24 replies to this topic

[aliveandkicking]

http://www.sedlabanki.is/lisalib/get...px?itemid=8147

External imbalances have
disappeared, and the underlying current account balance is now in
surplus. Inflation has fallen from about 18% at the beginning of 2009
to the present 4½%. It is moving rapidly down to the Central Bank
inflation target of 2½% and, excluding the effects of tax increases on
price levels, will be at target early next year. Concerns that the
Icelandic Government will fail to pay instalments on foreign loans in
2011 and 2012 have vanished as the foreign exchange reserves have
grown

[G0ldfinger]

...

So, everything back to normal & good?

Badly enough, the next leg down seems to be starting with the fraudclosure mess and QE II/III/you name it.

[DrBubb]

Introduce austerity, eliminate waste... fire enough bankers, and things can improve

[d2thdr]

Introduce austerity, eliminate waste... fire enough bankers, and things can improve

Can the really improve? They have even thrown a kitchen sink at the problem. Austerity is perhaps a bit too late. Eliminating waste is being attempted. It does not seem fast enough. The country can not be pulled back from the brink, because any attempt to tackle the debt will cause French style demonstrations.

[chris ct]

People have lost a lot of their savings.
I bet it's really hard to find a job too.
However, they are closer to real recovery then the rest of us.

[TrueNorth]

People have lost a lot of their savings.
I bet it's really hard to find a job too.
However, they are closer to real recovery then the rest of us.

Speaking of savings, were the Icelanders like the Japanese going into the crisis, with high levels of personal savings?

I wonder, because it is obvious most people in the UK and US don't have much in the way of savings.

[Ologhai Jones]

People have lost a lot of their savings.
I bet it's really hard to find a job too.
However, they are closer to real recovery then the rest of us.

Maybe the real test of a proper recovery is whether Iceland would do the last decade the same way if the opportunity arose again.

More generally, having spent the last two or three years listening to people (both media folks and members of the public) predicting/hoping that the economy will return to 'normal', I feel pretty sure that they would happily settle right back into the high debt, high spend days that went before with hardly a second thought.

It'd be nice to be wrong about this.

[DrBubb]

Maybe the real test of a proper recovery is whether Iceland would do the last decade the same way if the opportunity arose again.

More generally, having spent the last two or three years listening to people (both media folks and members of the public) predicting/hoping that the economy will return to 'normal', I feel pretty sure that they would happily settle right back into the high debt, high spend days that went before with hardly a second thought.

It'd be nice to be wrong about this.

OJ.
Reality will not permit this, except for a very brief period as a prelude to the next major crisis

[Meralti]

People have lost a lot of their savings.
I bet it's really hard to find a job too.
However, they are closer to real recovery then the rest of us.

I agree with this and so does Icelands premier, Olafur Grimsson. As reported in Bloomberg.

“ ... in Iceland we allowed the banks to fail,” Grimsson said in an interview with Bloomberg Television’s Mark Barton today. “These were private banks and we didn’t pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks.”

.
.

Iceland’s banks, which still owe creditors about $85 billion, were split to create domestic units needed to keep the financial system running, while foreign liabilities remained within the failed lenders.

.
.

“How far can we ask ordinary people -- farmers and fishermen and teachers and doctors and nurses -- to shoulder the responsibility of failed private banks,” said Grimsson. “That question, which has been at the core of the Icesave issue, will now be the burning issue in many European countries.”

The road to true recovery is to allow private banks to fail and force investors, whether foreign or domestic, to accept losses.

[Mugged Saver]

The Irish “bailout” plan, with its EUR 54,800 cost per household, is by all accounts a modern-era “Long Day’s Journey Into Night”. Ireland’s future, by the way, looks a lot more bleak than Iceland’s. Iceland took a different path (debt default and a devaluation of 60%). Two years on, Iceland is rebounding: exports and manufacturing are growing by 20%, tourism is back near all-time highs, real wages are rising, unemployment is declining sharply, interest rates fell from 18% to 5.5% and the stock market rebounded 50% from its lows. In Ireland, GDP is contracting at a 9.7% rate; real wages, price levels, the money supply and exports are falling; and unemployment is stuck at 14%.

http://www.themarketfinancial.com/irish-ba...p-nbg-pt/108076

[callmejoe]

http://blogs.telegra...viking-victory/

Quote

Iceland's Viking Victory
Congratulations to Iceland.

Fitch has upgraded the country to investment grade BBB – with stable outlook, expecting government debt to peak at 100pc of GDP.

.... It will shrink to 3.4pc this year, and will be almost disappear next year.

The strategy of devaluation behind capital controls has rescued the economy. ... The country has held its Nordic welfare together and preserved social cohesion. It is slowly prospering again, though private debt weighs heavy.

... The outcome is a vindication of sovereign currencies and national central banks able to respond to shocks.

... The contrast with the unemployment catastrophe and debt-deflation spirals across Europe's arc of depression is by now crystal clear. Those EMU shroud-wavers who persist in arguing that exit from the Europe would be suicidal will have to start coming up with a better argument.

[Roddy]

I really hate it when people say 'real wages' are rising etc. Real in what sense?

Surely the true analysis would be the following:
(1) Net worth of an individual is 'assets - liabilities' in a independent constant currency eg gold or CHF etc
(2) If you really want to include earnings you should NPV the remaining working life of an individual again in hard currency and deduct taxes etc.

I am willing to bet that the net worth of an Icelandic citizen in hard currency terms has a long way to go to recover to the peak.

[Roddy]

(Or actually (referring to another post I have just done) net worth ought to be calculated in the following way '(assets - liabilities) divided by (average hourly earnings)' to get net worth in a measure (number of hours) that is independent of your local currency.

[callmejoe]

http://www.bloomberg...very-story.html

Quote

Icelandic Anger Brings Debt Forgiveness in Best Recovery Story

Icelanders who pelted parliament with rocks in 2009 demanding their leaders and bankers answer for the country’s economic and financial collapse are reaping the benefits of their anger.

Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population ...

“You could safely say that Iceland holds the world record in household debt relief,” said Lars Christensen, chief emerging markets economist at Danske Bank A/S in Copenhagen. “Iceland followed the textbook example of what is required in a crisis. Any economist would agree with that.”

The island’s steps to resurrect itself since 2008, when its banks defaulted on $85 billion, are proving effective. Iceland’s economy will this year outgrow the euro area and the developed world on average... It costs about the same to insure against an Icelandic default as it does to guard against a credit event in Belgium. Most polls now show Icelanders don’t want to join the European Union, where the debt crisis is in its third year.

[callmejoe]

http://winnipeg.ctv....ub=WinnipegHome

Quote

Iceland considering switch to Canadian dollar

[THEBIGMAN]

All those of you who agree that Iceland did the right thing by not bailing out the bankers at their taxpayer's expense are all TERRORIST SYMPATHISERS.

Here's all the proof I need:  http://www.bloomberg...id=aXjIA5NzyM5c

[InternationalRockSuperstar]

callmejoe, on 21 February 2012 - 04:02 PM, said:

http://www.bloomberg...very-story.html

Quote

Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population ...

“You could safely say that Iceland holds the world record in household debt relief,” said Lars Christensen, chief emerging markets economist at Danske Bank A/S in Copenhagen. “Iceland followed the textbook example of what is required in a crisis. Any economist would agree with that.”

The island’s steps to resurrect itself since 2008, when its banks defaulted on $85 billion,

hmmm, so the banks forgave people's loans to the tune of 13% * $16 billion = $2.1 billion.

meanwhile the banks defaulted on a whopping $85 billion.

I'm sure any banker sponsored economist would support that outcome.

[DrBubb]

Will Iceland decide to go loonie?
Commentary: Idea in Iceland to adopt Canadian currency gaining momentum

By Bill Mann, MarketWatch

The idea of adopting the loonie as Iceland’s currency to replace Iceland’s battered, propped-up krona was first suggested late last year by politicians and economists in Iceland’s opposition Progressive Party, it was given scant credibility by the Icelandic government, which is still officially applying for EU membership.

But the idea has gained momentum...

/more: http://www.marketwat...nvestinginsight

[callmejoe]

http://www.icenews.i.../#ixzz1oxUyicJW

Quote

Old Landsbanki to sue PriceWaterhouseCoopers for ‘deliberate’ auditing errors

The resolution committee of the failed Icelandic bank Old Landsbanki has subpoenaed the international auditing firm PriceWaterhouseCoopers, accusing the company of creating wrong annual accounts which misled the markets. The committee’s damages claim runs to hundreds of millions of krónur.

The subpoena is around 90 pages long, RÚV reports, and it claims that the misleading of markets about the strength of Landsbanki led to greater losses in the Icelandic financial crash than would otherwise have been the case.

[callmejoe]

http://the-tap.blogspot.co.uk/2012/06/iceland-shows-to-get-rid-of-bankers.html

Quote

Iceland Shows How To Get Rid Of The Bankers
GLOBAL ELITES THROWN OUT OF ICELAND: Iceland Dismantles Corrupt Gov’t Then Arrests All Rothschild Bankers