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New: headlines!

Just a quick post to call attention to a new feature in my sidebar – news headlines. I’m going to be updating those frequently, as the news unfolds.

The idea is to give all those lovely readers who are trying to keep up some idea of what is going on, as I am not – at the moment, at least – in a position to write extensively about all that is happening, as it happens. [And besides, not sure many of my long-term readers care about such intricate details.] I know headlines give a very limited picture of the rapid developments taking place, but at least it is something.

More anon!

A COLD AND GRAY DAY
Temps are just below the freezing mark, but it is relatively calm so at least we escape the windchill. Wind set to pick up this afternoon with rain or sleet, and warmer temperatures. Right now -2°C [28F], sunrise this morning was at 8.59, sunset due for 5.22 pm.

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  • mary October 28, 2008, 1:01 pm

    Good idea about the headlines!
    I saw on the BBC news today that your interest rates had gone up to 18%, that seems extraordinary high to me. I hope you can all manage somehow!

  • Dumdad October 28, 2008, 1:12 pm

    That’s a useful new feature. Perhaps, though, a date could be put on each headline or in brackets after it? Unless, of course, these are all today’s headlines.

  • alda October 28, 2008, 1:17 pm

    mary – this is breaking news for us, so I think people are just trying to absorb it. Our interest rates were 15.5% until a few days ago so this isn’t a total shock. The idea, presumably is to target inflation.

    Dumdad – yes they’re all today’s and will be updated daily. Hm. Maybe I should change the heading, though. Thanks for the tip.

  • RH October 28, 2008, 1:24 pm

    Sounds like a good idea Alda. I realise the significance of all that is being written about the economical/political events as they unfold, and I am trying hard to take it all on board, but am finding it quite difficult. I’ll definitely keep reading though.

  • Stan October 28, 2008, 1:25 pm

    Great idea about the headlines. As a fairly long-term visitor to Weather Report I appreciate your having taken on the new challenge of putting out perspectives on The Kreppa. I appreciate and thank you for the headlines sidebar. A lot of what you are contributing cannot be found through links in English and in a way you have been becoming a news channel anyway.

    Frettir (news) is good, but give us sludur (gossip) too. Sorry about the keyboard.

  • Kathryn October 28, 2008, 2:15 pm

    Hi Alda,
    The headlines are a great idea – especially for those of us who have had
    a little difficulty following everything that has happened in recent weeks.
    Makes me wish I was studying Economics instead of English Literature !
    I will keep reading from the sidelines, and send my best wishes to you.

  • Bluegrass Mama October 28, 2008, 2:28 pm

    Good idea. And I hope the fact that you don’t have time to write about it extensively now means that you have some paying work in hand!

  • alda October 28, 2008, 3:08 pm

    Cat – I have a little. Not much, but some.

  • Penn October 28, 2008, 3:47 pm

    Your country is about to go into deep, deep depression, and nobody – not the government, not the people – is doing anything to stop it.

    This interest rate hike will decapitate anyone with debt. The government did this on IMF urging, but the IMF hasn’t even agreed to an amount, let alone a loan.

    This hasn’t stopped your blob of a Prime Minister from saying on countless occasions that the deal is done and Iceland will soon receive a loan of $2 bn, or 1.6 bn, or 1 bn, depending on the day.

    Get on the streets. Riot. Throw molotov cocktails. Do something, anything, to avert depression and starvation. From the looks of it, you and the Icelandic people are just a bunch of passenger on a plush but sinking cruise ship, waiting for help that won’t come. Do something.

  • alda October 28, 2008, 3:56 pm

    Thank you for clarifying that. As if we didn’t already know.

  • Penn October 28, 2008, 4:21 pm

    Alda – I don’t know if you’re answering my comment or not.

    In any case, I brought in the clarification because, actually, it doesn’t seem as if people already know.

    I keep abreast of several Icelandic publications, like http://www.icelandreview.com and http://www.icenews.is. They have nothing but optimism.

    If the people really sensed how bad it’s going to get, they’d put up a show of force. None has materialized.

    The Icelandic government is sitting on banks with $60 bn dollars in snowballing debt. Likely the Central Bank has no money – though you won’t hear this confession for a while. Why would anyone lend to a bankrupt country?

    The IMF loan is tenuous, despite the PM’s pronouncements that it’s a done deal. But even if Iceland gets the $2 bn, what of it? There are 60 bn dollars to be paid off. This loan will make that figure $62 billion. And to get this loan the government will saw off the heads of anyone with a loan out. 18% interest? That’s usury.

    Anyway, stir yourselves awake Icelanders, before the supermarkets empty.

  • alda October 28, 2008, 4:33 pm

    Penn – not to sound too annoyed, but really, it is difficult to sit here in the thick of things and listen to people make sweeping statements like “stir yourselves awake”, “do something”, “sack your PM”, “fire your Central Bank governors”. Believe me, people here are very aware of how bad things are – just ask those people who have been fired in the last two weeks, who are about to default on loans, who work in banks and have to deal with crying people on an hourly basis. And it is very difficult to sit here and feel so powerless. However – what exactly would you have us do? Yes, people are demonstrating, they are holding citizen’s meetings and demanding answers, and at the end of this month there will probably be a lot of unrest when people don’t get their wages. Again: what would you have us do? We all want answers. We would all like a new government that suddenly stepped in and knew exactly what to do, but there isn’t anyone arriving on a white steed, I am sorry to say. If people are sounding optimistic it is probably because we are trying to take one day at a time, trying to figure out what we can change and what we can’t, and trying to take it from there. Something that is not very easy right now. So unless you have the perfect solution for us, please lay off telling us what we should be doing. It’s difficult enough without people shouting meaningless slogans at us.

  • Rachael October 28, 2008, 4:46 pm

    Thanks for introducing the news headline feature Alda, it’s very useful when you want to know what’s going on in Iceland. 18% interest rates… ouch.

    There is a difference between optimism and burying heads in the sand – I hardly think the Icelanders are doing the latter!

  • Marc October 28, 2008, 5:03 pm

    Alda,

    The idea of the 18% intrest rates is not to target inflation. They’re past that. The idea is to make the Krona tradeable again. The biggest problem for Iceland is that its coffers with foreign currency are very limited and no one accepts Krona at the moment. Offering investors a return that would double your investment in 3 years and 10 months (in Krona, admittedly) should tickle some to take a gamble. The other bit will be to discourage the Icelandic people to buy an oversees product where homegrown stuff is available. Thirdly, if you can, start saving.

    All those changes in behaviour will lead the country into depression (but that is coming anyway), but will rebalance the country’s current account, thus reducing the need for much foreign currency. After a while the Krona can revalue again.

  • alda October 28, 2008, 5:13 pm

    Marc – thanks for the clarification – and economics lesson. It still sounds like Greek to me, but I’m learning in increments.

  • Vikingisson October 28, 2008, 5:23 pm

    Ditto Alda, people do know that things are not as they were last year and are likely to get much worse for a long time. The aforementioned online mags are not there as a source of mainstream news. They are more of a marketing tool, IR also (or used to) publish the magazine stuffed in the pocket of the airline. Lovely magazines but I’d hardly call on them for hard hitting critiques of a world in peril. I can find that kind of news in plenty of places inside and out of Iceland. Those mags have been printing bits and pieces of this lately and long before. They just don’t obsess over it.

    The U.S. media is not the source for truthyness in news either. There is either obsessed doom and gloom or hard hitting news about what hairdo a certain politician should be wearing on the next episode of ‘America’s Next Top President’. And of course the fringe brigade is in full force with total proof blaming this on the Spaghetti Monster or whoever they like to point at.

    I do know that I’m not blaming Iceland for how it has affected me. Or how my father has lost his pension fund just at the time he needs it after working an entire life. Or how is it that he can loose that money and then be on the hook for the bailout that won’t get him his own money back.

    So I’ll be spending my last dollar in a few weeks in Iceland. Alda, I can bring you some coriander or anything else that they’ll let me bring on the plane. I hear that I shouldn’t do duty free before getting on board as it might be taken away but should buy after I get there in the local duty free. Kinda backwards but if them’s the rules then that is how it will work.

  • trev london October 28, 2008, 5:50 pm

    Thanks for the headlines. All the Iceland vs UK stuff is beginning to get me down. I’ve said before, but I was keen on a visit 21/11 but there’s no way I’ll chance it! We’ll have to find somewhere else.
    101 Hotel booked up anyhow 🙂

    Interesting to contrast Iceland Review/News which are resolutely upbeat and optimistic compared to UK press and BBC which are non-stop 24 hour gloom/doom/panic. Boris Johnson was marvellous in the Telegraph today. “If you have money, it’s your duty to spend it”!!
    Is the Icelandic language media so positive?

    Marc’s right re interest rate, though it must be a short term measure. It was over-inflated interest rates and the flood of foreign deposits that caused this mess in the first place. Managing a micro-economy like Iceland’s with interest rates is always going to be a delicate matter.

  • Penn October 28, 2008, 7:38 pm

    Thanks for the reply, Alda. You were nice to me. Even though I didn’t deserve it.

    First, Iceland has to get this government out of power. My understanding is that the President and the PM have held office for many, many years. They led Iceland into this crisis. Why should they lead Iceland out of it? They’re stupid bureaucrats. They let the bankers run wild. They probably themselves ran wild. Force them out of office. Maybe there are some potential leaders in the opposition party.

    How does a people force a government out of office? By surrounding the ministries and the parliament with a ring of human bodies. Overwhelming protest. Maybe even some slight violence, like vandalism of government property and a few well-placed Molotovs.

    Violence is uncalled for, it would make matters worse – I hear someone say. This is where you have to remind yourself: Iceland is not facing recession, it’s facing depression. Worse than depression, it’s facing starvation. Yes, it has greenhouses, it has dairy and homegrown meat and lots of cod. But the population is 300,000 plus. Many of the calories are imported – maybe even a majority of them, though I’ve never been to Iceland and couldn’t say. Anyway, do you think a bankrupt government and a depressed economy can provide substitutes for the lost imports in just a matter of weeks? What’s more, in the heart of winter?

    And food isn’t the only question. What about basic goods like food and firewood and heating oil? You name it.

    Again, Iceland might not survive this. The people must understand that. If they understand it when the supermarkets run out of food and the credit cards stop working and there are families wandering the shopping districts of Reykjavik with no homes and thin clothes, then it will be too late.

    When the government is removed, the people should elect someone competent, preferably a woman, a technocrat maybe, but a genuine spokesperson for the people. This person should have qualifications and this person should go to the world and say, ‘Please, absolve some of the debt, suspend the debt payments, and send us aid.’ The IMF is no good. They’re Washington number-crunchers with extreme neo-liberal agendas. They have no idea what they’re doing. They’ll kill people and the deaths will only ever be a statistic. So forget the IMF. Appeal to the Japanese, appeal to the Nordic countries, appeal to the United States people. A change of leadership will make the appeals more visible and credible.

    Anyway, that’s my suggestion. Regime change, and an attempt at debt absolution. And then on-the-ground measures to help the unemployed, the homeless, the broke. They might have to be extremely socialist measures, but so what.

  • CarolQ October 28, 2008, 7:44 pm

    Alda, I’m sure you’d like this to all go away but I think your plan of ‘One day at a time’ is the best, unless you’re an Econ major and can actually get something done.

    We here in the U.S. have been putting up with the #$%^&* election %^&* (stuff) for about 2 years now and you just have to go one day at a time with that too. At least we see the light at the end of the tunnel on the election but now we have the stockmarket yo-yoing and a recession at the end of our tunnel to look forward to. I know that what you have is worse but just getting through a day at a time with your thoughts applied to just today will help. Hope this makes sense but well, gGood luck and thanks for your information about the Niceland situation. Glad you have the headlines on the sidebar so you can blog about something different/better.

    BTW, I just LOVE your photography, have you thought of making note cards and selling them?

  • Zoe October 28, 2008, 7:49 pm

    With regards to Penn…

    thank you for your input, but I think it’s obvious that you have very limited knowledge of Iceland or how we do things. First of all, we don’t use heating oil or firewood. Second of all, although I have become very disillusioned about many things Icelandic after having lived abroad for several years, I can absolutely tell you that we will survive this and no one will die.

    At risk of employing the same ethnocentrism that I have been criticising lately – we’re simply above that. Our institutions are sound, the economy is facing difficulties but we will pull through. Even if credit transactions were to come to a halt and imports of food were drastically cut, then guess what? We will find other ways. There is still fish in the sea. We will not run out of homes; even though some people might lose their houses as they default on skyrocketing loans after having lost their jobs, that does NOT mean they will be out on the street. In the worst case scenario that they will not be able to stay with friends and relatives for the time being, I absolutely refuse to believe that the government or someone else would not let them stay in some of the new apartments that have been built but not sold until something is figured out.

    And thin clothes? Come on. Although people might not be able to renew their entire winter wardrobe this fall that doesn’t mean that everything we have ever owned will suddenly incinerate. We have lived in this climate for centuries and we will manage.

    Sounds like someone has a flair for dramatics. Yes, we’re in trouble, but yes, we will get through it. Maybe more protests would be good, maybe a new government would handle things better, maybe the IMF isn’t the best way to go. But it is the path we have chosen for now and we will make it work. And if not, we will find another way. And it will not be with vandalism of government property or “slight violence”. We know better than that. (I hope…)

  • seit4bffeun October 28, 2008, 7:50 pm

    18 % ? scam 2 ? EMBARGO x iceland

  • Penn October 28, 2008, 8:11 pm

    Zoe,

    Alright, I was wrong about firewood and heating oil. What is it that you use? Is it all geothermal?

    ‘Our institutions are sound.’ This was one of the refrains of Herbert Hoover before and after the Great Crash. We hear it in the States, too. ‘The fundamentals of the economy are sound’. Anyway, which institutions are you referring to? Certainly not the banks or the government.

    I’m not talking about a drastic cut in imports. I’m talking about an altogether cessation. And that’s in the cards. You need a functioning currency to import stuff. Iceland didn’t have one for about a week. There was no forex. Now the government has resurrected the currency at the cost of a major interest rate hike. Anybody with loans out will be strangled.

    Fish in the sea? How do you intend to reel in fish for 300,000 people? Hasn’t the fishing industry shrunk this decade to make way for retail and banking? I’ve heard that only a few percent of Icelanders are employed in fishing. Correct me if I’m wrong.

    People should absolutely get to keep their homes. But will they? Has the esteemed PM bothered to guarantee this?

    What is the PM saying about people defaulting, people foreclosing, people losing jobs? What assistance has he promised? I’m truly curious. I have no access to his day-to-day briefings to the nation. The Western media is turning away from Iceland; there’s little coverage except of the economic technicals.

    ‘Maybe the government should go, maybe an IMF loan isn’t well-advices, let’s maybe have some protests…’ Etc. Etc.

    Well, will the government go, or will you keep Haarde for years to come? Will you take the loan from the IMF vultures, or won’t you? Will there be significant protests, or won’t there?

    ‘Maybe.’ You might as well just say, ‘Manana.’

    When did violence against government property become the ultimate taboo? The worst kind of violence is the government’s kind: inflicting pain on ordinary people to accommodate moneymasters across the sea, lying, obfuscating, avoiding responsibilities to depositors across the sea, shifting blame to the British, conspiring with oligarchs during boom times and letting them sail to the Caymans when the avalanche begins.

    A flair for dramatics? It’s your country that has no banking system, that relies on imports and can’t import, that faces depression on top of hyperinflation in the middle of an Arctic winter. The dramatics are very much intrinsic to Iceland’s reality. I’m reflecting them.

  • James October 28, 2008, 8:18 pm

    As everyone is aware, the IMF always mandates many painful changes for countries in trouble. Most of the changes provide little short-term benefit for individuals; the changes typically cause short-term pain, but increase the likelihood of long-term recovery. Therefore, to retain buy-in from individuals, the local news media should clearly explain the reason for each painful policy/fiscal change. For example, the IMF identified stabilising the krona as top priority and this required a substantial interest rate hike, with local inflation (and just about everything else) being comparatively irrelevant. If the 18% rate isn’t sufficient to stabilise the krona, then it’ll be interesting to see what the IMF mandates next…

  • Marc October 28, 2008, 8:19 pm

    @ Zoe
    Of course you are right. And no one in their right mind imagines Icelandic people starved to death, next to naked in the streets. But ignoring the provocative tone of Penn, he does point at two things that even Iceland cannot escape:
    – You need a change of government. An election in 3 years just isn’t good enough. The easiest way to bring this about is to convince the MP’s to submit a vote of no confidence. Which MP aspiring to be around longer than today could express his confidence in your current government? I’m quite sure it would do the trick, people will make their opinion heard.
    – Depression, in economic terms is defined as a fall in GDP by 10% or more. During the famous US depression GDP fell by 40%. The more recent Argentinian default triggered a drop betweend 10 and 15% (I haven’t got the exact figures, sorry). This does have an immediate effect on employment and the wealth of those most vulnerable in society. Think single parents, old age pensioners, the handicapped,…

    A suggestion mentioned above is to default on the foreign debt. While this may turn out inevitable, it is works like taking out a loan on your children and grandchildrens heads. The bond market has a very long memory. Probably negotiating more favourable terms for your foreign debt is what you need to do. I hope you have nice and understanding creditors.

  • Vikingisson October 28, 2008, 8:19 pm

    wow, it does get a little goofy around this virtual world at times eh? In my opinion there is never a cause for ‘a little violence’. Vandalism or whatever you call it is never positive and never solves anything. evar. On the other hand there is the very rare case for extreme violence. That is a revolution and sadly is sometimes required. But in this case it is not even close to being a necessary option. Not even in the Excited States of America is there a need for violent revolution even though things have long since gotten out of control as far as ‘By the people, for the people’ is concerned.

    Icelanders have endured much worse over a millennium. In one sense it is better that this has happened now instead of a generation later. Plenty of people are still around that remember the old days and how to adapt and thrive in a sometimes harsh world. They will survive. They aren’t exactly like Americans or the British or anyone else for that matter but they are familiar enough and tough enough. Maybe that’s why Canadians love them so much, they have much in common including a strange sense of humour.

  • alda October 28, 2008, 8:19 pm

    What Zoe and Víkingsson said!

    Marc – We’re very well aware of those points.

  • alda October 28, 2008, 8:33 pm

    Carol – re. your last remark, thank you very much! No I had not thought of that. Hm. Thanks for the tip.

  • Grif October 28, 2008, 10:31 pm

    (Recently stumbled into your site, and I must say I like your writing style. Think I’ll stick around for some while 🙂 )

    I’d like to agree to the highlight section is a nice addition.

    Recent discussions made me wonder something though… .
    How many percent of the working population work in the fishing industry?
    Have any figures of what the unemployment rate is? (see newest headline) (before or after the 100% rise). I mean, while of course it is never a nice fact when the unemployment rate rises, much depends on how much you were starting with.

  • Marc October 28, 2008, 10:43 pm

    @ grif

    Fishing industry employs about 4500. Not to be sniffed at, but neither an industry that can absorb thousands of new workers.

    Unemployment was extremely low, 2 to 2,5%. Participation in the labour market was sky high, somewhere in the eighties %.

  • Grif October 28, 2008, 11:08 pm

    @ Marc

    So that’s about 1.5% working in the fishing industry… That confirms some figures I found then. Problem was that I found anything between 1-2% and 20%, so it was hard to really be sure of which one to believe.
    Had the same problem with the unemployment rate :p .

    Thanks for the figures.

  • Sigvaldi Eggertsson October 29, 2008, 9:57 am

    Marc and Grif, the Labour market participation at the end of 2007 was 83,3 % of the population (ca 256 000 people) (www.hagstofa.is/www.statice.is) and the unemployment was around (or less than) 1% for most of the last few years and up until the middle of this year.
    As of 29-10-08 there were 3721 people (www.vinnumalastofnun.is) out of work, ca 1.5% of the work force and with all the layoffs (they usually have a period of 3 months) we are likely to have between 7 000 and 10 000 people out of work by the end of the year.

  • Penn October 29, 2008, 1:56 pm

    Call my tone provocative if you like.

    Wait for the winter to come. Wait for the unemployed to become 25% of the population. Wait for the banks to evict people from their homes into sub-zero temperatures and blizzards. Wait for the supermarkets to run out of most of what they import. Wait for the hyperinflation. Wait for the total decimation of purchasing power. Wait for Haarde to disappear from public view. The government will abandon you when the problems become severe. Maybe they’ll just leave – like the bankers did.

    Change your government, get the new PM on CNN and every other media outlet in the West, and get the debt renegotiated, absolved, whatever. It’s no exaggeration: a small apocalypse is approaching Iceland.

  • Penn October 29, 2008, 2:01 pm

    How many times I’ve heard that Icelanders have survived worse… Has it ever survived the wholesale collapse of its economy? I mean, the wholesale collapse of an economy that is import-heavy and concentrated around banking and retail? Maybe you guys should quit talking about your hardiness and demonstrate some.

    Literally – demonstrate. Or end up as ice sculptures.

  • Zoe October 29, 2008, 3:08 pm

    I, personally, will be waiting for Penn to get a clue.

  • Dietmar October 31, 2008, 2:49 am

    Hi Alda,

    Is there any noticeable impact with various foreign workers leaving the country? This article mentions over 2000 Poles have left in the last few weeks. Apparently also happening on a large scale in Ireland and the UK.
    (sorry for the long link!)
    http://www.monstersandcritics.com/news/business/features/article_1438368.php/In_crisis_Polish_workers_abroad_feel_the_pull_of_home__Feature__

  • portkins October 31, 2008, 12:21 pm

    Penn does come across as a little radical.
    I think what he is trying to do is get you to realize this isn’t some situation you folks will just read about you will live it in living color. This is unprecedented for a small nation like yours. You should at least store away some canned food that will last you a month or so.
    I think your country is a microcosm of what may happen worldwide. It is so sweet and nice for some readers to say Penn is a nuts and why can’t we all just get along, but the warm and cozies all fade away when people have no food.
    I will also suggest that if you can’t afford a mortgage or rent, don’t think it is honorable to move out. there will be many more like you and you need to worry about yourself. I know a few people in the US that have depleted every last penny of savings and retirement “because it is the right thing to do” to keep paying the mortgage. Now they have nothing and the bank doesn’t care one bit. Don’t do anything in haste. Hunker down and preserve any wealth you may have left. They can’t evict 50% of the population.

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