1. There was a demand of reform in the fishing industry. It was needed because the resource was gathering in the hands of very few who in turn used their wealth to borrow intensely against it and invest in other sectors. The profits of the sector have increasingly been disappearing abroad. Oh and the UN Human Rights Council had condemned the system and claimed it was in violation of human rights. The new government indicated that reform measures would be taken. Then it appointed a reform committee dominated by industry lobbyists and politicians whose career depends on the industry. The result..a fucking fuck solution which benefits the…fishing industry.

Finnbogi Vikar, a member of the committee delivered a special opinion. “As I have said before, the appointment of this committee was a mistake because from the beginning it was clear what the result of the majority would be. One needs only to examine the interests behind the members of the committee to realise that most representatives of the wage-earning public and employees in this country have long ago taken a stand with the representatives of the largest organizations of employers and against the public’s interests after the collapse of 2008. Together these parties form a formidable power-bloc which controls a great deal in our society with the bloated undemocratic pension funds behind them. It is unbelievable that there is no demand to be made of the political parties and the politicians on this committee that they reveal the amounts donated to them from interest groups in the fishing sector in recent years.”

2. There were demands of constitutional reform. Iceland copied the Danish constitution in1944 and then Althingi neglected review and reform for decades on end, despite promises and indications otherwise. Reform is for example needed in clearer seperation of the branches, re-examination of the role of the president and timely separation of church and state. Althingi is stuttering through with a constitutional congress for which elections are supposed to be held in the autumn. The way appears clear for demagogues, special interests and representatives of the politicalparties to deliver a loud and argumentative debate and a fucking fuck result.

3. There was outrage over campaign finances. Political parties and members of Althingi were awash in cash from the finance sector, the energy sector, the fishing sector to name a few that their loyalties were not just questionable but plain obvious. The way politicians bent over backwards to exploit public utilities for the benefit of shaky corporations and ignore regulation for the suicidal financial sector left a bitter taste in the mouths of voters stuck with higher utility bills and monumental sovereign debt. So a campaign finance reform committee was created and its results are an almighty erect middle finger in the fucking fuck direction of those voters. The party‘s don‘t want real change and have just made some minor inconsequential changes.

The Movement‘s announcement. “This issue is a clear example of how Althingi is not going to consider the work of the Special Investigation Committee and its conclusions. The eight chapter of the committee’s report is named “Morality and procedures connected to the collapse of the Icelandic banks in 2008”. In Chapter 2.3 it says “One of the most obvious tool of the business sector to influence politicians are direct donations, both to parties and individuals.” The conclusion of the chapter is where conlusions are drawn and the lessons of the past are examined. “Ways to draw a clearer line between the financial sector and the political sector must be found. It can not be tolerated that the guardians of public interest act on the behalf of private companies in such a manner as was done in the event of the banking collapse.” With this new legislation, Althingi has rejected the conclusions of the part of the Special Investigation report which criticizes harshly the connections of poltical parties to the business and financial sectors. Unfortunately the financial interests of the four parties are placed above the publics. Democracy and transparancy are of little use against the mixed up priorities of those in power.

4. There was great displeasure with the president, Olafur Ragnar Grimsson who had opened the doors of the presidential office to the bankers and financiers who in turn jetted him around the world to open doors to global business. The president had become a caricature who had brought the reputation of the office down. Then he managed to somehow please the special interest group InDefence by approving their call for a national referendum on sovereign debt and won some credibility back with the increasingly xenophobic, scared and confused public. So he still occupies the office, trying to reinvent his damaged image to the amazement of observers. A president who owes his people is suspectible to participate in plenty of fucking fuck demagoguery.

5. It became clear in the banking collapse that on the global stage Icelandic politicians had neglected making friends, forming alliances and providing shelter for their citizens. Timothy Geithner laughed at advances made by David Oddson, the Nordic countries offered concerned but sound advice and Britain offered solutions. Instead Icelanders followed the lead of the Independence Party‘s leaders and decided to sulk, play the victim and accuse the international community of a siege. When things were coming to a heat, the Social Democrats delivered a plan that could restore Iceland‘s credibility abroad and solutions to the volatile currency and mounting public and national debt. An application was made to join the EU. And then the xenophobes, cold war relics, special interests and racists hijacked the debate to the point that grown up, educated people want the IMF out without any alternative solutions to Iceland‘s currency and debt problems, a national referendum designed to exit NATO without any alternative solutions towards Iceland‘s defences and to retract the EU application without ever having to offer alternative plans to restore Iceland‘s economic viability and international credibility. Meanwhile in the real world, Iceland recently dropped almightily the World Economic Forum‘s Report on Global Competetiveness as far as macroeconomic environment goes and is ranked number 138. The Independence Party, the Centre Party and the Left Greens have offered no solutions or propositions on how to restore Iceland‘s standing. They are currently getting away with spewing venom all over the only realistic and credible plan available. Oh and fucking fuck IceSave is still unresolved.

6. The media came under plenty of scrutiny for not delivering scrutiny at all. Now it is in the hands of Jon Asgeir Johannesson and David Oddson. Editor in chief David Oddson even has the nerve to accuse the State Broadcasting Channel of bias because a reporter there is the sister of Exista‘s CEO, implying that her media can not be trusted with delivering news. Apart from maybe DV, the media is worse than before. When investigative reporting was needed, Channel 2 cut theirs from the program and gave the nation cooking lessons from the wife of Baugur‘s head of finance. Agenda, propaganda and fucking fuck through your mailbox and television screen every day.

7. There were loud calls for debt reform through restructuring and write-offs. For a moment, people actually believed that those who had accumulated the greatest debts would have to pay the most. Then reality bit hard and cold. The government‘s promise of a fortress around Icelandic households ended up in solutions which benefitted those who had geared themselves the greatest. Those with a 100-200% mortgage were bailed out, especially if they could find members of Althingi willing to do their bidding within the banks. Those who had saved and put down payments on their homes were left to rot with their inflated debt. And what about Jon Asgeir Johannesson, Bjorgolfur Thor and their kind? Well they have so far managed to score deals with the banks on massive write offs domestically so they can manouvre deals where they can get back their companies abroad. And they have been granted stand-still agreements where their debt collects no interest and is not gone after either. Many of the same people are still main actors in the business sector. Bjorgolfur Thor has been seeking tax-exemptions while wage-earners are experiencing higher taxes and higher utility bills. Did you think Sigurdur Einarsson, wanted by Interpol a few months ago was here to be questioned the other day? No he was here in talks to buy a fucking fuck financial institution.

8. There was need for someone to hit the refresh button in the political arena but so far it seems like the old guard has gotten away with a restart. The Social Dems were and still are unable to find anyone with remotely the same political credibility as Johanna Sigurdardottir. The ladder below is crowded with wallflowers and followers of men. If Johanna has enough then it does not bode well for the only party with a plan for the nation. Meanwhile the Independence Party, Left Greens and Centre Party are ablaze with infighting. All three parties are currently letting the monkeys run their circus and if it were not for Steingrimur J. Sigfusson‘s incredible turn from idealism to realism then all bets would probably be off. But it says all about the unruly waters of Icelandic politics that isolationist xenophobe Ogmundur Jonasson has had to be brought in to the government again to appease his followers. The Centre Party is currently in suicidal mode as requests for rampant demagoguery is fully provided elsewhere. And then there is the Independence Party which freed from the oppression of David Oddson almost managed to start a self-examination and reconciliation process, only to fall prey to the rampant partisanship and playground politics of their great leader again. The party‘s ladder is also crowded with hungover leftovers from the heady days. The only realistic challenger to the madness is former vice-chairman Thorgerdur Katrin Gunnarssdottir who has the financial freedom thanks to the former banks and little political reputation left to lose. New pretenders on the political scene have been pushed out by the Citizen‘s Movement which collapsed in record time and the Best Party‘s moves are under relentless attack from the four parties. It is not just an economic crisis anymore but an all out fucking fuck political crisis.

9. According to rumour there are people preparing to take the law into their own hands this weekend if the parliamentary committee charged with determining the responsibility of the elected officials named in the Special Report this spring comes up with a fucking fuck whitewash. It is to the Icelandic nation‘s outstanding credit that not one of the politicians or the businessmen most responsible for the ponzi economy which collapsed has been physically hurt so far. But it is to the incredible detriment of the political system‘s inability to appropriate blame that ordinary Icelanders are being heard in private conversations saying that “If I do it alone then it is murder, but if a group of us do it then it is a revolution. I am too angry.” The government and Althingi apparently now must be careful. An indebted and outtaxed public might cross new boundaries if they continue seeing Jon Asgeir and Bjorgolfur Thor parking their Range Rovers in Laugavegur, if Sigurdur Einarsson returns to Icelandic banking or if David Oddson claims his kingdom back. Lady Justice is in a fucking fuck pickle in Iceland these days.

10. The public is currently in an all-encompassing state of fucking fuck delusion. Serious, well meaning, well educated people are discussing between themselves in “revolutionary” terms. Yet, they still buy Morgunbladid, access Jon Asgeir‘s cable TV, vote for the Independence Party and nod when Ogmundur Jonasson talks of Nazi Europe. Currently letters are going out to 1.000 Icelanders selected for a National Meeting on constitutional reform. Yet again, a simulated process is given priority over weighty substance in the national debate. The public has already been lead on a ride by the Citizens‘ Movement (guilty), the National Meeting (not guilty), national referendum on IceSave (not guilty) and the Gudmundur Franklins‘ of Iceland are only beginning. Instead of taking responsibility for getting to know the issues of today, voting responsibly and holding their elected officials to their words, people are talking revolutions, Right Green parties and secession from NATO, EEA and the civilized world. Good, sensible people seriously need to start taking a stand in the fucking fuck that is Iceland.

Related posts:

1. The Icelandic Discourse in A Nutshell
2. Blue Handballs and Tackles From Behind
3. Iceland Will Say No To The EU

What does it take to maintain ablog which is read by a few more people than your mother? A bit of time to write, inspiration and a whole lot of enthusiasm for your subject.

And I am totally lacking any of the above.

In October 2008 I thought that finally something was going to change. An enormous veil had been lifted off a society so plagued with flaws and corruption that large numbers of its citizens had convinced themselves that everyone else had got it wrong.

The culprits fought to stay in power. Of course they believed that only they could adjust what had gone wrong on their watch. And their interests at stake were so great that they had to be chased out with pots and pans. They should have been grateful that this was not Southeast Asia or Latin America. They might not have been able to use the back doors.

And suddenly there was a breath of fresh air. Journalists actually wrote critical stories and bloggers started telling the truth. The fear of expressing ones opinion in Iceland had been temporarily lifted. Facebook was teeming with groups calling for a “New Iceland”, thousand joined the call for a better society. They wanted a new constitution, better policies, more transparancy, better justice and a more equal society.

And typically for Icelanders they thought it would happen overnight.

At first we heard a lot about our “abundand resources” and “strong pillars”. Even more typically for Icelanders the quest for quick fixes manifested itself in politicians repeatedly talking about possible oil resources in the Dragon Area. We heard about justice and retribution. That the people most responsible for the situation the country was in would have to pay with jail time and cold hard Caribbean-stored cash. A new government was elected on an almighty swing to the left after decades of sheepish adherance to the right. The PM was gay and there was even a new party in town which promised it would do things differently. An application was made for membership to the EU, better late than never. The new government promised reform in the fishing industry and a famous fortress around Icelandic households.

And then…what the hell happened?

Funnily enough we don’t hear that much about oil anymore. Living in Iceland today is like being stuck in a bad dream. When it was time to clean house the maid went to sleep and the urchins took over. Everything is in limbo! It is like that time after 6am on a Sunday morning when the nightclub has closed, everyone is worse for wear but they thought it would be a good idea to have an afterparty. And that is when the bad things happen. People pass out, things get damaged, stolen and raped. And nobody knows when the zombie-state is over because no one is really in control. It is hard to make cohesive plans in this environment because even the loons start to make sense for many participants in this drunken state.

There are still too many relics left over in the coalition parties to think differently than before. The fortress promised to the households was delivered to the banks. The resources we were going to use to turn things around were distributed to the bullies. The banksters and the politicians got theirs first. The former have equities which outstrip their liabilities, the latter help their own with employment through the state. The public has neither. It has been plunged into debt and unemployment has been at a record high. The US seems to be waking up to the fact that its middle class is shrinking. Iceland is getting there. The government seems to have decided to demoralize its population between 30-50 by throwing the chief burdens there. Higher taxes, less service, no real debt reforms.

Bjorgolfur Gudmundsson meanwhile still drives a Range Rover and lives in a mansion.

Demagogues, racists and extremists are having a field day under these conditions. Ogmundur Jonasson’s faction within the Left Greens seems to have decided to … well what is it that those people want? Accusing the EU of having Nazi-like intentions and likening Icelanders to the native Americans who were brutally murdered and chased out of their lands is not only insulting to history but also potentially destructive for the future. The government needs Ogmundur and his folk to help it steer the state into a save haven. Instead they are ripping down the sails and not replacing them with anything but spite, hate and rageful rants. This meanwhile delays the call for reform within the two most rotten political parties north of the Alps. The Independence Party and Centre Party which ruled Iceland with a corrupt fist for decades have allowed the madmen to take over. The two billionaire who lead those parties have been happy for Ogmundur to do their biddings. As things don’t get done, the necessary reforms in the fishing industry have been delayed and might be put on ice for a long time yet. As the government maintains a hands off policy towards the banks, old friends serve each other valuables from their collapsed ruins. The scavengers are having a field day and the Independence Party and Centre Party old guard probably can not believe its own luck.

And meanwhile they have not been required to provide the nation with any answers, visions of the future or policies to strenghten Icelandic society. Even if many of them do not know it themselves, the citizens of Iceland need a plan for the future and they need answers to questions like what is the currency going to be in the next ten, thirty, fifty years? What sort of interest rates can we expect? What would Iceland’s position be if the IMF had not stepped in? How will it be if the IMF is kicked out? What is Iceland’s place in the world going to be for the next ten, thirty, fifty years? Is it EU membership or something else? What exactly is that something else going to be? If there is no EU membership what will happen to the Iceland’s EEA status? What will happen to our exports/imports if we are out of the EEA? How is Iceland going to participate on the international stage in the next few decades?

The Independence Party, the Centre Party, The Left Greens and the Movement have all failed their nation in providing realistic and meaningful answers to these questions. The Social Democrats have proposed EU membership as means to provide Icelanders with a road map to the future. The others have only provided diversions, road-blocks and general jibberish.

In this we have a thriving atmoshpere for scaremongers such as the new Right Green party, misleading entities such as the Isafold coalition of young people against EU membership, Young Farmers Association, Heimssyn and Raudur Vettvangur. The media is paralyzed by special interest ownership and proximity to people and issues. When blogger AK-72 revealed the astonishing similarities between Glitnir bank’s operations before the economic crash and Magma Energy’s operations this week, the mainstream media played ignorant. One of the most prolific bloggers, Lara Hanna Einarsdottir quit this week in a plea to be able to make a living out of her research and material. For a twenty-something journalist or TV reporter on a paltry salary and short on resources it is easier to call Ogmundur or Sigmundur David for an ranting soundbite than to get to the bottom of complicated issues. The rabble rousers are taking over. The only mainstream media trying its darndest is DV, still smarting from being a trashy yellow press a few years ago and the editor’s frightened stance towards Bjorgolfur Gudmundsson at one point after the crash. Morgunbladid is propaganda trash, Frettabladid suffers its owners. Trust is low in Iceland.

Even the church finds it hard to navigate the narrow path. The state church asked to cut its budget by 9% refused on the grounds that it is a “seperate entity” which must not unilaterally accept cuts proposed by the state. It will offer a 5% cut in Iceland’s worst recession in memory. It then refuses to hand over numbers on sexual harassement cases. Icelandic priests who get their salary from the state, who through relentless lobbying have come to receive almost double the pay of policemen, nurses, teachers and firemen have no shame. One really should propose that the State Church should be privatized into the hands of some proper Independence Party members and then it will be bankrupt and gone in five years max.

A clean up is needed on so many levels but the after-party is still going on. At this point, Iceland is at its most vulnerable.

So while Bjarni Armannson, Bjorgolfur Thor, Hannes Smarason, Larus Welding, Bjorgolfur Gudmundsson, Hreidar Mar Sigurdsson, Sigurdur Einarsson, Lydur and Agust Gudmundsson, Karl Wernerson et al drive their shiny black Range Rovers into Euroland, Jon and Gunna are facing a record number of foreclosure sales and a welfare system coming to a halt.

Where is the inspiration and enthusiasm in that?

Related posts:

1. For Iceland To Get Back On Its Feet Important Reform Is Needed Within Independence Party
2. InDefence Honored By Young Independence Party Members
3. Independence Party Tragedy

Finally, there are many big unsolved problems that face the government and people of Iceland.

First, the Icelandic Krona is not a viable currency in the world of free movement of capital. The Euro seems to be the only solution. That requires a membership in the European Union. Becoming member is a long and winding process of negotiations and self analysis.

Secondly, the problem of the public expenditure alluded to above must be solved.

Thirdly, the dispute with the Brits and the Netherlands over the IceSave problem must be solved.

Forth, debt relief for families and firms must be concluded in a satisfactory way avoiding the making of zombi firms and zombi banks but without committing to much of the public budget. No small tasks for a government with thin majority and gross internal disputes.

Related posts:

1. Wikileaks Iceland: The Seriousness Of The Situation
2. The Drunk In The Pond
3. Financial Times: Iceland criticises IMF, UK and Dutch

Bill Still on Iceland. Comments?

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1. Sticking Us With The Bill
2. IMF: Iceland The Road Ahead (Video)
3. A Weapon Of Massive Idiocy – Glenn Beck on Iceland (Video)

Krugman please  get your facts right.

1. Iceland did not devalue, the currency fell.
2. This is not the kind of capital controls that often can be a sensible policy. These capital controls were imposed  only to lock in carry traders, and by most accounts are causing considerable damage. For reasons of equality (because of EU and IMF), no distinction is made between inflows and outflows and the impact of the capital controls is to prevent FDI and discourage  domestic investment.
3. Mr. Krugman seems to imply that little austerity  has been implemented in Iceland. The government is drastically cutting public services and lowering the salaries of government employees while at the same time imposing what may be the highest taxes in Europe. This is one of the strictest austerity programs around, if not the strictest.
4. “a handful of operators built up enormous debts that their fellow citizens are now expected to repay.”  The first part of this quote is correct, the second part is almost entirely wrong.  These operators accumulated debt equaling a large multiple of the annual GDP. There is no way their fellow citizens could pay even a small fraction of his and indeed most of  the losses will be written off by foreign creditor banks. The  only  part of this that may fall on their fellow citizens is Icesave,  and  the Icelanders havesuccessfully resisted paying that. On the contrary to the quote,  I suspect one final analysis is done, the pre-crisis bubble  and the subsequent crash will represent a large net transfer from foreign names to Icelandic names.
5. One reason for why Iceland got onto such a mess is because of inflation targeting,  and the Central Bank has not changed its policy. This is as orthodox as one can get.
6. The stock exchange fell by over 90% wiping out peoples savings. This on top of large losses in money market accounts, and real estate price drop that may exceed 50-70%.
7. “benefits of the financial bubble went overwhelmingly to a small minority at the top of the income distribution.” Judging by the amount of high end cars, expensive houses, foreign luxury holidays, and the like, I would think most people benefited. The impact of the bubble was to raise salaries across the board, and create a large number of very high paying positions.  Indeed in common with other wealthy countries they brought in migrants to do their dirty jobs. The bulk of the money may have gone to the to, but most shared in the loot.

From Jon Danielsson’s blog

Related posts:

1. Iceland looks to restructure $3.6bn of foreign-held debt
2. FACTBOX-Recent capital controls in emerging markets – Iceland
3. How Much Is A Krona Worth?

In all the commotion about the Independence Party’s medieval stance towards the EU, no reporters have gotten down to the business of asking them or the Left Greens what their thirty year plan for Icelandic consumers and households or the country’s place in the world.

Apart from the Social Democrats, none of the other three parties have offered a vision for the generations that are supposed to pay for the excess of the noughties. Just diversions about relationships with China and India or taking up the dollar or the Norwegian krona. But perhaps it would be too much to expect the guard-dogs of special interests and backwards thinkers to have a vision.

But in all honesty, the future does not concern the older generations, the people who have been in charge for the past couple of decades. It is not theirs to worry about. Therefore they can take a stand like the otherwise excellent blogger Vilhjalmur Ari, on not taking a stand.

“But we should not enter into talks from a weak position, right after an economic collapse and most of us hurt. The timing is simply wrong and under unnatural circumstances, and besides, the nation needs to mature to be able to realistically weigh the benefits and the costs.”

Putting aside the fact that nations choose to cooperate to compensate for their weaknesses, Vilhjalmur is right on the Icelandic nation being so shortly removed from the third world that it lacks a certain maturity. But while that may be true for the older generations which still view the deprivation and poverty of Iceland’s past in a romantic light, the younger generations are learning fast. The only thing standing in our way to grow up fast, is the mindset of the disaster generations nearing the end of their careers. With us working overtime to pay for the money in their bank, they are doing just fine and don’t have to stretch their minds that far.

Related posts:

1. A bitter generation
2. An Economic Horror Story: The Frightened Generation Of Iceland
3. EU In Less Than A Year

First up, Gudni Th. Elisson pondered the same things William K. Black had a month earlier, what if the crash had happened in 2011 or 2012 instead of 2008. Maybe we should count ourselves lucky that the fatal growth of the banking system was stopped before it got worse?

As someone concerned with translations and linguistics Gudni wondered whether Icelanders should examine their languague for explanations to the crash. Icelanders have succumbed to a nationalistic rhetoric since the fight for independence from Denmark and many of the fables and myths created by those trying to install nationalistic pride in the new nation lacking in common self-image, stuck for too long as was evident by president Olafur Ragnar Grimsson‘s speeches for instance. Another interesting play on words is the hero-myth of the viking, exalted in Iceland but when you see things from their victims eyes, you see robbers, rapists and a path of destruction.

Gudni also mentioned Charles Mackay‘s book Extraordinary Popular Delusions when discussing how the Icelandic psyche had gone overboard regarding its own self image. Quotes from recent years from the Chamber of Commerce on how Iceland should stop comparing itself to the Nordics as “we are further ahead of them on most accounts anyways“, on the idea of Iceland as the “richest country in the world” as Hannes Holmsteinn Gissurarson called his vision of a tax haven or the similar concept of Iceland’s plan to become an international financial center as Halldor Asgrimsson dreamed of when he became prime minister.

Gudmundur Magnusson came and talked about his book, New Iceland – the art of losing oneself from early 2008 in which he casts a regretful eye back to the days of the late twentieth century when Icelandic society had more cohesion, less visible division of wealth and more equality. Gudmundur had found with himself a distaste for the wealthy Icelanders which flaunted their private jets and Range Rovers in the faces of ordinary citizens who could not measure up anymore and had less and less share of the wealth. The book is interesting when you consider that Gudmundur has been considered to be of libertarian leanings and was connected to the clique which took over the Independence Party.

Gudni Th. Johannesson’s book The Crash is an outstanding account of the days leading up to and right after the fateful October of 2008. Gudni carried out extensive research and painted a vivid picture of a government and banking system on the brink of collapse and his book is a must read on the subject. He mentioned that David Oddson’s character cast a shadow over everything.

Next up were history professors Gudmundur Jonsson and Gudmundur Halfdanarson. It caught my attention that having G as the first letter in your name seemed a prerequisite for the male lecturers in the course. The former Gudmundur (who coincidentally is my uncle) brought up some measuring sticks to assess the damage done, including the one which shows how the asset depreaciation in Iceland outdid any other in history by a mile, five times the GDP. According to Gudmundur the crash is without precedent in Icelandic history, it included one of the greatest depreaciation of the krona, the biggest contraction in GDP since 1920, the largest number of unemployed since 1957 when the numbers were first collected. Iceland was relatively free from the travails of the world wars due to its isolated location, but this event could etch itself into Icelanders conciousness as our world war experience.  Iceland had seen bankruptcies on a global scale, Kaupthing’s collapse was 30% bigger than Enron’s, the private sector is the most indebted in the world or 400% of GDP in 2008 and no developed industrial state had sought the help of the IMF since 1976 when Iceland came knocking that year.

Gudmundur claimed that a potent coctail of of globalization and libertarianism had hit Iceland really bad. A social experiment in the spirit of a radical libertarianism had laid the foundations of an unchecked financial system running amok.  In short, the crash has badly damaged Iceland’s image on the international stage. Like Gudni Elisson said before Gudmundur, now Iceland will never be an international financial center.

Gudmundur Halfdanarson has been lauded and criticised by even measures in Iceland for combating the nationalistic myths that have taken hold. He pointed out that we remember what we are tought to remember, including the created story of a glorified beginning, a decline and uprising which connects all Icelanders and sets them apart from others (who coincidentally have their own versions which set them apart from others as well). The myth has painted the period of the Danish rule as an era of decline and humiliation when perhaps there were no grounds for the small isolated farmers community in the North Atlantic to control its own matters in any way. The myth claims that Icelanders cherish freedom from foreign influence above anything else and that freedom creates prosperity and industry. Foreign intervention will only bring decline.

This idea has stuck with modern Icelanders who believe that Iceland’s place in the world is best left alone from the meddling of others. It is a narrow viewpoint which has seen influential figures claim the Icelandic Sagas to be as influential in human history as the Bible and Greek philosophy and that no place in the world has the allure of Iceland, except for maybe the banks of the Nile.

Gauti Kristmannsson then talked about the concept of social contracts, how they had developed through Hobbes’ Leviathan, Filmer’s Patriarcha, De Mandeville’s Fable of the bees, Hume’s Treatise and Of the original contract and then Montesquieu’s Spirit of the Laws and Rousseu’s Contract Social. Gauti explained how Montesquieu and Rousseu’s influence had affected democracy from France to the US and most importantly Rousseu’s assertion that by giving up the right to control to someone else by casting your vote makes you even more personally responsible for what goes on in your society than if you did not. Gauti also examined how Hannes Holmsteinn Gissurarson’s shaky logic and propaganda in the book The Invisible Hand had come to shape the social contract of the libertarian society Iceland was becoming, when its foundations had been rebutted convincingly in the book Libertarianism by another young thinker in the eighties, Birgir Bjorn Sigurjonsson one who lacked the influence and power the former had.

It should be noted that the lecturers were suprisingly hesitant in handing out their power point slides to the students in the course. When pressed they explained that there were forces in society which would stop at nothing in attacking them, verbally, personally and through whatever legal measures they could. It says something for the percieved freedom of speech academics enjoy in Iceland. How on earth was the University of Iceland ever going to crack the top 100 universities in the world under these totalitarian conditions?

At that point in the course, things took a turn for the worse. Arnfridur Gudmundsdottir from the theological department arrived to lecture on sin, arrogance, power and believe it or not, the truth. The theological department had to have a role to play in order for its students being able to collect credits in the summer but at that moment there was a sharp intellectual descent in the course. Oblivious to the significant event of Enligthenment, Arnfridur suggested solutions and solace in the ancient fable of the Bible and the Reformation. Arnfridur did not appear comfortable in the company of such a disagreeable crowd and replied to tough questions with condenscending answers. The absurdity was complete with a theological student at the back scolding those who criticized her for “not wanting to understand her”.

I made my point clear to the director of the course. The kind of introspection as the course offers Icelanders is badly needed. But the search for truth and answers is at best blurred and at worst distracted by the presence of the theologicans.

Unfortunately I could not attend the second course taking place right now. There crowd next up was supposed to be of even more religous nature… the economists.

Related posts:

1. Top 10: Who’s To Blame For The Icelandic Crash
2. More resignations
3. Immortal Quotes From The Crash

Paul Krugman in NY Times

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1. Financial Times: Iceland After A Year Of Financial Crisis
2. Revenge Of The Glut
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Politicians who did not understand or want to confront reality.

Special interests over national interests.

Just what we have been talking about in the last 18 months.

English translations available here.

Before writing about the report I need to read it. Unfortunately, I’ve got project deadlines at the university this week but I will get to it.

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1. Solvency Committees Having A Laugh
2. Landsbankinn Praised For Best Annual Report 2007
3. The Special Report – Bits & Pieces

After a year and a half of turmoil and drama, things are sort of in-between at the moment in Iceland. The national referendum and its underwhelming effects seem to have let a lot of hot air out of the system and left things in limbo for now. Sigmundur David Gunnlaugsson is nowhere to be seen, and the Independence Party seems to have adopted a policy of keeping mum to avoid losing the advance it seems to have in the city elections in Reykjavik. Instead the Confederation of Icelandic Employers and the Federation of Icelandic Fishing Vessel Owners have been left to keep the pressure on the government at any step. But still with the foot just lightly on the pedal, as they have promised to step on it in and run the government over in the autumn. Your average Jon and Gunna could care less for now, they are more concerned with eating chocolate Easter eggs and travelling as far away from any news media for the holidays as is humanly possible.

Meanwhile, pressure grows beneath Icelandic society, much like in Eyjafjallajokull where the volcano has been hogging the headlines for the past two weeks.

The story goes that there is a second crash looming and it is due later this year. The more dramatic of those prescient pundits even have a date ready, October 10, 2010.

10.10.10

It is not certain whether Roland Emmerich has a keen interest in Icelandic economic and political matters but the theory goes that by then the indebted households and businesses of Iceland will have been pushed past the limits they are currently operating within. Years of high interest rates and gruelling debt will start to tell for businesses that can only push their liabilities onto their paying customers for so long. Another sign of things being upside down in Iceland is the leftist prime minister Johanna Sigurdardottir promising severe cuts to be made in the bloated government left behind by the right wing politicians from years past.

The national referendum has not delivered what so many hoped it would, and some of us said it wouldn’t, a sympathetic wave across the world for Iceland. Holland and Britain appear to be in no hurry to negotiate a new deal. They can wait for now until Iceland gets its act together in presenting a united negotiating team. Meanwhile the IMF loans are uncertain if you would believe Dominique Strauss-Kahn who said recently that there might not be sufficient support for a loan to Iceland within the fund. Many dare not say so out loud but further IceSave and IMF delays could be disastrous for Iceland come autumn. Read between the lines and Mar Gudmundsson, Central Bank Governor and Jon Danielsson, LSE economist are whispering the unmentionable. Iceland needs to get its act together or expect a turn for the worse.

Iceland’s foreign policy and international relations are in a mess. Apart from the Social Democrats (who want Iceland into the EU), none of the political parties have produced plans to revive and enhance the country’s reputation and standing in the world. The other party in government appears to be on its way to becoming a haven for isolationists and the Independence Party and Progressive Party have yet to provide a credible road map for the country because of internal strife between special interests and ordinary party members. A scared and confused nation seems likely to vote against EU membership, but what will then become of Iceland’s participation in the EEA? With the country already operating under exemptions from the four freedoms through the currency restrictions, what benefits would Europe see in Iceland’s inclusion if the nation does not want to participate with the benefits and responsibilities associated?

Voters are confused for sure. The Best Party, running on a satirical campaign with popular comedian Jon Gnarr looks like it might get two places in Reykjavik City council? Is that alright, asked a political science professor last week? He should be more concerned with the 40% of those who took a stand in the latest poll and want to reward the Independence Party for its work on behalf of FL Group and Landsbankinn in the last few years. And then there are 40% who are undecided! As one political science professor remarked earlier in the winter, people are more interested in politics than before but less interested in politicians.

The economic disaster was a political catastrophe of course. In the aftermath of October 2008, various people were making comparisons with the downturns of Finland and Sweden in the 1990′s and literally said, “in two or three years when we will be on the up again…then”. But comparisons with different countries, different economies, different political landscapes are speculative at best, ignorant at worst. Sweden and Finland ended up in the European Union. There was a political and economic action which took place in those countries. The government has done much more than it is being given credit for but it is up against the wall in so many areas and appears to be crippled in too many ways. Right and left wing nutjobs can still be found who bemoan that while other economies spend their way out of recessions, this government is cutting down, failing to mention that the level of debt in the economy makes it impossible to adhere to “normal” economic laws. Ideological issues such as closing down strip clubs (left wing) and pushing for casinoes (right wing) are given priority over economic and international matters while enough confusion still reigns to avoid a calm and enlightened debate.

Last month I went to my bank and got 2.3 million knocked off the 20 million ISK I owed for my original 16.7 million apartment. Meanwhile a friend got 40 million knocked off the 90 million he owed for his original 45 million currency loan as he sold his apartment for 55 million and is completely off the hook. Another economic law turned on its head, while those who take the largest risks in Iceland reap the highest rewards, the never suffer the biggest losses. The fishing lobby now needs 200-300 billion ISK written down and is ready to do anything it takes to get those write offs without relinguishing the ownership of those who got the industry into such debt.

Maybe 10.10.10 is unavoidable.

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