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A conspiracy theory cooked in the hot pot

As many of you will know, the hot pots [or tubs] in Icelandic swimming pools serve pretty much the same function as the pub does in Britain, or the café in France … it’s where people gather together to socialize and discuss current affairs and matters of national importance.

This evening I read a pretty interesting post over at this blog, in which the author relates a conspiracy theory overheard in one of the hot pots at the Seltjarnarnes swimming pool a few days ago.* According to this theory, numerous individuals connected to the Independence Party [which ran this country for 18 years until the government collapsed in January] and the Progressive Party [a frequent coalition partner of the IP] are starting to sweat profusely since details from the Kaupthing loan book were leaked.

Word has it that the Kaupthing book PALES in comparison to the Landsbanki loan book. As some of you may recall, there were some pretty dubious methods employed when Landsbanki was privatized, as I wrote about here, and the IP has had a stronghold on Landsbanki for about as long as most of us can remember.

Considering how nervous people are getting, and considering that for the first time in a couple of decades neither the IP and PP are in government, word has it that it’s open hunting season on the current government and that these two parties WILL DO ANYTHING to bring down the coalition. Indeed, it is amazing to watch the vehemence with which the opposition parties argue against the two key issues that override everything in parliament at the moment: the Icesave agreement, and the EU question. The manifestos of the parties have completely been tossed overboard in this regard, particularly that of the IP, which it should be noted was the first to sign an agreement [last fall, when it was still in power] that Iceland would honour its obligations in repaying the Icesave debts. Now, suddenly, they are whistling quite a different tune – and are threatening to reject the agreement this coming week.

According to the hot pot theorists, the primary aim of the two abovementioned parties is to get back into power to make sure no more rocks are overturned. [Indeed, many of us believe – YT included – that if the IP were to get back into power, one of the first things they would do is fire Eva Joly.] The best way for them to do so is to woo the nationalists in the Left-Green party and get them to reject the Icesave agreement [many of the have already declared they will not support it]. Once that’s done, it will be tantamount to a vote of no confidence for the coalition and the government will automatically collapse. Then it will be a shoo-in for the IP and PP to take centre stage again.

I shudder to think what will happen if this comes to pass. Truly. I can totally understand the democrats in the US who, in anticipation of the elections last fall, said they would leave the country if the republicans came into power again. I just can’t go there – the thought of it just makes me want to crawl into bed and pull the duvet over my head.

GLOOMY, RAINY WEATHER
But very mild, and fairly calm, which has made all the difference. And it’s quite a relief to be able to get things done indoors again for a change – when the sun is out it’s just so impossible to stay inside in this country. It’s currently overcast and DARK [the days get shorter again so quickly], with temps of 12°C [54F]. Sunrise was at 5 am and sunset at 10.04 pm.

* I’m usually in the Seltjarnarnes swimming pool hot pot every couple of days, but I never hear such good theories. All I get is this.

PS – There are some excellent discussions and points raised in the comments to the last post. Just sayin’.

Comments

comments

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  • Alexander E. August 10, 2009, 1:38 am

    I would say that current “coalition” has been doomed from the start and neither IP nor PP or whatever need to do anything to ruin it. Just sit and wait.
    When the whole mechanism has been ill-designed – changing its gears won’t make it working. No matter how much noise it is producing.

    PS. Is it really a surprise that Landsbanki books are as freaking scary as Kaupthing? What about Glitnir’s ones? 🙂

  • Lee August 10, 2009, 2:34 am

    Interesting conspiracy. And I wonder how the British and Dutch governments will react to the rejection of the agreements, especially with Gordon Brown on holiday for two more weeks and Alistair Darling standing in for him next week…

  • Ljósmynd DE August 10, 2009, 6:32 am

    The bad thing about this particular conspiracy theory is, that it has far more credibility than many other conspiracy theories.

    Carrying this a bit further – should a IP/PP government be reinstalled, they might sign the Icesave agreement later under a pretext anyway, just to get it over with. After all, it’s not the people they really seem to care about. And then they might start selling off Iceland’s remaining natural resources – maybe to the Russians, or – using some stooges – to their friends from the Tortola connection. And those, who do not agree with them, just emigrate. What a wonderful prospect…

    I hope, there will be enough Icelanders not living in denial and able to prevent this kind of scenario to become reality.

  • Bromley86 August 10, 2009, 6:49 am

    Perhaps the government should push through a repeal of bank secrecy in the old banks? They can dress it up as a national morale matter, rather than an attempt to stick the knife in 🙂 .

  • Flygill August 10, 2009, 10:47 am

    A related rumour is that the Landsbanki committee has already been forgiving (ie writing off) loans made to the quota-kings using their fish-quotas as collateral. The quota-kings are nearly all old-time IP supporters / cronies.
    This is one reason the Icelandic government is hanging on to the “new” Landsbanki, whereas new and old Kaupthing and Glitnir have been or will be rejoined and given to the foreign creditors.
    In addition to loans given in exchange for fish quotas, the Landsbanki loan-book probably contains a lot more dirty laundry, including loans to the agriculture and energy industry.

  • Dave Hambidge August 10, 2009, 11:45 am

    Do you recall the barricades I talked about, what 8-10 months ago?

  • Lee August 10, 2009, 12:13 pm

    The past criminal banking actions had tentacles throughout business, politics and society. And, as long as there remains the possibility of prosecutions, politics will inevitably be self-serving and not for the benefit of citizens. The best way for Iceland to draw a line and move on may therefore be to provide a blanket amnesty, ie the precise opposite of what Eva Joly is proposing. A similar rationale as for debt cancellation, but for banking crimes. Only joking!…

  • Alexander E. August 10, 2009, 2:54 pm

    The best way for Iceland to draw a line and move on may therefore be to provide a blanketamnesty

    Amnesia would work better then…

  • Fred August 10, 2009, 7:19 pm

    There’s a key point about fishing quotas that I’m ignorant about.

    Suppose Landsbanki doesn’t forgive leans secured by the quotas. In this economy, the borrowers are likely to be unable to pay the loans back, so Landsbanki winds up owning fishing quotas.

    Landsbanki in turn owes money it can’t pay to foreigners. Can foreigners wind up owning the bank’s assets?

    Can foreigners own fishing quotas?

    If not, then the ghost of Landsbanki sells the quotas to Icelanders and the foreigners take the money, and Iceland’s fish remain in the hands of Icelanders. Otherwise, foreigners get the fish.

    Do I understand correctly how Icelanders would react to that if it happened?

  • Ljósmynd DE August 10, 2009, 8:27 pm

    Asked in your interview with Eva Joly about how long the investigation should take, she predicted a five-year time frame. It might look like she won’t have so much time. I think, some tangible result of the investigation must be presented much sooner. And according to her, bank secrecy laws are not an issue, so, why does it take so long? By now it should have been time enough to turn every computer upside down to find compromising documents like the Kaupthing loan book at Landsbankinn and Glitnir, too.

    Whichever government is going to rule, without a proper investigation there will be social discontent. And all politicians, who have their dirty laundry hidden somewhere, must always fear being blackmailed. That’s anything but a promising new beginning.

  • Scott August 10, 2009, 9:29 pm

    I´d REALLY like to know the answer to Fred´s question. And if the government (bank owner) winds up with quotas that were securities on defaulted loans, is it going to just give them away for free to connected people, or could it be the start of a public auction system to recover some money.

  • Bromley86 August 10, 2009, 10:21 pm

    Fred & Scott.

    This is old information, but I think the general principle still applies:

    “Fishing in the Icelandic economic zone is reserved for Icelandic nationals and only Icelandic registered vessels may be used. For joint stock companies wishing to engage in fishing, at least half the capital has to be owned by nationals of Iceland, the company domiciled in Iceland, the directors must be Icelandic nationals and at least half the board of directors must live in Iceland.”
    http://www.oecd.org/dataoecd/38/60/2349594.pdf

    Of course, I assume that the banks count as Icelandic nationals, so there’s no problem there. If repossed though, the quota rights can effectively only be sold on to Icelanders.

    Of course, income streams that would otherwise have been Icelandic will now be diverted off outside of Iceland. But that’s the result of not paying back money that’s effectively been syphoned off (i.e. when those income strams were Icelandic, they weren’t being used in a way that benefited the people of Iceland).

  • alda August 10, 2009, 11:29 pm

    Thanks for your comments, everyone.

    Fred/Scott – I don’t know the answer to your question, but my hunch is that Bromley is right.

    As to your question of whether foreigners can own bank assets – it was revealed recently that foreign creditors of both Glitnir and Kaupthing will get major stakes in the banks [if not acquire them in their entirety]. So obviously the answer to that is yes.

    There is major debate now, though, over whether foreigner can own Iceland’s resources. Like I said, I don’t exactly know where the law stands at present, but there are loud demands for legislation to be passed that would ban this – because there are precisely those fears now. That foreign creditors can come in and demand our resources if all those foreign debts cannot be repaid. Hence the big debate over sovereignty, Icesave, the EU, etc.

  • Alexander E. August 11, 2009, 3:18 pm

    Ljósmynd DE :

    Asked in your interview with Eva Joly about how long the investigation should take, she predicted a five-year time frame. …
    … And according to her, bank secrecy laws are not an issue, so, why does it take so long? By now it should have been time enough to turn every computer upside down to find compromising documents like the Kaupthing loan book at Landsbankinn and Glitnir, too.

    Ljósmynd DE.
    Most likely Eva Joly was talking about the length of proper legal procedures i.e. court decisions. Investigation is just a part of process. Also it’s not that simple and quick as you might think – rather few people have to search through tens of thousands of documents to find out traces of EVIDENCES. Then they have to collect these evidences – in proper legal manner again etc.
    So there are two “express” methods.

    One – the guys plead guilty and hand over stolen money.
    Two – we hire some people who (for a fraction of cost) would make such an offer to the guys mentioned above that impossible to reject (unless you want to see yourself in a nice coffin).

    But probability of these two express methods are next to zero. So several years is realistic time. And optimistic as well…

  • Ljósmynd DE August 12, 2009, 9:45 am

    @Alexander E.

    Investigation is just a part of process. Also it’s not that simple and quick as you might think – rather few people have to search through tens of thousands of documents to find out traces of EVIDENCES.

    I would expect this whole investigation process to be anything but quick and simple. Eva Joly herself has complained repeatedly about the investigation team being understaffed.

    But I think, it is essential to keep the Icelandic public informed. They can’t just wait for several years until some judge may finally have acknowledged some evidence. If a document like the Kaupthing loan book has the power to stir up such a furor, then the whole society is prone to wild speculations, discontent and unrest about things not yet revealed. So, I would consider the bank secrecy laws concerning the old banks of lower priority than the public interest in proper information – like about some Landsbanki or Glitnir loan book, which should have been found by now.

    And of course, a law offering a reduced sentence for serving as witness in a trial should be an option to speed things up.

  • Alexander E. August 12, 2009, 1:11 pm

    ” If a document like the Kaupthing loan book has the power to stir up such a furor, then the whole society is prone to wild speculations, discontent and unrest about things not yet revealed”
    Ljosmynd DE.
    The loan book might stir up any furor but in legal terms it’s nothing. For investigation purposes (and later – for the court) it’s important who made all decisions, who ordered them, what exact law or rule were broken etc. And all this must be proved by facts. And no matter how many people are engaged in investigation – their number is limited anyway.
    The problem is – the whole financial system mess is unprecedented. Not in absolute numbers (ten of billions of dollars are just a fraction of what “vaporized” in US or UK) but in relative to the nation’s size. Can you imagine that ALL financial institutions in USA have to be “bailed out”? But this is is what happened in Iceland.
    And investigation is also unprecedented in this respect as it involves ALL very powefull people and institutions of Iceland.
    Like if in the US someone has to investigate ex-president, most members of the Congress and the Senat, Treasury, Government and all guys from Wall Street!
    So first of all – for any progress – there MUST be a political will to do that.
    So far I don’t see it among Icelandic political “elite” … And I doubt I will.

    PS. This doesn’t mean the matter is hopeless. But it must be done in unprecedent way as well 😉

  • Alexander E. August 12, 2009, 1:17 pm

    oops, forgot the main thing!

    The main task of this investigation – to trace and get back stolen money. They didn’t disappear. And for sure – they are stolen.
    And all this rush with Icesave (imho) is just an attempt to bury the process of retrieving the stolen money and close the case. So they guys can keep their money and all others pays for it.

  • Bromley86 August 12, 2009, 7:41 pm

    >The main task of this investigation – to trace and get back stolen money. They didn’t disappear.

    One of the first things that Eva said before she was formally engaged was that the money will, for the most part, never be recovered. Although the investigation will easily recover enough to pay for itself, the main thrust was to ensure that the social contract in Iceland was not shattered. Or something like that.

  • Ljósmynd DE August 13, 2009, 6:57 am

    The loan book might stir up any furor but in legal terms it’s nothing.

    Yes, all the more this kind of documents should be disclosed to the Icelandic public.