Not so long ago, Icelanders strutted down the streets of Denmark as if they owned the place. Back then, the Faroe Islands were a mere afterthought.
Foroya Bank has just bought 51% in Icelandic insurance company Vordur for 1.1 billion ISK.
Different times indeed.
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Melvin Godfried
2 years ago
The next thing you know we will be discussing a possible loan from the Russians!
Bromley86
2 years ago
That won’t be necessary because Norway will give them $16bn!
Bert Pachetta
2 years ago
Well, at least the Poles are willing to load Iceland money as long as the Icesave deal is approved? The IMF is not supposed to be involved in this, yet they are. Screw the Icesave loans, give the British and the Dutch an ultimatum, take it or leave it! This is the the universal language of understanding!
Bromley86
2 years ago
And the British & Dutch have so far indicated that they’re happy to leave it. Only if Iceland is willing to not take the IMF/Nordic package will that threat carry any weight. And even then, when the UK/NL take it to court, the EU/EFTA court may still find against Iceland. So they’d be back at square 1; owing $4bn with no one willing to lend it to them other than the people that they owe it to.
Unfortunately, as I keep moaning on another board, no one has examined what would happen if Iceland did not get (or did not take) the IMF/Nordic loans.
hmmmm
2 years ago
Bromley86
“Unfortunately, as I keep moaning on another board, no one has examined what would happen if Iceland did not get (or did not take) the IMF/Nordic loans.”
you are an ingenious mind.
You know, rule #1 says: when problems search the cause among your own kind.
I was told a brilliant thing on the last Smyril ferry leaving Iceland the last autumn. BTW: the mood of some passengers was that of escaping. My feelings were quite different: I couldn’t have left a land I lived in for a number of years at the worst time. A sense of treason really.
OK, back to the words I was told by my fellow passengers. Literally, they told that it was Icelanders themselves abandoning the country among the first just when noone else knew what is going to happen next morning.
It was said w/o anger actually, just as a matter of fact.
how true it actually is. Real [enemies? or just greedy fools?] are among the closest people. Why do really iceland needs yet another loan when it ALREADY BORROWED THAT MUCH it can not repay?? Who’s gonna guarantee the loan will be used wisely this time?? Easy come easy go, it’s a rule n# 2. Who’s gonna sit and distribute the money and to whom?
Is it gonna be yet another power game of some elite? Possibly names will be different (well, given a limited pool of icelandic names it may not be true) but what about the essence?
p.s. On a bright side a liked one notion told by Mr. Geir Haarde (if my mind serves my right) that we icelanders are not going to dig into fish quotas which are our most important natural resources and they belong to our children. Some sanity is still present. It gives a hope.
Blubber
2 years ago
Indeed, not taking the IMF loan is the way to go IMHO. Clearly Icelandic financial institutions do not have the intellectual capacity to handle the money(not to mention the more sinister accusations).
And in all fairness, why should anyone lend Iceland any money as long as Iceland does not pay the debts it has already incurred?
What would happen if Iceland did not take the IMF loan?
Bromley86
2 years ago
Bear in mind that I don’t really have a clue and, AFAIK, all the people who’ve advised Iceland to stay away from the IMF are either in the same boat or haven’t, for whatever reason, advanced a likely scenario.
All I can do is look at what the IMF/Nordic funding is meant to be used for. In order of, as I see it, increasing importance
1. Stabalise the currency. AKA burn money not so that you spread the pain over a number of years, rather than taking all the pain now. Not sure that this one is necessary, as Iceland could just carry on with the capital controls indefinitely. As long as its fishing companies are forced to repatriate their earnings (and seeing as they’ve probably just been bailed out, they damn well should).
2. Fund the deficit. Ditto to the above regarding pain and timescale. Probably more important than (1) to most people, as we’re talking big changes to lifestyle here rather than just eating more fish and less beef. No cancer drugs, charging for some medical treatment, lower state pensions, etc.
3. Recapitalise banks. This I suspect is the key. When I last looked at this, something like half of the IMF/Nordic money was for the banks.
What does it mean though? I can only assume that it means that the banks just don’t have enough assets, especially liquid ones, to function. Will failure to secure $2bn+ for the banks lead to second collapse? Or could they survive with something like the capital controls in place?
This is where it would have been nice for people like the economist Michael Hudson to get involved. But that wasn’t on their agenda.
hmmmm
2 years ago
“bromley86 All I can do is look at what the IMF/Nordic funding is meant to be used for. In order of, as I see it, increasing importance”
in that small economy with floating exchange rate all things are interconnected. Currency rate stability was an issue over the years and still is. I can not envision any businessmen who deals with króna. It is solely an instrument of speculators and only of them.
)))
Banks recapitalization – well, I remember Mr. Thor Bjorgolfsson telling that they had (they actually still have judging from offshore króna market) plenty of krónur. The Central Bank just refused to borrow them notes printed in other countries
Which brings us back to the currency issue and the role of the Icelandic Central Bank in the last years. The attempt to peg króna lats Autumn was pathetic to say the least. Currency Boards imposing fixed exchange rate are used by small fishes like Baltic states and someone else in the Europe. Fixed rate sucks but it brings some discipline and stability at least.