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Max Keiser on Silfur Egils

Max Keiser was on Silfur Egils today.

I have to confess I had no idea who Max Keiser was, although the name did ring a bell. After a minute or two of searching I remembered why – TJ posted something about him in the forums a while back.

Clearly not everyone is like me, because from what I can gather, this Keiser guy is relatively well known and has a pretty popular website. At any rate, he was there giving his two cents worth about Iceland’s predicament, Icesave and so on, and even revealed that he was present “at the sushi bar at 101 Hotel” back in 2006 when a bunch of hedge fund managers decided to stage an attack on the Icelandic krona.

Having watched the interview, I’m not sure what to think of this guy. I’m especially not sure what to think of his remark that capital crimes deserve capital punishment [is that a joke …?]. Also, I don’t agree with his remark that anyone who deposited money in the Icelandic online banks was taking a big risk and should stop whining. I have personally spoken to depositors who made expressly sure that their deposits of up to EUR 20,887 were guaranteed by a deposit insurance scheme, although it could be argued that they might have questioned whether the Icelandic one was capable of covering all those deposits — personally I wouldn’t blame a regular retail depositor for not thinking of that.

In any case, here is the interview, in two parts.

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  • sylvia hikins February 1, 2010, 12:30 am

    I find this kind of off the cuff interviewing where wild statements are made without evidence and go unchallenged, disturbing. Not that I disagreed with everything Kaiser said. Two weeks ago the Independent Newspaper published a letter I wrote arguing that the banksters now living in London should be put on a flight back to Reykjavik. There are legal ways of doing this and perhaps Iceland needs to ask for some extraditon orders. I did not put money into IceSave but you know, the UK depositors were in the main small savers attracted by the slightly higher interest rate (not set high enough to scare people off) and the deposit guarantee scheme and they trusted the name Iceland which they believed to live up to Scandinavian values. What a shame Kaiser couldn’t treat them with a little more humanity.
    sylvia from viking wirral

  • Kris February 1, 2010, 1:33 am

    Janet Tavakoli is another financial expert worth checking out on YouTube. More reasoned in her approach, but similar conclusions.
    A lot of what is happening is criminal in nature and there is intent and collaboration. That is my opinion.
    If there is no legal basis, then this is just extortion. Sign here or I’ll break your knuckles. I guess these are the blessings of the new Europe.

  • idunn February 1, 2010, 1:34 am

    Who would have thought the future predicament of Iceland could have been discerned at the sushi bar of the Hotel 101?

    I think Max Kaiser is on to something, and certainly agree with him on some points. For one thing, it might give anyone pause to reflect that while the world economy is about 60 trillion dollars, that highly speculative derivatives comprise 700 trillion. Perhaps less of a surprise that guys such as Mr. Jamie Dimon of Goldman Sachs are unprincipled sharks. People such as this are by nature predatory. They serve an important function, but one which must be balanced. The role of government is to see that the greater good protected from such influences with sound regulation.

    If perhaps a bit extreme, how can one argue with Mr. Kaiser that many in this system act as effective ‘financial terrorists?’ He makes a good point that the end result in human suffering is much the same as if someone had planted a bomb. Even more so. Perhaps it is sometimes unintentional, but I’d guess many more times they know exactly what they’re doing, with little regard for who might be hurt.

    Mr. Gordon Brown for one. Wasn’t it highly irresponsible to term Iceland a terrorists state when this was patently untrue? And why shouldn’t he be sued for libel? Wasn’t he indeed acting as far more of a terrorist than Iceland ever thought to be?

    I’m not as sure that Iceland at the moment can afford to forsake the tender mercies of either the UK, the EU, or the IMF. Mr. Kaiser was a little vague on the ramifications of lack of liquidity or access to international finance in day to day business affairs. But he also has a point that if not careful Iceland risks, “complete[ly] lose[ing] your independence as an economic entity.”

    He also has a point that depositors into Icesave should have equated the higher returns with a commensurately higher risk. On the other hand, they also had the right to expect that depositors guarantees might be upheld.

    Unfortunately it is no surprise to me that powerful interests in the USA have a greater control over this nation than its people do. This might be seen in the widespread corrupting influence of money in politics, which apparently no politician will forsake for the welfare of this nation. Also in our Supreme Court having cast aside any doubt that from now on only those with money will decide the fate of this nation. No terrorists, al Qaeda or anyone else could have done a finer job of destroying the fundamental basis of democracy in this country.

    So when I consider the plight of Iceland, it is with the knowledge that people such as Max Kaiser are more than a little right. All nations of this world live within a predatory and highly unfair financial system, which at basis values gold far more than the greater welfare of mankind. Presumably these guys do not wish to entirely destroy their home countries, although at times doing a damn good job of it. In such circumstances, as I’ve said before, the people of Iceland should look out for number #1 first, which of course means them.

    Iceland for Iceland.

  • Andrew (the other one) February 1, 2010, 3:04 am

    Well to start with, the UK would extradite Icelanders currently resident there to face charges in Icelandic courts. But for that to happen, Iceland has to press charges and ask for their return (I hope that you are working on that). He seems to have little grasp of the process of law! It’s actually quite difficult to deport people from the UK…

    The use of the antiterrorism laws to seize assets was a UK public relations disaster it is true. Whoever put the powers in that particular piece of legislation should be out of a job. The UK has had powers to seize assets and prevent them leaving the country for many years (they used them to seize Argentine assets during the Falkland war).
    However, if Icesave assets were being moved back to Iceland to pay off Icelanders debts and leave foreign depositors with nothing, then would any government have let them go? There were some very bad and confusing signals coming from the Icelandic central bank and government, as seen from London.
    Personally, I’d like to see the UK waive the debt and both Iceland and the UK getting on with recovering as many assets as possible.

  • Stephen Cowdery February 1, 2010, 3:09 am

    Fascinating and horrifying. Regardless of how completely accurate Max is in his appraisal of the world banking situation, his statements are reinforced by the actions of the parties involved.

  • Gagnaráðr February 1, 2010, 3:32 am

    Max Keiser is right on.

    I think he’s right that it’s elementary economics (retail or otherwise) to assume that there is high risk associated with well-above-market rates of return. But I agree even more with the thrust of his principal arguments that it would be national self-destruction to submit to the UK-NL demands, or to seek EU membership.

    He has a very sardonic side, and I’m sure this accounts for his comments about ‘capital’ punishment.

    His show “Money Geyser”, that was referenced in the interview, can be viewed at:
    http://www.youtube.com/watch?v=JjglR2KYz5o

    (Alda, please note the proper spelling of his last name).

  • Lincoln H February 1, 2010, 6:23 am

    I’m sure someone has pointed it out already, but you spelled his name wrong in the article and the title of the post. I dunno about the death penalty for white collar crimes either.

  • Joerg February 1, 2010, 7:35 am

    Maybe, the foreign depositors would have whined less, if they hadn’t seen the Icelandic depositors beeing reimbursed fully.

    The foreign depositors could have known better but the Icelandic banks advertised very explicitely with the guarantee by the Icelandic deposit insurance scheme. And they were seconded by Icelandic politicians. And the interest rates, offered by Kaupthing in Germany was not exorbitantly high. It was just high enough to make it on top of the list of day-to-day savings accounts, offering barely more than banks, which were covered by the German deposit insurance scheme.

    I haven’t watched this interview yet but your summary doesn’t sound too promising – capital punishment shouldn’t be part of the civilized world at all.

  • Bromley86 February 1, 2010, 8:41 am

    >I’m not sure what to think of this guy.

    Finally, I have a use for a phrase I’ve been saving up! Mad as a box of frogs.

    He mentions the rate rises of the central bank as the structural reason for the problems (2nd, 2:45), but then proceeds to blame people that took advantage of those conditions. Even if he’s absolutely correct about the intent and success of a move on Iceland by bankers, that’s the Icelandic government & central bank’s fault.

    You don’t blame the shark for attacking a bleeding seal. You blame the guys who cut it and dumped it in the sea.

  • alda February 1, 2010, 10:01 am

    Thanks for the input, everyone, and for the heads-up about the misspelling of the name. Corrected forthwith.

  • Sebastian February 1, 2010, 3:35 pm

    @sylvia hikins:
    Iceland is not a Scandinavian country. However, considering the banking sector collapsed in both Sweden and Norway less than 20 years ago, one could argue Iceland indeed has lived up to Scandinavian values.

    @Joerg:
    The Icelandic deposit insurance scheme was obviously not capable of supporting a collapse of the Icelandic banking sector. Politicians lie. The question is how a failure of the Icelandic deposit insurance scheme should be addressed according to Icelandic law. Does the law mention a state guarantee in such a situation? Nevertheless, depositors should receive their share of the remaining assets of the failed bank and the funds in Icelandic deposit insurance scheme.

  • sylvia hikins February 1, 2010, 7:13 pm

    sebastian- I know that Iceland is NOT a Scandinavian Country -my point was that UK depositors saw Iceland as having Nordic/Scandinavian values, and they put their trust in this.
    sylvia from viking wirral

  • Marc February 1, 2010, 8:07 pm

    Alda,

    You were wondering how seriously you should take this guy. It is true that his show has a big following. So has Jim Cramer’s show on CNBC. It pretends to be about finance & investing, but it’s really only entertainment. That doesn’t mean that no valid points can be made in these shows or that they must be wrong per se. But the aim of the show is to attract viewers, not to be right. So, the more spectacular, the more controversial, the better.

    And for the likes of Keiser any mention of their name (good or bad) is better than no mention.

  • Bromley86 February 1, 2010, 8:54 pm

    >The question is how a failure of the Icelandic deposit insurance scheme should be addressed according to Icelandic law. Does the law mention a state guarantee in such a situation?

    True, but there’s also the question of whether it is required under EU/EEA law. That’s likely to be more important, otherwise Iceland would have told the UK/NL to bugger off already.

  • Rik Hardy February 2, 2010, 5:34 am

    Bromley86, “You don’t blame the shark for attacking a bleeding seal. You blame the guys who cut it and dumped it in the sea.”
    I think that’s a moral cop-out.
    I’ll agree that you don’t blame a shark for being a shark, but you do blame a human being who DECIDES to be a shark, especially if he goes around eating his fellow human beings.
    Whether we agree with Darwin or not, it’s time for us humans to remember that we are in fact no longer animals, and if we now decide to act like animals, then we actually immediately become less than animals, which after all have no choice in the matter.
    For the record, I ain’t no bleeding seal either. I’m an Icelandic man who had money stolen by criminal bankers who at least might end up prison, unlike the shark, which might be killed on sight.
    Perhaps Mr. Keiser would recommend that?
    Like many here, I’m not sure what to make of the guy either – maybe borderline insane – but I’m pretty sure that capital punishment for capital crime is his idea of a joke, and that everything else he said is unfortunately true.

  • Bromley86 February 2, 2010, 10:42 am

    >I think that’s a moral cop-out.

    Not really. Look at the news – the world is full of people sticking it to each other, often literally. Hell, it’s a core part of capitalism as currently practiced.

    All governments can do is put laws in place to regulate it. And enforce those laws. And not fall asleep on the job.

  • Joerg February 2, 2010, 4:05 pm

    @Sebastian: It was not obvious for most German depositors, that the Icelandic deposit insurance fund was incapable of coping with the situation, because they were told differently and deliberately deceived about the problems (just think about the Sheikh Al Thani scam). And as Bromley has pointed out, this is not just a matter of Icelandic law as Kaupthing in Germany operated under EEA-law.

    Besides, this is a pretty abstract argument as the German depositors have been reimbursed by Kaupthing’s own means – except for the interest payments, which are currently subject to the usual insolvency proceedings. Fortunately, as we would otherwise have a Kaupthingedge issue in addition to Icesave.

    I just object to the popular tendency of blaming the depositors for their greediness as this guy does. This has even been done by German politicians after the crash of Kaupthing, so this objection is not directed to Icelanders in particular.

  • Sebastian February 2, 2010, 10:38 pm

    @Bromley86 and Joerg:
    According to EEA law, that is Directive 94/19/EC, the state of Iceland has no obligations to cover deposits in case of a systemic banking crises.

    The question is if there exists an Icelandic version of the Irish state guarantee:
    http://www.finance.gov.ie/documents/publications/other/marketnoticeoct08.pdf

  • Bromley86 February 3, 2010, 9:01 am

    @Sebastian. That’s not the case. If it was as simple as that, Iceland would not be in the situation it is now.

    As I said, Icelandic law doesn’t really come into it. Whether Icelandic law says that there is a state guarantee or not (and I’m 99% sure that it does not explicitly say so) is entirely irrelevant. The only things that matter are (a) the EU legal situation and (b) Iceland’s willingness to delay or forgo the IMF/Nordic loans and to risk its EEA membership.

    So the current realities are that the EU is saying that there is an obligation. However, substantiation of this insistence has not really been forthcoming, as it’s frankly something that could only really be settled in court.

    The Nordic loans have, so far, been entirely linked to Iceland’s recognition of this debt. At the moment, only Norway seems to be wavering on that. (An aside – I wonder what happened to that joint Nordic statement promised last month).

    The IMF loan is dependant on the Nordic loan and so is effectively linked to Icesave. An added complication is the influence of the UK/NL (& pos. the EU) on the granting of any loans.

    Iceland apparently needs these loans, and delaying them apparently damages its economy. That said, it may be worth taking some damage there to secure a better outcome on Icesave, although I’d put it to you that taking a year and a half to end up where we are has hurt Iceland for little real gain.

    Just look at the relative power differential. I’m not talking about big economies vs. little Iceland, I’m talking about risk and reward. At the end of it, the only thing that the UK/NL are risking is the interest on the loans, as they’ll get back the guarantees eventually via Landsbanki (something that wasn’t clear to me until last month). But Iceland is risking its economy.

    Nowhere in that does the Icelandic law matter. The only place where it would come up is if it went to EFTA/EU court and there was a ruling that state backing was required for any guarantee fund, and even then only as proof that Iceland had failed to enact 94/19/EC (as interpreted by this hypothetical court ruling).

    If the court did rule against Iceland, and if Iceland then refused to pay, then that is when its willingness to court EEA expulsion would be tested.

  • James February 3, 2010, 7:09 pm

    He may come to Iceland (via Skype) with a halo and angel wings offering grand advice, concern and throwing his own accusations of terrorism but something is sticking in my mind…

    If he was told by folks from Bear Stearns et al in that they were gonna do a hit on Iceland in 2006… why didn’t he do anything about it then? I just done a quick search and can’t find any evidence of it. If he is willing to stand in front of a nation and say he had prior knowledge of this, then surely the nation is entitiled to ask, WTF!? Why didn’t you scream, holler and stamp your feet over this travesty throughout your various media outlets? Isn’t prior knowledge to a crime (or terrorism as he puts it) without action treated just as bad as the crime itself. Doesn’t that make him just as liable?

    As he says himself this is an act of terror he had prior knowledge of. Could you imagine someone stepping up and saying they knew about 9/11 NY, 7/7 London or the Madrid bombings years in advance and said nothing?

    Alas, I believe he enjoys the sound of his own voice and is an astute media performer of the Fox News ilk. If someone could provide me with evidence of his pre-warning, however, I would gladly take all of this back!

  • Bromley86 February 3, 2010, 10:36 pm

    He’s actually alright when he’s got a producer/editor and a script. Take a look at his Money Geyser programme that Gagnaráðr linked to above.

    Of course, that does nothing to explain why he didn’t report the “attack”.