Apropos the last post, our Prime Minister addressed the nation about an hour ago to announce that a bill would be submitted and presumably passed in parliament today [they'd already met with the opposition, who agreed to cooperate] which will give the Financial Supervisory Authority extensive scope to intervene in the operations of Iceland’s financial institutions. We’re talking emergency legislation to deal with this very serious situation.
He was deliberately vague about what this would actually mean in practice, but stressed that deposits are safe [and mentioned something about funds, although whether he means MY funds as per the last post is still unclear, very unsettling]. The bill is being introduced in parliament as we speak [type] and from what I can tell it basically gives the government all and any power necessary to take control of the banks and their operations.
Reading between the lines of the address, it does not seem likely that any more banks will be nationalized or that the government will pump funds into saving them [he basically said what everybody knows - that the Icelandic economy is not big enough to rescue the banks, as they are substantially larger than the GDP of this nation], which presumably means that if they’re going to collapse, then that’s what will have to happen. Apparently the position of the banks has become substantially worse over the course of today as all foreign capital has been cut off. Again - he stressed that people should definitely not panic because all measures will be taken to secure insure the general public against losses.
I guess we can only wait and see what transpires. Stay tuned.
{ 22 comments… read them below or add one }
That REALLY sucks about your Glitnir funds… Hopefully, Geir isn’t blowing hot air up our asses when he says that “all measures will be taken against losses”. Thank you so much for blogging about this! As an expat living in Iceland who still doesn’t understand a great deal of Icelandic, your blogs are one of the only sources of Icelandic financial news in English.
Meanwhile, Norwegian media are reporting that the prime minister of Iceland has just informed the nation that the entire economy might collapse: http://e24.no/spesial/finanskrisen/article2696079.ece
Fingers crossed for you. And I’ll keep looking for that joke you were asking about.
more animals
Jessica - glad this helps.
Stine - that’s a gross misinterpretation. He absolutely did NOT say that, but rather that IF we were to bail out all the banks we COULD go bankrupt along with them. These measures were taken today in order to ensure that this would not happen.
It infuriates me when things get misrepresented in this way because it can have such serious consequences.
Stine - thanks. Akshully I’ve been hooked on ICHC for the last couple of days or so.
As for Jessica i would like to give you a extra special takk to take the time to blog about the crisis. It is really helpful to read as fast as the news go what is going on as for my understanding of icelandic is limited to food and weather.So once again thank you for being one my light in those dark times.
My guess is the Icelandic banks (Kaupthing and Landsbanki) fail/crash this week. Government is powerless to stop this
Krona down 29% against the euro today.
Credit to Iceland has dried up completely, sadly a financial “perfect storm” in progress.
Yeah. This is bad.
I converted my krónur to foreign currencies the other day, at what looked like a horrible conversion rate. But given today’s decline, that turned out to be a good call.
I wonder if when they say “deposits will be safe”, they mean that for foreign currency accounts too. And of course I wonder if they can really guarantee anything, or they’re just talking out of their asses.
Kristján, where did you get that 29% figure from? It was around 11% at the end of the workday, but I don’t know what the live rates after 5pm are.
Alda, and all other Icelanders, good luck with your savings :(. While I have some money here it’s not the bulk of my savings, so I can take a loss, but I know it’s different for many others.
seriously, every icelander INCLUDING the Prime Minister needs to get on the horn with everybody they know, that lives outside of iceland’s borders. they need to tell them to visit iceland RIGHT NOW. seriously. 350,000 tourists spending like their pockets are on fire, because it is SO CHEAP right now! if they all spent $1000, the financial impact would “trickle up” and quite possibly jumpstart your economy. if not, it’ll be one HELL of a party!
my heart goes out to you and all icelanders. my country will survive because it is too dumb to die. but yours, needs all the help we can spare.
btw- i am working day and night on convincing the missus that we should be in the 101 RIGHT NOW! wish me luck.
austin, texas USA
This has got to be so scary. Keeping my fingers for you and everyone else in this situation!
Eyfjord - you’re welcome!
kristján - like Djaddi, I’d like to know where that 29% figure comes from. I heard 12% today.
Djaddi - I expect they include foreign currency accts. in that figure - I sure hope so, because I have a couple! And yeah, one can always wonder if they’re full of hot air, but right now there is so much mistrust I think you just have to choose to believe that things will work out for the best. That’s what I intend to do.
Doug - yes, do tell all your friends! This is definitely the time to visit Niceland for all foreigners - jump at the chance while you can!
Valerie - thank you. :-/
Jessica: Same here. Alda is a goof source for information and gives also a nice view to Iceland.
thanks for the info! my boy/24 years (unemployed) son lives in ryk - i’m greatful for any description of the current situation!
Chris - a goof source? Freudian slip?
Oops…this is indeed a small typo.
EUR/ISK
2008-10-06 195.21 (reported-probably incorrect)
2008-10-03 156.13
and last year at:
007-10-08 85.77
However the 195 number may be incorrect, seems 172.28 is the number which would be more like 5.45%.
From Bloomberg:
“The Icelandic krona fell against the dollar and the euro on speculation the government’s plan wasn’t enough to keep a financial crisis from scuttling the island nation’s economy.
The krona, the worst-performing currency after the Zimbabwean dollar and Turkmenistan manat in the last 12 months, slid after the government said Iceland’s biggest banks may sell overseas assets and repatriate the proceeds in a bid to bolster the krona and alleviate the impact of the credit crunch.
Traders at RBC in Toronto among others recorded trades in the krona against the euro at prices above 190 today, indicating the Icelandic currency markets weren’t operating properly”
USD/ISK was about 13% today.
FX traders will drive the ISK down further, blood in the water now and no one to defend the krona.
Happy days!
Alda: Let’s have a party?
Alda you amaze me! Good reporting on a crap situation. What gets me though is why the central bank did not intervene a while ago and buy up kr oners on the international market. Also, why are Kaupþings assets better than others? Is the squid/octopus still alive? (I really want to be a conspiracy theorist now) will the karma thing really happen so quickly in that Glitnir is now in a better financial situation that all other banks.. … and being a dumb ass. If I was in financial crisis would I be telling the world that there would be a fire sale tomorrow? ( I mean what was with that last night saying hey all is well the banks will sell off their foreign assets and all will be well with the world - hardly the advertising to get you the best price in the current market). So far all I have seen is incompetence laden upon incompetence etc etc etc. (As an aside ma was telling me yesterday that DO´s dad had a bit of a psych prob… do you know anything about this?)
I see the Icelandic government has now taken control of Landsbanki, and are introducing new laws to avoid “national bankruptcy” - what a terrifying thought, a whole country going bankrupt! I do hope you all weather the storm. Boom and bust is the way of the world, although that doesn’t make it any easier when it happens. It’s amazing seeing Iceland in the headlines - I just wish it were better news!
I’m willing to send a food parcel over to Iceland from the UK to ensure you don’t have to eat pickled ram’s testicles or singed sheep heads. Marmite, anyone?
Well, I would not be surprised if the icelandic krona will continue to fall. According to the theory of purchasing power parity, the icelandic krona - at present rates - is still overvalued against the japanese yen though undervalued against the euro, the dollar, the pound and the scandinavian currencies.
I also think that it would be better for your prime minister to focus on the positive aspects of currency devaluation. It would for example be easy to abolish farm subsidies and farm protection since foreign foods are now very expensive in terms of icelandic kronur. Your exporters make good money which can be lent to mismanaged banks at high interest rates. The touristic sector will probably experience a giant boom and so on.
It is not necessarily a bad thing to get a realistic exchange rate. The problems collapsing banks cause for the rest of the society are exaggerated.
Sigga - thank you! Yes, there are lots of unanswered questions and I guess everyone is just trying to muddle through. And no, I don’t know anything about DO’s father’s psychiatric situation.
Rachel - how very kind! However I’ll have to pass on the Marmite … perhaps you could send over some Scottish shortbread?
Flavian - I’d like to focus particularly on your last comment, which is very encouraging. I completely agree - and it is frequently said around here these days - this does not have to mean disaster, there are a lot of inherent opportunities, as well.