Amidst the general furor over Icesave in the last few weeks and months, there is a related matter that has gone almost unnoticed: that of Kaupthing Edge.

Buoyed by the runaway success of Landsbanki’s Icesave accounts, which collected a whopping 4.4 billion pounds in its first 12 months of operations in the UK [and a further 1 billion euros or so in Holland in its five months of operations there], Kaupthing bank set up a similar online bank called Kaupthing Edge in October 2007. It was initially rolled out in Finland, and by the time mother ship Kaupthing sank in October 2008 it was operating in 11 European countries. In some of those countries Edge operated as a subsidiary of Kaupthing, in others as a branch. And as you will surely know if you’ve been paying attention, there is a vast difference - namely that branches are covered by the Icelandic deposit insurance scheme [and therefore the Icelandic taxpayer if all else fails], whereas  subsidiaries operate effectively as other national banks in those countries where they are based, and are covered by the deposit insurance schemes there.

Kaupthing Edge hasn’t got nearly the same amount of press as Icesave, mainly because a] it wasn’t as big b] in many of those countries it operated as a subsidiary and therefore didn’t have the same disastrous effects on the Icelandic state as Icesave, and c] Kaupthing announced fairly soon after its collapse that its assets would be sufficient to compensate depositors.

However, the plight of the Edge depositors, at least in Germany, was in many ways worse than those of Icesave depositors. The German Kaupthing Edge website was closed the day Kaupthing was taken over by the state last October, and from that day onwards those depositors were not able to access their money. Kaupthing Edge was a branch in Germany, not a subsidiary, so those deposits were not covered by the German deposit insurance scheme. This meant those German depositors had to obtain their money from the Kaupthing liquidation committee in Iceland - and that has been a colossal task.

Two weeks ago when I was in Berlin, I met with one of the Kaupthing Edge depositors - a young law student named Jan. He had, in good faith, deposited a sum that was below the amount he was assured would be guaranteed by the deposit insurance scheme. When he decided to put money into Kaupthing Edge he didn’t deliberate over whether or not it was a subsidiary or a branch - to him, for all intents and purposes, it operated like any other German bank. It was registered with the German Chamber of Commerce, it had a German bank reference number [Bankleitzahl], a German-language website, and it conformed to all the known standards employed by other German banks. And in any case, he was assured that if the bank were to fail [which at that time was a possibility located somewhere in the outer stratosphere and not considered seriously] his money was safe if it was below the maximum guaranteed amount.

In contrast to British and Dutch authorities, who in the case of Icesave compensated their citizens immediately for their deposits with the intention of collecting from the Icelandic state later [that much-debated agreement everyone is up in arms about], the German authorities basically told their citizens to stuff it. The message was clear: it was their problem, they’d been stupid enough to put their money into that particular bank [which note bene had an AAA credit rating at the time] and, well, they were on their own.

Those depositors responded by joining forces, setting up an excellent website [which will be closed down in a few days' time] and even travelling to Iceland at their own expense to meet with the Kaupthing liquidation committee in an effort to get some answers. For almost nine months their money remained frozen and they in limbo - until last week when Kaupthing finally started repaying them.

Happily, Jan and his compatriots were compensated in full last week - at least for their initial deposits [I'm not clear on the situation with the interest payments, but judging by their website it looks as though the interest will not be repaid - and few people seem to have the energy to contest that]. What’s more, Kaupthing is able to pay them their money back without having to saddle us, the citizens of Iceland, with the debt. I can just imagine the relief those people must be feeling - and even though I don’t feel personally responsible for the actions of any Icelandic bank, I am relieved that their matter has been brought to a happy resolution, for them - and for us.

A small bout of sunshine amidst all the gloom and doom that currently permeates this nation - which incidentally, as before, is being completly obliterated by the big, dark Icesave cloud.

IT’S HOT IN EUROPE, AND IT’S HOT HERE
Although I daresay a lot more bearable than what my British friends are reportedly having to contend with. Today we had highs of around 20°C, which was just delightful, particularly as there were no chilly breezes to obliterate those balmy temps. It was very misty, though, which seems to be a byproduct of these new high temps we’re seeing more and more of every summer [we don't like global warming, but, sad to say, we DO like this]. At the moment we have 14°C [57F], sunrise at 3.03 and sunset at 11.58 pm.

[Incidentally, I've focused on German Edge depositors in this post simply because I don't have much info about the other European countries [except the UK - I have a pretty good picture of what it was like there]. If you can provide input, I’d be grateful, either in the comments or by contacting me directly.]

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This week, Iceland’s parliament will vote on whether or not to accept the Icesave agreement with British and Dutch authorities, negotiated several days ago. Some are calling this the most important casting of ballots the Icelandic parliament has ever had to undertake. If the agreement is rejected, it could well mean the kiss of death for the current government.

The controversy over the Icesave agreement is harsh and far-reaching and numerous MPs have already said that they will not support it.That includes several members of the Independence Party, including one Tryggvi Þór Herbertsson who was the financial advisor to former PM Geir Haarde at the time of the bank collapse [and who featured with YT in this interview]. Tryggvi Þór was one of the guests on the programme Vikulokin [Week-end] on RÚV yesterday,  a weekly talk show that reviews the week’s events in the company of a few of guests usually directly involved with the topics under discussion. Yesterday’s programme was entirely devoted to the Icesave dispute.

It was extremely enlightening. Near the beginning, the host played a clip from an interview that Tryggvi Þór did in the British media [didn't catch the name of the programme] last October. Excerpt [verbatim]:

INTERVIEWER: A lot of British savers have money in the two largest banks Landsbanki and Kaupthing - is their money safe?

TRYGGVI ÞÓR HERBERTSSON: Yes, according to my knowledge, Iceland is a part of the directive on deposit insurance, so yes - they should be.

I: I know you’re part of the deposit scheme, I’m asking if they did come to you, you would say, ‘we can pay your 20,000 euro’, or would you say, ‘the economy is in such difficulties, I’m sorry, we can’t meet this obligation’?

TÞH: No, we are not in that kind of difficulties.

- Oh, the folly!

It’s tragicomic to watch how the coalition parties and the opposition have completely switched roles in parliament these days. The Left-Greens, for instance, were vehemently opposed to paying the Icesave debts - until they came into power. Now, suddenly, they are in favour. Whereas much of the opposition [led by the Independence Party, of which the aforementioned Tryggvi Þór is a member] opposes it - some with a vengeance.*

Be that as it may, one of the more interesting things to be illustrated by the programme yesterday was just to what extent the Icesave dispute was an international one - and not just a dispute involving Iceland on the one hand, and the UK and Holland on the other. It seems common knowledge that the UK and Holland exercised their influence behind the scenes to force Iceland to sign a preliminary agreement on Icesave last November, just when this country was appealing for a loan from the International Monetary Fund. The message was clear, and came not just from the IMF but from the European Union: there would be no assistance from the IMF or any other European country until Iceland agreed to the terms set by the UK and Holland. And if Iceland refused? There would be no foreign currency to pay for basic necessities like food, fuel or medical drugs. Starved into submission.

Oppression? Coercion? Manipulation? - You decide.

In another compelling interview [on Kastljós last Friday], Einar Már Guðmundsson, one of our most prolific writers, presented an interesting perspective, drawing parallels between the Icelandic economy in the past few years and economies fuelled by the drug trade. In Einar Már’s view, over the past several years a system emerged in Iceland in which the nation’s wealth was transferred to a handful of moguls and into the banks, the bankers lied to and misled the nation, the wealth was squandered in vast excesses and extravagance - and now the IMF and the European Union are stepping in, not to help the people, but to maintain this system. And how? By allowing the moguls to get off scot-free and making us, the Icelandic people, responsible for their mess - and their debts.**

There is some dispute about whether the Icelandic people are really obligated to pay the Icesave debt. According to some legal experts, the Icelandic state fulfilled the obligations it undertook with the EFTA [European Free Trade Association] agreement by simply having a deposit insurance scheme in place. Yet when that regulation was drawn up and signed, no one could imagine the scenario that would later come to pass - the collapse of a country’s entire financial system. In other words the directive was flawed and was never intended to be applied to extreme circumstances such as this.

Many people have wanted to see this settled by an international tribunal - but the problem is that no tribunal exists by which all of the disputing parties are bound. Iceland is not bound by the European Union court, and the UK and Holland are not bound by an EFTA court. The only possible solution would be arbitration court - but on that all parties must agree, and alas, they do not.

Anyway. It’s hard to envision a more despicable situation for this - or any other - country to be in. The Icelandic people are proud people, and on the whole we want to pay our debts - when they are OUR debts. But when we are being held hostage to pay the debts of private individuals who squandered and pillaged our wealth we become like Third World countries forced to pay the debts of its tyrannical leaders - while their people starve.

AS PROMISED, THE WEATHER IS INDEED FINE
Although somehow I think we all envisioned a bit more sunshine. Not that anyone is complaining - it has been very calm, which is rare around here, with temps are in the mid-teens. We have 12°C right now [54F]. The sun rose in the sky at 3 am [and was blazing at 5 am], and will go down exactly at midnight.

* I should point out, though, that a share of the opposition is not opposed to the agreement in principle, but rather the terms of this particular agreement. Tryggvi Þór, for instance, is strongly opposed to the fact that the interest on the loan - some ISK 40 billion per year - will inevitably fall on the state. He would like to have a clause in the agreement that interest paid by the Icelandic state may never exceed more than one percent of our gross national output - which seems eminently sensible.

**Just to put this into perspective once again: the Icesave debt, which in the worst possible scenario we the Icelandic people would be responsible for, would be enough to run the Reykjavík City Police force for 130 years.

Some more on Icesave:

On becoming an Iceslave
Facing up to the Icesave debacle
I get dizzy trying to understand the sums
On the status of the Icesave debacle

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Today EPI and I decided to live dangerously and head out for a hike on Reykjanes peninsula, right smack in the middle of earthquake country. Most of the quakes of the last few weeks have had their epicentre just a few kilometres from where we were today and, yes, I would by lying if I said the thought hadn’t crossed my mind once or twice over the course of the 2-3 hours we were there.

Our plans for sunbathing all day at the pool were thwarted by the very conspicuous absence of sunshine. The supposedly fantastic weather we were to have this weekend had been hyped for days beforehand … and it IS relatively warm, but the sunshine appears to have been reserved for other parts of the country. Anyway, both of us were longing to get out of the city, a common state of affairs when the Icelandic summer finally rolls around. It’s the season for making the most of the amazing landscapes of this country we’re lucky enough to inhabit.

We drove for around 30 minutes [from our front door] and found ourselves in the middle of nowhere. The Reykjanes peninsula is the area you drive through on the way from the Keflavík International Airport - the landscape that from the window of a car [or bus] looks desolate, like the moon. Thing is, though, that once you go off the beaten path, it has incredible variety of colour, landscape and geology, and is, in many ways, reminiscent of the highlands. There are craters everywhere, and cone volcanoes, like the conspicuous Keilir, very visible from the capital area.

This, meanwhile, could be Keilir’s little brother:

Highlands in miniature, and not a soul around:

The full set of pics is here.

It’s 11°C [52F] right around midnight, the sun came up at 2:59 am and will set in a couple minutes at 12.01.

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Such a tragic life he had. Never given the skills to become a whole and healthy human being. A continuous downward spiral. I suspect he just couldn’t take any more.

May he rest in peace.

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Just had a major quake! I’d put it at over 5 on Richter.

Still shaking [YT, that is.]

Shouting from nearby apartment.

More anon.

UPDATE: mbl.is reporting two quakes, 2.6 and 3.9 on Richter, unconfirmed. Has to be more. Epicenter near Kleifarvatn lake, on Reykjanes peninsula.

UPDATE 8.30 pm - well, it turned out to be a quake measuring 4 on Richter. Most people agree that it felt bigger, though, possibly because it was so sharp.

Another, smaller, one came at around 7.20 pm.

The earth has been shaking a lot lately here in the south, and still more quakes are expected. The epicenter of these is on the Reykjanes peninsula [the area you drive through on your way into town from the airport]. However, word has it that Hekla could blow at any time now, too, and tourists and hikers are advised to stay away.

Never a dull moment!!

THE WEATHER HAS BEEN VERY CHANGEABLE
Started out sunny and bright this morning, then gradually clouded over and started to rain this afternoon. No rain now, but still cloudy. We’re bracing for a heatwave due to hit us this weekend, with record temps [wOOt!]. Currently 12°C [54F]. Sunrise 2:57 am, sunset 12.02 am.

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Today AAH, who got her drivers’ licence last September [holy cow it's been almost a year!] bumped into a car in the Kringlan mall parking lot and left a scratch on the bumper of a Citroen Picasso.

She came home looking decidedly deflated and admitted the mishap to her mama. I went out and checked the bumper of our car and didn’t see anything too startling, just the usual gallery of scratches and nicks accumulated over nine years of ownership. She reported that she’d left a note on the windshield of the other car with her phone number on it, in which she apologized profusely and invited the owners to get in touch with her.

Incidentally, AAH had a similar episode last winter when she was driving her [now ex-] boyfriend’s car and got caught on an icy hill. She slid backwards and into the bumper of another car, then called me in a panic because she couldn’t get up the hill and her bf’s car was effectively stuck on the other guy’s bumper. She left a note at that time, too, and the guy called her the next day and showered her with such praise for her honesty and integrity that she was high on it for days.

This evening, meanwhile, she moped around a fair bit, remarking how she wished they’d call and either take her to task for the scratch, or absolve her of her crime. She mentioned it around three times. Clearly it nagged away at the poor child.

An SMS came at around 10 pm:

No problem about the car, you can hardly see it.
Keep on being so honest.
Yours - the Blue Picasso

Seriously, I don’t think I’ve seen the girl beam so brightly since … well, the last episode.

Now my only concern is that she’ll start perfecting the art of leaving minor dents in the bumpers of other people’s cars.

IT’S SO BEAUTIFUL OUT THERE
And I’m feeling so lame for not being outside RIGHT NOW taking in the gorgeous hues of the midnight sun here in the west end of town, where it is at its most gorgeous. But the truth is I’m sooooo tired and can’t wait to crawl into bed with a good book. So on that note: overandout. Temps 10°C [50F], sunrise was at 2.57, sunset at 12.03 [tomorrow] AGAIN!

PS - just have to share this for those who understand a bit of Icelandic … it’s by Lára Hanna, one of this country’s most prolific and energetic bloggers, who is taking a break from blogging [hopefully just a holiday] and left us with this little medley. It features some choice phrases uttered by some of the more prominent players of the meltdown [most notably Doddsson and Geir H. Haarde] set over the song Gangsta’s Paradise. Classic!

PPS - Take note: this is the first and probably last time there will be smilies in the post.

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Last week, on June 17 [Iceland's National Day] a man here in Reykjavík [well, nearby municipality of Álftanes to be precise] took an excavator to his house and demolished it. He also dug a hole in his yard into which he dumped his car and shoveled some earth on top.

He’d lost the house in the collapse and didn’t want the bank to have it.

Then, two nights ago, a man went berserk, rammed a jeep he was driving into all four doors of the fire station in Skógarhlíð [here in Reykjavík] before ramming into a police cruiser and at least one of two ambulances that tried to stop him, then taking off at high speed. He drove down Skúlagata and hit two separate cars on the way before ramming into the gate of the main police station down by Hlemmur. Apparently his intention was “to kill a cop”.

This certainly gives one pause. Incidents like these are not common here in Niceland. And they certainly beg the question whether the social contract that Eva Joly has so frequently talked about [and talks about in this interview] is already being broken. That people are just snapping, figuring they’ve got nothing left to lose and why should they care about anything - social codes, mores or their fellow citizens.

I fear this is the dark underbelly of the kreppa.

BUT IT IS SO BEAUTIFUL HERE NOW
The height of summer, season of the midnight sun. Everything is so vibrant green and the sun so dazzling … it’s hard to believe that people are desperate enough to pull stunts like the ones above. Right now, 10 pm, we have brilliant sunshine with light breezes, such a pretty evening. It’s 9°C [48F] right now, the sun came up at 2.56 this morning, will set at 12.03, er, tomorrow.

[PS I've finally added titles and descriptions to our Berlin photoset on Flickr.]

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We’re flying out of Berlin in a couple of hours after a fabulous week-long break from everthing back home. It’s been fantastic. Seriously. Icelandic current affairs, which I’ve loosely kept up with via mbl.is and Facebook, have seemed a whole lot more dreary from over here than back home. It’s like the old adage about the fish who don’t know they’re wet - when we’re in the thick of things back home we don’t always notice how heavy they really are.

The big thing now, of course, is the public discontent over the Icesave agreement. If you’ve just joined us, Icesave was an online bank opened in the UK by Iceland’s Landsbanki in 2006, which managed to accumulate around 6 billion pounds in deposits over a period of 18 months. Icesave operated in the UK and Holland, and was a branch of the Icelandic mother bank, which means the Icelandic state is liable to cover the deposits of British and Dutch nationals as if they had had their funds in the bank in Iceland. Immediately upon the bank’s collapse, the UK [definitely] and Dutch authorities [I believe] compensated their citizens via a “loan” to the Icelandic state, and the terms of repayment of that loan have just been negotiated.

The main dispute revolves around the horrible injustice of the Icelandic public being made responsible for a debt that was accrued by a private banking institution. And this is no small debt - the total amount that the Icelandic state has just taken on is enough to run the Reykjavík city police force for the next 130 years. It doesn’t take a rocket scientist to figure out that this will make a colossal dent in the country’s budget and will mean severe cutbacks in all areas of society - in our health care system, educational system, etc. etc. etc.

So why IS the Icelandic public being made liable for the debts of a private institution? Well with the emergency laws that were set when Landsbanki collapsed last October, the deposits of all Icelandic citizens were covered 100% in all Icelandic banks. And because Landsbanki was a branch of an Icelandic bank - as opposed to a foreign subsidiary - there is an EEA [European Economic Area] directive that states that citizens cannot be discriminated upon on the basis of nationality. So foreign nationals who were customers of Landsbanki must obviously receive the same treatment as the Icelandic citizens in that same bank.

I’ve heard a lot of people say over the last few days that it might even have been better not to cover the deposits of Icelanders in those banks - to just allow the whole thing to collapse. But anyone with a bit of sense can see that it would have completely paralyzed Icelandic society. If everyonehad lost everything they had in the bank, society would have completely ground to a halt and collapsed within days, as companies went bankrupt, etc. So it was simply the least terrible of two horrible choices.

We had dinner with a friend last night who happens to be British, and he was adamant that Iceland should simply default on its loan to the UK - just refuse to pay. It’s not a new argument - however, it’s something that’s easy to say, for someone who would not have to stick around to face the consequences.

Meanwhile, many young people - like Ragnheiður, my youngest stepdaughter who we have been visiting here - are not very keen to return to Iceland at all. She’ll be going to school in Salzburg this fall, and who knows what she’ll decide to do when she’s finished studying. If things are in the toilet back home, I wouldn’t blame her - and would even encourage her - not to come back. It’s the same with other young people, who have nothing to lose and everything to gain by leaving Iceland. Even YT, who has lived in Iceland now for 15 years and have never wanted to leave, am thinking how tempting it would be just to jump ship.

However, those of us who own property and have committments back home can’t leave that easily. And in any case, I’m not sure it’s the right solution. Still, I will not be getting on that plane this evening with a light heart. Sadly.

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Just had an incident. Noticed a neon green bug with long feelers sitting on a tube of cream next to my bed. Picked up tube and rushed to window with the aim of shaking off bug. [Was pretty grossed out.] Shook tube out window, pulled it back and noticed to my dismay that neon green bug had not fallen to the sidewalk as planned but was in fact on its way up the tube just about to crawl onto my hand. Let out a yelp, shook tube once more and - oops! - tube went flying out of the window and bounced on the sidewalk, one story down.

Ran to door, pulled on sneakers whilst hopping on one leg, ran down stairs and out through the huge double doors that lead into the courtyard where Ragnheiður’s flat is. A guy standing outside the bar next to Ragnheiður’s building looked at me nonplussed and said:

“Hey, du hast deine Zahnpaste verloren.”*

—

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