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Dubai is not the new us. We’re the new Dubai.

Man, what a day it has been!

I wonder if people outside of Iceland realize what a huge and serious thing this whole Icesave matter is for our nation. I wrote earlier that the country was practically non-functional for at least an hour after the president’s veto, and that is true – I can’t imagine that there was a single workplace in this country where work did not just STOP while people absorbed the ramifications of what had happened. It was like a bomb had gone off and we were – and are still – dealing with the fallout.

Some people are jubilant – others are deeply shaken. I heard of one woman today who remarked that, for the first time since the beginning of October 2008 – when the banks collapsed – she had a knot in her stomach. I had much the same feeling today. This feels like a throwback to those first dark days of the collapse when it felt like the rug had been pulled out from under us and there was all this nagging uncertainty – would our currency plummet even further, would we become totally isolated, would we run out of food and gas, would we have a functioning economy, would everything grind to a halt?

It’s a scary feeling.

Today there has been much focus on the way the foreign media has interpreted the move by the president. The reaction from abroad was instant, and many headlines claimed that Iceland had decided “not to pay” – which, according to those concerned, is not the case at all.

Oh.

Actually that has not been clear, even to us locals. I mean, I was under the impression that the petition that InDefence had going was all about that – refusing to pony up, because it was unfair. Now they tell us that, no, it’s about getting a better deal.

Not that it matters either way – Icelandic negotiators already headed that way twice, and they are unlikely to be welcomed with open arms if they go back a third time, requesting still more concessions. Call me a cynic, if you will if you shall if you must.

Plus, Iceland’s credit rating was dropped down to junk status today. We’re on par with Dubai now. Totally expected. Our credibility was in the toilet before and evidently with his performance this morning, Óli flushed us down.

Still, it looks like the government will hold, at least for the time being. The referendum will likely take place within two months and will cost 160 million crowns – but hey, who’s worried about money?

The only light in the dark today was the awarding of the Bjartsýnisverðlaun – the Optimism Award – which was the other thing Ólafur Ragnar had to do today. They went to our dear friend Víkingur Heiðar, and I truly cannot think of a better recipient. If there is an optimistic light in the cultural darkness of this nation, it is definitely Víkingur. We’ll even overlook the fact that the Bjartsýnisverðlaun are  sponsored by Alcan Rio Tinto. Instead let us watch Víkingur play the first part of Rachmaninoff’s Piano Concerto No. 3 with the Iceland Symphony Orchestra.

See, we should have just stuck to exporting musicians.

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  • Dori Sig January 5, 2010, 10:25 pm

    Will it get better ?

  • Árni Viðar January 5, 2010, 10:36 pm

    Actually, the InDefence webpage has from the beginning had these words above the sign-up form (roughly translated for your English speaking readers):

    “I challenge the Icelandic president, mister Ólaf Ragnar Grímsson, to deny confirmation of the new Icesave law. I think it is a fair demand that the economical burden that a government guarantee will inflict on the Icelandic public and future generations of this country, will be put before the Icelandic nation in a national vote.”

    No more, and no less, has ever been the aim of the InDefence campaign.

    Nobody who signed his or her name on the InDefence page should have imagined that signing was in any way an indication of the fact that we will not pay. We’ll pay what we can, what we must, but preferably no more.
    Personally I believe that this disgusting ‘deal’ that our fearless negotiator made on our behalf and was so brilliantly made fun of in the year-end’s comedy show, was not the best deal that could be made and as such it should never have been accepted.

    Love the piano show though. Víkingur is awesome.

  • jpeeps January 5, 2010, 11:20 pm

    What a lift Vikingur provides – but oooh Alda – I can understand that knot in the stomach, having just watched Paxo on Newsnight discussing today’s Icesave news with his panel. What was your president thinking of? It is quite possible that everything has just got a whole lot worse for Niceland…

  • kevin o'connor waterford Ireland January 5, 2010, 11:25 pm

    I agree especially stars like Hafdis Huld at least I know the Icelandic for spider just looove her accent !!!!

  • James January 5, 2010, 11:30 pm

    And I thought that Dubai was the new Iceland 😉

  • hildigunnur January 5, 2010, 11:36 pm

    Uh Árni Viðar, it is extremely easy to misinterpret this, and even easier in Icelandic. I know of a lot of people who thought they were signing so we wouldn’t have to pay at all.

  • Ásdís January 5, 2010, 11:45 pm

    I was watching Mamma Gógó tonight (new Icelandic film) where the main character, completely in her own world because of Alzheimer, comments “in what play are we now?” and that is how I felt today. That I´m stuck in a depressing play that I don’t recognize, and I just want to get out of it. I actually looked at how much it would cost to fly the family from this rock and had a look at opportunities in my field abroad. I haven’t felt like that since last October. I just want to leave and sever connections with this joke of a country (pretend that I’m from Norway, or something).
    In the meantime, I’ve decided to stop watching news or read blogs to preserve my sanity.
    Perhaps I will feel better in a few days but now I just feel disgust.

  • alda January 5, 2010, 11:49 pm

    Skil þig svo vel Ásdís mín! knús í hús.

  • Berglind January 5, 2010, 11:52 pm

    Ég gat ekki betur séð en að forsetinn væri líka viðstaddur valið á íþróttamanni ársins í kvöld þannig að embættisverkunum lauk ekki í Iðnó síðdegis …

  • alda January 5, 2010, 11:57 pm

    Núúú, hva. Bra bizzy kallinn!

  • Árni Viðar January 6, 2010, 12:02 am

    hildigunnur: I fail to see how it could possible be misunderstood, unless you willingly or unconciously intended to do so. The words are plan enough and no extra fiddly-diddly language to confuse anything… which is in it’s own right a minor miracle 😀

  • Edo January 6, 2010, 12:13 am

    The best analysis on the web I have found so far by DaveM191:
    (seen here: http://www.reddit.com/r/worldnews/comments/alr4g/the_president_of_iceland_refuses_to_sign_a/)

  • Ralph Haygood January 6, 2010, 12:16 am

    Alda, as a foreigner who has followed recent developments in your country only casually, I have no opinion regarding what should be done about the Icesave mess. However, I suspect that although you may be in for some nasty short-term reactions from other countries, in the long run, it won’t amount to much. In particular, your money isn’t going to become worthless abroad. The reason I think so is that Iceland has real goods, such as fish and geothermal energy, for which there’s continuing demand. Foreign politicians will throw histrionic tantrums, but they can’t stop the world from buying what you have to sell.

  • Paul H January 6, 2010, 12:19 am

    Be not afraid.
    (to borrow a quote)

  • kevin o'connor waterford Ireland January 6, 2010, 12:45 am

    Update Alda some real bloodlust comments in CIF section of the Guardanista thank god theres thousands of kilometers of ocean between you and their acid pens/tongues reminds me of a verse to an Irish song “The sea o’the sea thank god it roams between England and me, a sure guarantee that one day we’ll be free thank god were surrounded be water” ha ha.

    http://www.guardian.co.uk/commentisfree/2010/jan/05/iceland-debt-financial-crisis?showallcomments=true#start-of-comments

    It seems that it being a different country they want da money back from Iceland but the ICESAVE thing is chicken feed compared to what UK taxpayer has dished out to RBS,Northern Rock and HBOS I think its 20k times 60 million people and of course here in Ireland we have NAMA,collectively the European and American regulators failed so the losses should be spread all around the world if you are in the banking bailout business under their wonderful global capitalism model.Icelands problem is its small size town of 300,000 which makes the debt burden so challenging per head. Some of the comments are quite good apparently the average Icelander has a huge home (designer kitchen/ensuite sauna),every family member has a brand new SUV to drive to the mall to buy designer gear, then recuperate after an exhausting days retail therapy in a swanky restaurant. Wish I had moved there in 2000 could have had a great 7 years.!!

  • sylvia hikins January 6, 2010, 12:58 am

    Just what is the intention of the referendum then? Referendums usually require a yes/no answer. Or will this referendum propose ‘yes we will pay off the capital but want a re-think about the interest rate’? Surely the question to be answered is not about the will to pay, but if Iceland has the ability to pay off this debt. A settlement must be seen to be fair on all sides for it to be agreed. Could not an independent arbitrator bring the UK, Dutch and Icelandic Governments together to hammer out an agreement? Trust needs to be restored. My worst fear is that a majority no vote in a referendum will result in the international community turning its back on you.
    in solidarity, sylvia from viking wirral

  • øyvind giæver January 6, 2010, 12:58 am

    I guess you’re far up the creek. Without a paddle. For the first time since I moved to Iceland, I’m happy for my Norwegian citizenship… Actually, I can’t really see why Jóhanna and Steingrímmur shouldn’t throw in their cards and let the bad guys try to clean the table. With a president who’s ready to veto any unpopular cabinet, nay, PARLIAMENT decision, it’s gonna be plain impossible anyway.

  • Lissa January 6, 2010, 1:10 am

    Man, it is like the entire Icelandic people peed in Loki’s Cheerios (um…skyr?) or something. Every time it looks like things might calm down, someone tosses a spanner in.

  • Rachel Down Under January 6, 2010, 1:17 am

    I don’t think Nicelanders should have to pay a cent until the actual perpetrators are stripped of all their ill-gotten gains, or unless all those who were paid billions of dollars in bonuses as they engineered the global financial crisis are also made to pay up. Why on earth is anyone expecting you to pay when the real culprits are still out there rolling in money?

  • Alexander E. January 6, 2010, 1:49 am

    would we become totally isolated, would we run out of food and gas, would we have a functioning economy, would everything grind to a halt?
    It’s a scary feeling.

    Alda, I thought you believe in Ants Wisdom. But I’m no longer sure 😉

    Plus, Iceland’s credit rating was dropped down to junk status today.

    We both know well now that at times it was on the top – is was fake one anyway. So who cares now about ratings?
    China doesn’t care – they just bought Volvo with cash. So Norður Hongur Kongur sounds nice for me 🙂

  • Andrew January 6, 2010, 2:58 am

    Looks like Iceland will be blocked from joining the EU. But is that such a big deal? Iceland is already in the EEA which is like being half in the EU.

    “Britain threatens to freeze Iceland out of EU as loan payback vetoed”

    http://www.timesonline.co.uk/tol/news/world/europe/article6977152.ece

    “Iceland out in the cold as it seeks to share blame over collapse”

    http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6977016.ece

  • SLM January 6, 2010, 2:59 am

    I was 100 % sure that the message would be misunderstood, specially abroad (but also some Icelanders who were being interviewed in yesterday’s evening news were referring in the street interviews that this is great news; they don’t want to pay). In international politics it doesn’t really matter what you really say, it’s what the other part thinks you say. That was actually one strong reason for me to hope that this bullshit law would have been finally accepted and things could have move on. And then, maybe after some years the agreement would have been rechecked and things could have been renegotiated. Deals can always be renegotiated.

    The worst has now happened: people abroad think we don’t want to pay, Iceland doesn’t have any credibility left in the international markets, we are running out of cash any time soon, króna will sink further and EU-negotiations are on hold. And, most likely the government will fall, sooner or later there will be new elections and IP is back in power. And that at least is not a positive thing for the on-going financial crime investigation – too many of the kreppa-creator-suspects have too close ties to the party. Thinks just won’t change.

  • The Other Katherine Harris January 6, 2010, 3:22 am

    Let’s not forget that those same rating agencies colluded with the transnational banksters to bankrupt the world economy, by rating garbage derivatives AA and AAA.

    Not only should their opinions be irrelevant — the dudes should be in jail!

    Furthermore, they also colluded with the banksters and other speculators who brought Iceland to ruin before the global collapse.

    As I wrote here on another thread, bravo to your president for insisting on a referendum — and bravo to every Icelander who’ll vote to maintain your democracy and sovereignty, not pick up the predators’ tab and thus become slaves to the IMF/World Bank wrecking crew.

    We’d all be a great deal better off, if we’d been given a chance to say no to these greedy bastards.

  • Kris January 6, 2010, 4:29 am

    The willingness to walk away from the table increases your leverage. Essentially, that is what he did. The people will not approve this unless they have lost their minds. When you go back to the negotiations, you will have a better position. They want money, they will be back. The fear mongering is about closing the deal to their best advantage. Negotiations take patience and nerve. Your position is getting better. A year of foot dragging and you have new friends in the doghouse! Another year and maybe the US and UK join the party (bringing their own booze, of course).
    A personal FYI, I offered my creditors 5 cents on the dollar when they came calling. After a few days they wanted 30 cents, but I said 25 cents or sue me. They went away. Moral of the story: it’s the same deal on a bigger scale. There is lot’s of room on the downside.
    Hire a lawyer from the City of London to consult on the negotiation! Get a leg up. Stop cringing. Relax.

  • The Fred from the forums January 6, 2010, 5:53 am

    You’re a sensible and practical people from all that I’ve seen and read. If you can filter out all the nonsense then you’ll probably reach the right decision, whatever that is (I have no idea).

  • Michael Lewis January 6, 2010, 6:48 am

    Icelanders should be happy. I think the reporting is a little bit biased. Firstly, the absolute joke about ‘not joining the EU’. As if that were punishment, no sensible country would want to join the EU: its run for the benefit of French agri-business interests in the main. Small countries such as Singapore run their own currencies: without any problem, so Icelanders can safely ignore socialist MEPs that come out with clownish statements to the contrary. The balance of power is moving East and Iceland has natural resources. You should worry more about the currency being artificially held at a given level: that kind of policy creates problems. The quicker the short sharp shock, the quicker the recovery.

  • idunn January 6, 2010, 6:50 am

    Color me an optimist, but I feel President Grímsson made the right move. If unsettling to those involved, I take heart in a nation suddenly pausing en mass to consider its fate. Given the gravity of this situation, surely good that people awake to what they are about. If this had simply been done without a referendum there surely would have been ever so much recrimination and second guessing. Even if all of that not avoided, it may well help to know what a majority has decided.

    That indeed the Icelandic people have made their decision and now endeavor to move forward in the best possible way. This from someone admittedly not suffering those circumstances. But the path of the last several years was clearly unsustainable, and if the adjustment difficult now it could prove a blessing to a nation if it re-establishes a connection to land, place and purpose.

  • James January 6, 2010, 6:52 am

    Ah, Dori Sig posted a comment. I’ve occasionally followed his protest videos on YouTube:
    http://www.youtube.com/dorisig

    I wonder what people will protest about outside Althingi now?…

  • Joerg January 6, 2010, 7:14 am

    Unfortunately, the subtleties in regard to this petition and the President’s veto somehow seem to get lost on the way into many foreign media, too. The message seems to be “Icelanders don’t want to pay”. I wouldn’t agree, that those media are all partial or malevolent, particularly not in Germany. It’s just the way it is. The whole matter is more a political issue than anything else.

    Much damage has already been done by such misunderstandings back in October 2008, somehow it’s like a déjà vu.

  • Andrew January 6, 2010, 7:55 am

    I have Irish friends who all think that the Icelandic President did the right thing (Ireland has had a lot of the same problems as Iceland regarding banks!). Here is a nice piece on the subject in a major Irish newspaper:

    “Iceland shows importance of putting people before banks”

    http://www.independent.ie/opinion/analysis/iceland-shows-importance-of-putting-people-before-banks-2000578.html

  • Bromley86 January 6, 2010, 9:23 am

    Arni. Just reading the paragraph that you’ve reproduced I can see how many would take it to mean no repayment. It doesn’t actually say what should happen if the president vetos and the public vote no.

  • Eliza January 6, 2010, 10:08 am

    Sorry for Iceland but I see no Abu Dhabi coming to the rescue. The only way out now would be to declare default and forget about the English, the Dutch, the EU bureaucrats, the IMF economists and the foreign bond holders. For the good measure, you should also adopt unilaterally the euro.
    Otherwise, it will be a long, painful and very ridiculous process leading probably nowhere.

  • torsten January 6, 2010, 10:33 am

    This is not the end of the world and certainly not the end of Iceland. You are well educated people, you are not too many, so you will sort things out. Consider that the rest of the world wishes you all the best in this and I’m sure there are many people willing to help you. Soon the winter will be over.

  • WiseWoman January 6, 2010, 10:41 am

    You could do like the UK folks and start burning cheap books: http://www.cnbc.com/id/34703166

  • jpeeps January 6, 2010, 11:00 am

    I agree with Edo about the clarity of DaveM191’s analysis:(http://www.reddit.com/r/worldnews/comments/alr4g/the_president_of_iceland_refuses_to_sign_a/).

    It’s a crying shame that the Icelanders’ fury has not been directed more at the jokers who got you into this mess (and I’m thinking as much of the gormless politicians as I am the vile capitalists, who after all were only doing what vile capitalists do). To think that Doddsson for instance is still allowed to roam free beggars belief.

  • adwelly January 6, 2010, 11:13 am

    I think Icelanders have a perfect right to be consulted on this matter and in fact I wish our own head of state had had the guts to veto one or two bills passed in the last several years in the UK.

    If adults in the UK had been asked whether or not they wanted to bail out collapsing UK banks, I’m pretty sure I know what the answer would have been.

    I’ve written on this here. You’ll have to ignore the comment about the elves.

  • jpeeps January 6, 2010, 11:13 am

    And PS, I’m afraid I’d now put your prez in the gormless category. Parliamentary democracy is nothing to be ashamed of, and after much effort early in 2009 People Power got rid of the last shower and allowed Nicelanders to vote in a govt comparatively untainted by the crisis. They should have been allowed to get on with it with the prez’s support. But no, Ólafur Ragnar had to intervene. If I were Jóhanna I’d be spitting tin tacks.

  • Niamh January 6, 2010, 11:27 am

    Yesterday Sky News had reported that Iceland “has refused to repay Britain”. I left a comment at the bottom simply stating that their headline was, y’know, slightly off yet my comment STILL hasn’t appeared online. Hmmm funny that…

  • Barry January 6, 2010, 11:55 am

    Niamh – now isn’t that curious? I did exactly the same with the Sky News story yesterday, and my comment hasn’t appeared either. I wonder why that could be …?

  • Peter - London January 6, 2010, 1:47 pm

    “Iceland shows importance of putting people before banks”

    Actually, Iceland put its people before people from the EU, which is unfair and illegal. Icelandic depositors were give the guarantee they have been unable to offer UK and Dutch depositors.
    Also, remember that ‘its not fair that I should pay for the mistakes of bankers’ isn’t quite as harsh as ‘its not fair that I should pay for the mistakes of foreign bankers’.

  • portkins January 6, 2010, 2:31 pm

    I have a question for any of you out there.
    Gold is considered a store of value.
    Many people are buying it now in the US. Do you know anyone who has bought gold in Iceland and has the price gone up in terms of Icelandic dollars per ounce?
    Thanks

  • jo6pac January 6, 2010, 3:52 pm
  • Josh January 6, 2010, 4:20 pm

    Can someone explain this Icesave Bill that the President vetoed. I’m in the US and cannot follow it entirely.

    What I think I understand is that these were high-yield accounts held by residents in other European countries and when the Icelandic banks crashed all of the money in these accounts went with it. What was the Icesave Bill supposed to do? What are the current options for paying the money back to the people who invested? Is it a matter of how much they get back, if they get paid any interest on what they invested, etc.?

    Am I way off….?

  • alda January 6, 2010, 4:47 pm

    Josh – Wikipedia has all the answers:

    http://en.wikipedia.org/wiki/Icesave_dispute

  • Josh January 6, 2010, 5:38 pm

    Thanks for the link. I thought about checking there but didn’t know if all the info would be correct or up-to-date.

    Sounds like it is a mess right now and Iceland is trapped between asking the people for more money in taxes to pay back the investors or risking the countries reputation internationally.

    I’ll continue to follow the outcome of this. Looks like the referendum vote will be on Feb. 20th?

  • Stuart January 6, 2010, 7:34 pm

    The president may well have made the right decision but I hope it doesn’t cause too many problems for the government. The last thing Iceland needs is people like Oddsson and Haarde back in power. It’s really shocking that the Independence Party are again ahead in the polls.

    Clearly the IMF and EU (not to mention Britain and the Netherlands) don’t give a damn about helping the people of Iceland and the terms they’re trying to impose on the country are completely unreasonable, especially at such a difficult time. It was a private bank and anyway Iceland isn’t the only country with huge foreign debts.

    I’m not an economist so I don’t know exactly how well Iceland might manage on its own. But if you can avoid the EU/IMF wreckers like the plague and apply for loans from somewhere else. Iceland is a country rich in resources and human talent and I’m sure its people will get through this in the end.

    Interestingly I see someone in the Norwegian tabloid VG has suggested a merger with Iceland and most readers seem supportive of the idea (http://tomstaavi.vgb.no/2010/01/06/tilby-island-fusjon-med-norge). But this I imagine is completely unrealistic and I don’t believe most Icelanders would want to give up their independence just yet.

  • Adam Bowie January 6, 2010, 8:18 pm

    I see that the President of Iceland is going to be on Newsnight this evening. Should be worth watching for those who can.

  • John Hopkins January 8, 2010, 4:37 am

    Michael — I’d make the observation that the Nation-State is increasingly a minor actor in all these kinds of events, especially the smaller countries. The social structures that control and manipulate much of the economic landscape are not central banks and parliamentary (“democratic”) bodies, but actors who are not bound by national law, border, or policing. They are the monarchs of the global regime: corporate execs, monied politicians (they ‘serve’ their countries — more like they ‘serve-up’ the assets of their countries), and anyone else with an insatiable lust for power and influence. The only thing they understand is power and force. Sitting in a pillory in Laekjatorg for a week in winter, stripped naked would be a good start for the Barons — but will the Icelandic population have the cojones to make that happen? I doubt it!