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Is this the point where I withdraw all my savings and stuff them in my mattress?

Ah, me. Nothing quite like coming home to find that my bank has gone belly up. Yes, that is precisely what happened this morning, dear readers. The piles of post-holiday laundry and scores of unanswered emails were put on hold while our YT absorbed the alarming fact that Glitnir bank has rolled.

Our government moved swiftly and hammered out a bailout deal, which has already been passed. [Clearly they don’t sit around over here debating whether this is a fair expenditure of the taxpayer’s money like they do in the US.] We the taxpayers now own 75 percent in Glitnir, which I am the first to admit is a huge relief to the likes of YT who have their life savings stuffed away in their accounts and funds and whatnot. The Prime Minister and bank officials have spent the morning assuring the general public and staff of the bank that their money/jobs are safe. Worse news for the shareholders – many of whom were normal bank employees – whose shares have dropped by 85 percent.

Meanwhile myriad tongues are wagging about the scandalously high wages of Glitnir CEOs and the disgustingly high severance deals that have been handed out in recent years. Not to mention other examples of wild extravagance, such as changing the name of the bank from the perfectly acceptable Íslandsbanki to Glitnir [which a reader commented sounded like the name of an ointment that you’d apply to your nether regions, heh] a couple of years ago, with the accompanying huge expenditures in rebranding. Just saying.

Anyway! I’ve got lots to say about our recent holiday and loads of pictures to upload, more on that soon. The weather looks perfectly dandy out there now, sunny and calm, temps right now are 9°C [48F] – probably about as warm as the inside of our holiday apartment in Croatia. At least it has been delightful returning home to our toasty warm geothermally-heated home. Sunrise this morning was at 7.32, sunset due for 7.02 pm.

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  • Chris September 29, 2008, 1:26 pm

    More frightening from my point of view (I am not a customer of Glitnir) is the contionuing downfall of the Krona. This morning 1:145 to the Euro were passed…the question is, where will be the end? I am very lucky, that I booked flights for the christmas holidays already…

  • The Other Chris September 29, 2008, 1:32 pm

    The krona is extremely volatile, and it’ll take quite a hit from the credit crisis imho. Taking out your savings and stuffing them somewhere won’t help much… if there is cranking inflation, you’ll just loose purchasing power anyway.
    My hint: «Buy Gold» or something else that can’t be inflated by governments… 😉

  • Aidan September 29, 2008, 1:33 pm

    It is lucky that the government stepped in so quickly. I have a bit of cash in an Icesave account (part of Landsbanki) so hopefully that will not go belly up any time soon. The way its going governments are going to end up owning the whole banking system thanks to the idiotic lending practices of the lst few years.

  • Bluegrass Mama September 29, 2008, 1:40 pm

    I’ve been thinking the same thing over here–the mattress solution is looking better and better.

  • Dorothy Gale September 29, 2008, 1:53 pm

    Oh. I thought the Kronur was tied to the dollar. Not necessarily a good idea, but at least it would prevent it from being manipulated.
    I guess I am mis-remembering.

  • The Other Chris September 29, 2008, 2:02 pm

    @Dorothy Gale
    Well… the Dollar is not tied to gold, it’s tied to the decisions of the Federal Reserve. And if congress passes the 700 Billion plan today and wednesday, the dollar will have no other way than going down.
    Most austrian economists talk about 50-90% down… so being tied to the dollar instead of gold for instance means being open to manipulation by people who have been elected by nobody.

  • Jon September 29, 2008, 2:09 pm

    I would be happy to command a bank and drive it to financial ruin for a lot less money than the people who do it for a living. I’m just waiting for someone to ask.

  • meloukhia September 29, 2008, 3:59 pm

    Sorry our banking industry’s irresponsibility has created a global ripple effect, Alda. I’m glad that your money is safe (and I’m curious to know what being 75% shareholders will equate to in terms of policy, receiving dividends, and so forth).

  • Keera September 29, 2008, 4:02 pm

    Does Iceland have something like the FDIC? Norway does. That doesn’t have anything to do with the solvency of the bank, though, just with saving your savings.

    I’m wondering what will happen here. I’m not too worried. The bank I’m with (SkandiaBanken) seems to be staying calm and is encouraging its customers to be the same.

  • alda September 29, 2008, 4:33 pm

    Chris – yes I agree, the state of the króna is very worrying. Just when you think it can’t go any lower, it hits a new low. Free fall is really the only way to describe it.

    Jon – lol! yes, me too.

    meloukhia – your banks can’t be held accountable for everything. There are lots of people here who have made bad decisions too. As for the shareholder part … I was being facetious, of course we’re not proper shareholders as such, it’s just that the state bailed out the bank and now owns 75%.

    Keera – what is the FDIC?

  • Annie Rhiannon September 29, 2008, 5:07 pm

    I remember that re-brand well. I was working at an ad agency at the time and we were all appalled that not only did they (rival ad agency) feel a need to change it but they decided to change it for the worse. God, all that plasticky red shit all over town. I blame their collapse entirely on that ugly logo.

    I bank with Glitnir but I guess I shouldn’t be worried because I’ve only had about 2000 kr in there for the past year.

  • alda September 29, 2008, 5:18 pm

    Annie – my sentiments exactly. Had they stuck with blue they wouldn’t be where they are today.

  • The Other Chris September 29, 2008, 5:52 pm

    I don’t blame the banks directly, simply because of moral hazard.
    If there would be a free market, interest rates would be fair and accurate and no bank on earth would have taken these mortgages.

    Unfortunately the US Government and the privately owned and not elected Fed did two things. They had the interest rates artificially low to hide risks from banks and investors… they also forced banks to give mortgages even when no reasonably thinking person would accept these liabilities.

    To blame this all on the banks and exclude the government and especially the federal reserve from all involvment in this is pretty scary… to demand even more regulation on the market and bailing out the special interests with taxpayer money is criminal…

    that’s my last word on this, bæbæ 😀

    p.s. my mom hates rebrandings of all kinds too 😛

  • PhilippeP September 29, 2008, 7:01 pm

    Does that mean that 75% of my Glitnir Marathon T-Shirt is now a gift from the Icelandic people ?? 😉

    Well , I just returned from a week end from the south of France to hear the same kind of news in Belgium , Fortis a local bank (formely known as “Caisse Générale d’épargne et de Retraite” & “Générale de Banque”) has just been saved by our governement which has taken 49.9% of it (also without asking the people).
    It’s not my bank , and if it was , I think I have more of their money that they have of mine, so no worry 🙂

  • meloukhia September 29, 2008, 7:08 pm

    Alda, the FDIC (Federal Deposit Insurance Corporation) is the government corporation which insures deposits in member banks in the United States up to $100,000 per depositor per bank. It was created in 1933, after the Great Depression, to assure Americans that their funds would be safe, even in the event of a bank failure. Of course, when Washington Mutual went under, the amount of funds on deposit there exceeded the FDIC fund by over 400%, which was why the government was so delighted that Chase agreed to take over WaMu’s commercial banking branches.

    Someone I suspect that your bailout didn’t provide basically unlimited powers to the very people who caused the problem, unlike ours. My mattress is looking like a pretty appealing spot for banking at the moment.

  • alda September 29, 2008, 10:19 pm

    Very interesting everyone, thank you.

    Philippe – yes, that’s precisely what it means. And please note that 1/315,000th of that T-shirt is from ME. 😉

    Keera, meloukhia – ah, yes, in that case Iceland does have something similar to the FDIC.

  • Sirry September 30, 2008, 5:55 am

    I agree with Annie Rhiannon, that red logo is hideous and nobody in their right mind, knowing psychology/art/design/consumerism would have agreed on that logo.
    I didn’t know about the change from Islandsbanki to Glitnir (that’s how long I’ve been away) but I honestly think this change years back couldn’t have been a good one. Their old logo was quite nice, with sea, land and the sun, if I remember correctly.
    Red….*ugh* 🙁

  • PhilippeP September 30, 2008, 8:17 am

    alda > Thanks , then … 🙂

  • Rozanne October 1, 2008, 12:20 am

    Scary, isn’t it? I’m glad your money is safe.

    Guess where I banked until a couple of weeks ago? Washington Mutual. I make no claim to be a financial crystal gazer, but I am very glad I closed my accounts just before leaving for vacation. I knew the bank was on thin ice, but my reasons had more to do with the bank branch I used tearing down a perfectly good branch to build one that is extremely difficult to access and has this weird unpleasant overall vibe. Seriously.

    Anyway, I feel like I got out just in time, even though supposedly all savings in WaMu is safe–I’m glad I don’t have to deal with all the bother.

    I’m not really qualified to make any comment on the bailout, but I think that the top brass at WaMu and these other institutions were making OBSCENE amounts of money and I think they should have to donate it all toward the bailout.