Two elderly gentlemen are conversing on the banks of the pool.
G1. I honestly don’t know what this government is thinking. They are running this country into the ground.
G2. They are.
G1. They haven’t done a godforsaken thing. Not a godforsaken thing.
G2. No, they haven’t.
G1. They lie, they go back on their word …
G2. They say they’re going to do all kinds of things and they don’t do any of them. Not any of them.
G1. I don’t know how they’re going to get us out of this mess we’re in. They’re useless. Completely useless.
G2. Completely.
G1. Heavy industry. That’s what we need more of around here. But are they listening? No!
G2. They don’t have any solutions.
G1. I know for a fact that Steingrímur [Sigfússon, Minister of Industry and leader of the Left-Greens] went to a meeting at the OECD and they told him STRAIGHT OUT they told him, ‘If Iceland is going to get out of the kreppa you need more ALUMINIUM SMELTERS!’ That’s what they told him. And then he comes back and doesn’t say a solitary word about it. Not a solitary word.
G2. I don’t know what this society …
G1. I was working out in Reyðarfjörður [in the East] when they were building the aluminum plant there and these people who are now in government stood up there in parliament day in and day out and gave speeches about all the POLLUTION the supposedly came from the plant. Pollution! There was no godforsaken pollution.
G2. It’s true, we need more industry.
G1. Heavy industry is what we need! It’s the only thing that can save us now.
G2. But you can’t depend on anything that those people say.
G1. They just go on and on about how it’s everyone else’s fault. They’re useless.
G2. I know. They don’t take any of the blame. It’s always just everyone else’s fault but their own.
… At that point they got up and walked away. Leaving YT to marvel [and not for the first time] over how people can resolutely inhabit a universe of their own creation.
IT HAS BEEN A GREAT FEW DAYS
So warm! And so calm! It’s very rare around here that we actually have warm air [as opposed to that chilly freshness we usually have] coupled with an absence of wind – and even of breeze. EPI and I cycled out to the Grótta lighthouse yesterday and the entire area was transformed … where there are usually people walking briskly along the footpath or on the shoreline, people were now strolling lightly-clad along the black sand, families with small children were lying on the beach while the kids made sandcastles and used nets to catch live crabs, and all the benches along the footpath were full with people just enjoying the scenery. I remarked to EPI that all that was missing was people swimming… and on the way back, who should we encounter but our friend Paul who was going out to do just that – to take a dip! With the kreppa, people are staying at home a lot, meaning there’s much more activity on fairweather days. And, of course, July is the month where everything shuts down and people are out enjoying the weather whenever the opportunity presents itself. Right now we have 13°C [55F]. The sun came up at 3.13 and will set at 11.49 pm.
MORE ON ICELAND’S ALUMINIUM INDUSTRY:
Quite possibly the most important Icelandic film ever made; Björk and Sigur Rós play for the cause; Nice and green; National Power Company says NO to smelters; A grave post about the future of this country; White-knuckle weekend; Toxic gifts; A little bit of resignation; It’s time to get furious
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{ 24 comments… read them below or add one }
ohmyGOOD, I probably would have exploded in there.
Then again, maybe not. One’s getting used to stupid people. The more’s the shame.
Exploded in laughter or exploded in fury?
What’s the problem with that conversation? They could be right, or as right as anyone else in Iceland about the problems and solutions facing the country. Tryggvi Thor Herbertsson announces that the Icesave debacle won’t cost more than few hundred billion and accuses the government of wildly exaggerating the debt, then a few days later the government debt is announced as an astronomical 240% of GNP, or 3000-4000 billion and the serious types now contemplate national bankruptcy as the only option. Of course the average person doesn’t know what the situation is, because the government won’t say how the debt is counted, and won’t reveal what the nationalised banks own and owe – because they’re private companies and that information is confidential. Of course you could look at the banks’ Creditors reports and you would see, for instance, 1000 billion of Landsbanki bank depositor debt (to the British and Dutch). And another cryptic reference to 1300 billion of miscellaneous bonds and notes issued in Iceland – but to who and for what? Is this part of the 240% debt? Is it owed to foreigners? Nobody knows, or somebody knows and they are not saying. Aren’t the three new banks safe from the foreign creditors? How can you have 240% GNP debt when the government is only supposed to owe fair market value of 250 billion to the old banks and their creditors? Isn’t that what the government said? Is the Emergency Law valid? What happens if it fails? Do the three banks go totally bankrupt? What happens to Icelandic bank deposits then, how can the government fully insure them if they are broke? And then there’s the little Icesave Agreement problem. It kind of satisfies the British and Dutch, but not really, since they have the right to sue outside of the agreement if they feel like it. And the right to cancel the contract if one of a hundred contingencies occur. And the Landsbanki assets kind of cover the cost but not really – and who really knows what the Landsbanki assets are, because that’s confidential information.
So no one, it seems, knows what the debt is and how it is to be paid. Or for that matter, who they are paying it to. Supposedly a lot (20 billion euros) is owed to the Germans, but back in November many big creditors sold out their debt at 4-5 pence on the pound, probably to a bunch of hedge-funds.
Iceland is supposed to trust the plan of the international community. The basic plan is to pay all the debts, including Icesave, and join the EU, which sounds fine on paper. But what happens — apart from all sorts of severe budget cuts — if there aren’t enough assets to pay the debts? Supposedly the IMF folks have been spending a lot of time snooping around the geography office in Iceland, so maybe they have a secret plan for Iceland, which like everyone else they are not telling you about. So maybe they really do plan to build more aluminum smelters, or build more dams or put electric cables under the ocean. Who knows?
But why Alda? These gentlemen were probably absolutely right….
The only way for us to pay our way out of this hole is to generate revenue through export and energy intensive industries are our best bet.
And believe or not…there is not a long line of foreigners willing to invest in Iceland in other industries than aluminum smelters.
There are however plenty of people/companies willing to take advantage of the situation. One recent example is a nordic scientific mainframe farm covered in the papers recently. They are willing to bring over their mainframes and operate them in Iceland due to rising energy costs in Scandinavia. The only thing we are expected to provide in return is free electricity. Another example…datafarm owned by a one of our beloved vikings wich is expected to become operational later this year in an abandoned building on the naval base. They recently let go of 75% of their icelandic workforce and are now expected to create a total of one job in Iceland (that is 1.0).
I’m afraid that not all of the 20.000 people now unemployed will suddenly become world famous designers or musicians. But not a single one of them is an unemployed former worker of a now bankrupt aluminium smelter in Iceland.
A little realism, please people….
A bit of both, I suspect.
Pff!
I wonder, what it would have been, overhearing two bankers. Maybe it was just bad luck and Iceland should give it another try…
The weather is really remarkably calm and warm. Even in the far reaches of the Westfjords I could walk around in T-shirt (which, of course, Icelanders are used to do anyway). A bit hazy, though, particularly in the Capital area, which doesn’t make it photographers’ first choice.
In 30 years time, old men will be soaking in those pools and moaning that bigger banks are needed to boost the economy. Ah, remember the goode olde days of 2005-2007.
Flygill, Magnús, the only reason we’re not paying through our noses for the aluminium now is the devaluation of the IKR. Aluminium prices took a steep dive a few months ago and as we all ought to remember the plants pay for electricity based on the price of their product.
It’s just too simple. Don’t. Put. All. The. Eggs. In. The. Same. Basket.
and well, we still haven’t gotten Impregilo’s final bill for Kárahnjúkar…
Industry could get Iceland out of its economic hole, but aluminium isn’t the way to do it – the prices are too volatile and there’s plenty of competition for supply right now. Using Iceland’s energy to make something the rest of the World is crying out for and which is in short supply would be a better prospect – solar silicon for instance.
Sorry Hildigunnur but it has nothing to do with the devaluation of the krona. All of Landsvirkjun’s revenues are in dollars and so are their debts. The revenues are used to service their debts so it’s just dollars in and dollars out. Low aluminium prices mean lower revenues but this is expected over a life time of a project of this size and is easily met by their excellent capital ratio.
The worries now stem from the fact that they need to refinance their debts in 2 years time and it remains to be seen if anyone is willing to lend to anything Icelandic at that time.
Coincidentally, there are 3% fewer tourists coming to Iceland than the year before (figure from RÚV) and this is at the same time as the price of our fishing products are at an all time low. The way I see it….aluminium is the third egg in the basket and without it there would only be two.
Given the huge external detbt we are taking on these days an equally huge foreign direct investment is necessary to dig us out of this hole. Up til now aluminium smelters are the only industries willing to invest and pay the electric bill that we demand. Hopefully this will change but I’m not optimistic.
If not, we can all look forward to the excellent opportunies awaiting us in growing tomatoes and making arts and crafts items for tourists while we must take care and not loose our heads in envy over how good they have it in Cuba and North Korea.
I´m not convinced Iceland is even seeing much net revenue from the sale of electricity to smelters when you take into account the loans that they have had to take out to build all these powerplants. The dollars may come in but they go right back out to the foreign lenders – if it was that prosperous a business then the energy companies would not be teetering precariously on the edge of bankrupcy.
A plausible chain of events might be them collapsing under the debt load and requiring outside parties come in and take control – as may be happening currently to some degree with HS Orka/GGE/Magma. Surprised Alda has not taken the opportunity here to decipher all the murky dealings involved with that news, seems like it could be an interesting precursor to other takeovers of Icelandic resources by foreign investors.
Not saying some industry might not be a way to help dig out from this hole, but I´d want to make sure they are not selling things away so cheaply that the only beneficiaries are foreign lenders and a few Icelanders with greased palms.
If I took the opportunity to decipher every single murky dealing around here these days I would have no life and no job[s].
There’s a company called Verne Global who want to set up huge server farms at Keflavik to supply the growing ‘Cloud computing’ market – think of how Google works – thousands of powerful computers churning away 24/7 to do database work, searches and number crunching. These are prodigious power users and environmental nightmares if you use fossil fuel to power and cool them.
VG makes a big play on how green their operations are – their computers don’t need so much air conditioning as they would in a warmer climate and of course all their power comes from hydro or geothermal power. It also helps that Iceland is halfway between Europe and the US so it can supply computer resources during both working days.
http://www.verneglobal.com/icelandic_advantage/global_connectivity/
The amazing language skills of the Icelandic people are one of your strengths; you’ve got a great educational system and loads of experience of using high technology – that’s probably the best way out of the current crisis. The world isn’t short of aluminium, it *is* short of computer literate English speakers.
Mike.
Iceland survived centuries without heavy industry, why does it need it now?
The values of exploiting natural resources until their depletion may be the norm in increasing the GDP of countries today, but it’s the countries who resist that urge for instant material wealth who will pave the way for a sustainable, and ultimately happy future.
Heavy industry is to nature what the causes of the kreppa are to the kreppa. Isn’t that obvious by now?
Hopefully you are working and paying your bills. That is a good sign personally. But everyone has an opinion, and unfortunately most governments don’t listen but just do what they want.
But really, 13c and nice? Right now here it’s 41c, we will wait a little for it to cool down and sunset before jumping in the swimming pool, but the low tonight will probably be 26.
Gwrhyr- Yeah, Iceland was a very happy dreamland before the 1950s, not. Iceland was a pretty poor place, and it was also a hard life living there until relatively recent decades afaik (as in, the past 60 years). To sustain a lifestyle anything like it has now, the economy can not completely die. And trust me, countries have been exploiting their natural resources as long as man has known how to farm land, cut trees, and make metal. What do you think a world with no industry would be like :p, I hope you enjoy not using electricity, cars, or computers. Maybe OTHER countries should be the source of those things, right?
You know, I think I’d rather like to live in a universe of my own creation too… though I think it might look a wee bit different than the universe of those two gents.
Quite interesting that this about Icesave has hit the media in Britain- can Iceland really be regarded as liable for this debt?
http://inthesenewtimes.com/2009/07/07/uk-freezing-of-landsbanki-assets-as-damaging-to-iceland-as-treaty-of-versailles/
Magnús, did I say that I wanted to close up all the smelters we already have? The aluminium eggs are quite enough already.
I’m simply not buying that we get all that much revenue, see Richard’s post above. The power companies are very deep in debt and the aluminium companies sure aren’t in this to be helpful. The price for the electricity is way too low, that’s why they want to be here.
People like the guys in the pool have various ideas. People have a variety of ideas here in Florida USA as to how we got into this finance mess and how to get out of it. Some of the ideas are crazy, some close to the truth and some few truly useful and important.
Aluminum on the industrial scale is one for and against in Iceland. In Florida now People are considering scraping the entire park system, cutting education, removing all sorts of services and selling off public land and operations to private interests. I think this is insane! But who cares what I think.
The proponents of various schemes are presenting themselves all over the planet as a solution or a partial solution to the finance mess. Old people who understand whats up are wary of such proposals but others buy into advertising and propaganda all too easily.
For Iceland or Florida or New South Wales what is happening is that the citizens are becoming weary and the vested interests are just geting their ducks in a row and pushing hard. This is a test of will the ordinary citizens have to stay in the game and make decisions and not allow the lobbys to have their way without conscious approval.
The banking and finance thing here in Florida is actually growing worse at this time, so we are in for it and Iceland will continue to get some fallout form here.
Whatever Iceland chooses to do or we here I think first has to be some decisions about finance reform that are just not being discussed. Aluminum will not fix that nor selling off the state here.
Sorry to go on so long but I hear things here also (not in a pool) that sound so dumb, as if no one has learned anything from now years of crap in the news. There are no easy fixes. Plastics? Coconut fiber? Ferris Wheels? Give us a break!
Here’s my idea…How about we build a Wal-Mart next to the Aluminum smelters. It would be a marrige made in heaven. Both sucking natural resources and killing local buisnesses. The old timers from the pool can work there as greeters.
Gentleman G1 is wrong. In fact they both are. The last thing Iceland needs is any more aluminum smelters. Or heavy industry.
It might, perhaps, lead the way in environmental conservation. Something this world is sadly in need of. The upside could prove a substantial improvement to the economy . . . and the land. The downside only in better preparing Iceland should the other nations of this world run us off a cliff.
In the meantime I would keep a very close eye on your water, and those elsewhere eyeing it.
I don’t understand why there isn’t a thriving industry making widgets *from* the abundant aluminum. (something about who owns the freakin shiny metal and how it always goes with these things). I did my part and bought a genuine pancake pan. I wish I could have bought other things…. But I love my pan.
How’s that submarine fibre cable going? Data centres are a good idea but that too is in limbo again.