Comments on: Of independence and prosperity arcs and hiding behind aprons http://icelandweatherreport.com/2008/11/of-independence-and-prosperity-arcs-and-hiding-behind-aprons.html Tue, 07 Feb 2012 15:07:04 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: bryan http://icelandweatherreport.com/2008/11/of-independence-and-prosperity-arcs-and-hiding-behind-aprons.html/comment-page-1#comment-4411 bryan Thu, 20 Nov 2008 17:03:30 +0000 http://icelandweatherreport.com/?p=1039#comment-4411 money isn't real :) money isn’t real :)

]]> By: Bromley86 http://icelandweatherreport.com/2008/11/of-independence-and-prosperity-arcs-and-hiding-behind-aprons.html/comment-page-1#comment-4380 Bromley86 Wed, 19 Nov 2008 07:19:15 +0000 http://icelandweatherreport.com/?p=1039#comment-4380 Eek. Sorry for the shouting :) . Eek. Sorry for the shouting :) .

]]> By: Bromley86 http://icelandweatherreport.com/2008/11/of-independence-and-prosperity-arcs-and-hiding-behind-aprons.html/comment-page-1#comment-4379 Bromley86 Wed, 19 Nov 2008 07:10:13 +0000 http://icelandweatherreport.com/?p=1039#comment-4379 Hi guys. Yes, I was basing my comment on Bjorgolfur's statement that the assets cover the deposits, even if the assets were written down to 50% value. If you use the figures below it initially looks like there needs to be 100% recovery to meet the deposits, but as <b>Doesn't matter's<b> link notes, many of the deposits were either more than 20k euros (this excess being covered by the UK) or less than 20k euros. http://icelandreview.com/icelandreview/daily_news/?cat_id=16539&ew_0_a_id=315396 Anyway, despite the asset sale, the government is going to have it's long-term debt increased (because half of the assets are Icelandic and have been moved into the Newbankis). But that was going to happen whatever the scenario, excepting the one where the government actually stole those assets from the Oldbankis prior to liquidation. Hi guys. Yes, I was basing my comment on Bjorgolfur’s statement that the assets cover the deposits, even if the assets were written down to 50% value.

If you use the figures below it initially looks like there needs to be 100% recovery to meet the deposits, but as Doesn’t matter’s link notes, many of the deposits were either more than 20k euros (this excess being covered by the UK) or less than 20k euros.
http://icelandreview.com/icelandreview/daily_news/?cat_id=16539&ew_0_a_id=315396

Anyway, despite the asset sale, the government is going to have it’s long-term debt increased (because half of the assets are Icelandic and have been moved into the Newbankis). But that was going to happen whatever the scenario, excepting the one where the government actually stole those assets from the Oldbankis prior to liquidation.

]]> By: john haskell http://icelandweatherreport.com/2008/11/of-independence-and-prosperity-arcs-and-hiding-behind-aprons.html/comment-page-1#comment-4358 john haskell Tue, 18 Nov 2008 14:13:06 +0000 http://icelandweatherreport.com/?p=1039#comment-4358 Bromley- Under any scenario there would be a time lag between the demanded payment to the NL and UK depositors (immediate) and the liquidation, hopefully at top dollar, of Landesbanki assets. The minimum gap is US$2 billion- $8 billion of deposit guarantees minus maximum $6 billion of multilateral lending. The only other way to get funds would be to print ISK. I'm not sure what the ISK money supply is right now but I'm pretty sure that printing the equivalent of US $2 billion puts you into Weimar-style hyperinflation as no one wants to hold ISK - the new money will go straight into the market for goods. (IMF suggestions that raising interest rates to 18% will create demand for ISK bonds is too stupid to waste time on.) Those who ignore history are doomed to repeat it. When the Russians were in the same situation in the fall of '98 they told the IMF to bugger off- they were not going to plunge the country into hyperinflationary chaos to settle foreign creditors. Ignore that experience at your peril. Bromley-
Under any scenario there would be a time lag between the demanded payment to the NL and UK depositors (immediate) and the liquidation, hopefully at top dollar, of Landesbanki assets. The minimum gap is US$2 billion- $8 billion of deposit guarantees minus maximum $6 billion of multilateral lending.

The only other way to get funds would be to print ISK. I’m not sure what the ISK money supply is right now but I’m pretty sure that printing the equivalent of US $2 billion puts you into Weimar-style hyperinflation as no one wants to hold ISK – the new money will go straight into the market for goods. (IMF suggestions that raising interest rates to 18% will create demand for ISK bonds is too stupid to waste time on.)

Those who ignore history are doomed to repeat it. When the Russians were in the same situation in the fall of ’98 they told the IMF to bugger off- they were not going to plunge the country into hyperinflationary chaos to settle foreign creditors. Ignore that experience at your peril.

]]> By: Doesn't matter http://icelandweatherreport.com/2008/11/of-independence-and-prosperity-arcs-and-hiding-behind-aprons.html/comment-page-1#comment-4356 Doesn't matter Tue, 18 Nov 2008 14:05:42 +0000 http://icelandweatherreport.com/?p=1039#comment-4356 Blromley86, where did you get your calculations from? I know Björgólfur told the assets of Landsbanki worth more than the Icesave debt but that's not enough for me. The last information I have is that no one knows for sure: http://newsfrettir.com/?p=399 Blromley86, where did you get your calculations from? I know Björgólfur told the assets of Landsbanki worth more than the Icesave debt but that’s not enough for me. The last information I have is that no one knows for sure:

http://newsfrettir.com/?p=399

]]> By: alda http://icelandweatherreport.com/2008/11/of-independence-and-prosperity-arcs-and-hiding-behind-aprons.html/comment-page-1#comment-4353 alda Tue, 18 Nov 2008 10:27:26 +0000 http://icelandweatherreport.com/?p=1039#comment-4353 @ Bromley86 - the bank's assets will cover the compensation in the best of all possible worlds. However, I think most people here are reluctant to believe that this could be so, and in any case it will take years to fully liquidate the banks. @ Marc L. - there was a panel with some of the media heads here in Iceland and they were harshly criticized for their (non-) coverage of the lead-up to the banks' collapse. @ John Haskell - the money for what? @ Bromley86 – the bank’s assets will cover the compensation in the best of all possible worlds. However, I think most people here are reluctant to believe that this could be so, and in any case it will take years to fully liquidate the banks.

@ Marc L. – there was a panel with some of the media heads here in Iceland and they were harshly criticized for their (non-) coverage of the lead-up to the banks’ collapse.

@ John Haskell – the money for what?

]]> By: Bromley86 http://icelandweatherreport.com/2008/11/of-independence-and-prosperity-arcs-and-hiding-behind-aprons.html/comment-page-1#comment-4348 Bromley86 Tue, 18 Nov 2008 08:07:18 +0000 http://icelandweatherreport.com/?p=1039#comment-4348 John. From the failed bank. Forgetting for the moment the timing of the payments (i.e. whther the Icelandic government takes a loan to pay the guarantee or waits for the banks to be liquidated first), the assets of Landsbanki will cover the guarantee. Even if they don't (which would take a write down of >50%, I believe), the exposure of the Icelandic government will be minimal as they'll just have to pay the difference. Not that you'd know that from reading many of the articles by Icelandic professors/central bank board members. John. From the failed bank. Forgetting for the moment the timing of the payments (i.e. whther the Icelandic government takes a loan to pay the guarantee or waits for the banks to be liquidated first), the assets of Landsbanki will cover the guarantee. Even if they don’t (which would take a write down of >50%, I believe), the exposure of the Icelandic government will be minimal as they’ll just have to pay the difference.

Not that you’d know that from reading many of the articles by Icelandic professors/central bank board members.

]]> By: Marc L. http://icelandweatherreport.com/2008/11/of-independence-and-prosperity-arcs-and-hiding-behind-aprons.html/comment-page-1#comment-4347 Marc L. Tue, 18 Nov 2008 06:51:18 +0000 http://icelandweatherreport.com/?p=1039#comment-4347 Curious to hear about what was discussed at NASA last night! I'm assuming that the recent loans Reykjavik has received will assist with the Icesave compensation. As for the SNP, the party had not done the best job outlining the economic benefits of Scottish independence and will have a much more difficult time with that area now! Curious to hear about what was discussed at NASA last night!

I’m assuming that the recent loans Reykjavik has received will assist with the Icesave compensation. As for the SNP, the party had not done the best job outlining the economic benefits of Scottish independence and will have a much more difficult time with that area now!

]]> By: John Haskell http://icelandweatherreport.com/2008/11/of-independence-and-prosperity-arcs-and-hiding-behind-aprons.html/comment-page-1#comment-4346 John Haskell Tue, 18 Nov 2008 04:08:39 +0000 http://icelandweatherreport.com/?p=1039#comment-4346 If there were someone in the UK or the Netherlands who said I could be his friend if I paid him GBP 25,000, I would say "thank you very much, I don't need that kind of friend." Evidently your national leadership thinks differently. Where will they get the money? If there were someone in the UK or the Netherlands who said I could be his friend if I paid him GBP 25,000, I would say “thank you very much, I don’t need that kind of friend.”

Evidently your national leadership thinks differently.

Where will they get the money?

]]> By: Muriel Volestrangler http://icelandweatherreport.com/2008/11/of-independence-and-prosperity-arcs-and-hiding-behind-aprons.html/comment-page-1#comment-4345 Muriel Volestrangler Mon, 17 Nov 2008 22:39:23 +0000 http://icelandweatherreport.com/?p=1039#comment-4345 "Poverty arc" is perhaps a better way of putting it. "Icelanders become one of the most debt-bound countries in the world after the actions of the government this weeek," says the newspaper. Every Icelander now owes on average 1.4 million kr, or about 25,000 pounds. And that's just for the Icesave affair. Throw in another 25,000 or so per capita for the new IMF loan. Did I mention the 5% interest? Or how about the remaining debts of the other banks? In the meantime, Pétur Blöndal alþingismaður urges everyone to save more and pay down your loans as much as possible. Thanks for the tip, Peter! And Valgerður Sverrisdóttir, chairwoman of Framsóknarflokki, when asked if the privatization of the banks was a mistake, replied, "I wouldn't say that ... it seemed like a pretty good idea at the time." Valgerður, you get the Hindenberg/Space Shuttle Challenger award for today! “Poverty arc” is perhaps a better way of putting it.
“Icelanders become one of the most debt-bound countries in the world after the actions of the government this weeek,” says the newspaper. Every Icelander now owes on average 1.4 million kr, or about 25,000 pounds. And that’s just for the Icesave affair. Throw in another 25,000 or so per capita for the new IMF loan. Did I mention the 5% interest? Or how about the remaining debts of the other banks?
In the meantime, Pétur Blöndal alþingismaður urges everyone to save more and pay down your loans as much as possible. Thanks for the tip, Peter!
And Valgerður Sverrisdóttir, chairwoman of Framsóknarflokki, when asked if the privatization of the banks was a mistake, replied, “I wouldn’t say that … it seemed like a pretty good idea at the time.” Valgerður, you get the Hindenberg/Space Shuttle Challenger award for today!

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