Reykjavik is getting close to the price of a beer a few years ago. The price of beer is getting close to the price of mojitos a few years ago. A mojito almost requires a second mortgage.

It is worse in the rural areas. We camped in the Western peninsula a few weeks ago. The weather turned ugly and we checked out how much a stay at the local guesthouse would cost us. Twenty-two thousand kronas or almost $200 for a tiny guesthouse a night. I have stayed at four star hotels for less.

It is also very Icelandic to shrug these things away. We stuck with camping…for 4.000 kronas for the night, a butt-numbing amount for pitching your tent anywhere in the world. But when asked to explain these mad prices at Iceland’s tourist destinations an economist for the ASI explained that foreigners’ purchasing power has gone up considerably so they were not so price sensitive to these hikes.

Meanwhile those of us who are unlucky enough to be stuck with the ISK are encouraged to stay at home.

4.500 ISK for bathing with Chinese businessmen swimming in their underwear in the Blue Lagoon anyone?

Related posts:

1. The drinking crisis
2. Another economic car crash
3. A Business Friendly Country