Interview with Sigríður Dögg Auðunsdóttir
(Reykjavik Grapevine 24.6.2005)
Can you explain to a foreigner what exactly is going on with the banking scandal regarding privatization of Icelandic banks?..
The government first tried to sell Landsbankinn in 2001 and hired [British Investment Bank] HSBC to contact some foreign banks and investment banks to see if they were interested in buying at least 25 or 33% or up to a 45% share in Landsbankinn. This happened just after 9/11, when the world economy was put on hold for a few months, and nothing really happened. No one was really interested.
So early 2002, the deal gets put on hold. And what has never been made public until these pieces was that the privatization committee was preparing to sell the shares on a public market on the stock exchange. And they had made all necessary preparations until Björgólfur Guðmundsson of Samson contacted Prime Minister Davíð Oddsson and said they were interested in buying one of the banks.
Björgólfur’s son, Björgólfur Thor, had met someone at HSBC in London at a party and found out that they were no longer trying to sell the banks. The plan had just been thwarted. So he thought there were two banks up for grabs, he might just try to get one of them….
Samson had the lowest offer. But still got it.
Why would that happen? Why would the lowest bid win? Were the offers public?
At the time I don’t think the offers were made public. No one really knew what the difference was.
But Björgólfur and Samson had foreign capital.
Yes, that was the explanation, that Samson had foreign capital. Plus future plans, future vision. Number three priority was the price. They did a scheme where they broke down the priorities.
It seems like they could have gone reverse. 1) Price, 2) Vision, 3) Foreign Capital.
Well the assessment, the claim of the privatization committee is that the assessment was made to fit the purchase.
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Iceland’s economy ‘under attack’-
Iceland says it is under attack by speculators
(BBC News 2 April 2008)
Iceland is considering intervention in its currency and stock markets to fight hedge funds that it says are attacking its financial system.
The country’s prime minister, Geir Haarde, told the Financial Times that it was being unfairly targeted.
The Icelandic currency has lost a quarter of its value against the euro this year as rumours of a financial and banking crisis have swirled.
Last week, the country’s central bank made an emergency interest rate rise.
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Financial Predators Attack Iceland
(Great Red Dragon – 05/22/2008)
Apparently, Iceland’s investors have been loaned billions of pounds to make investments in Britain. This is how financial predators operate. They push credit lines to investors just like they pushed sub-prime loans to home buyers. In other words, they turned on the credit tap. Those who hesitated to partake were made to seem like losers, but obviously there is no free lunch, ever, for those who partake from the credit tap.
Now that those who had turned on the tap have figured to have made about as much as they can, they now turn the credit tap off. This allows them to make even more shorting the currency as it knowingly collapses. The financial predators are the ones who moves the whip’s handle, while others try to follow the whip’s lash. They decide when to zig, while others can only zag.
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Iceland is steamed -
Its economic meltdown, and the violent reaction of its people, may be echoed worldwide
(LA Times-8 Feb 2009)
In December, reports surfaced that then-Treasury Secretary Henry M. Paulson was nervous. Without a Wall Street bailout package, he reportedly warned members of Congress, civil unrest might become so widespread that martial law would have to be imposed. That same month, International Monetary Fund Managing Director Dominique Strauss-Kahn warned of the risk of worldwide riots in connection with the economic collapse.
What really worried them, I suspect, was not that people would throng the streets, or even that those people might demand radical social and political change. The real concern was that the rioters might achieve some of their demands.
Take the example of Iceland, the first but surely not the last country to go bankrupt.
While the United States was inaugurating its first African American president, Icelanders were besieging their Parliament, demanding change in the wake of economic meltdown. Dramatic video of the scene shows drummers pounding out a tribal beat, the flare and boom of tear-gas canisters being fired, scores of helmeted police behind transparent plastic shields, a huge bonfire in front of the stone building, its hot light flickering on the gray walls through the long winter night. People, silhouetted against the blaze, beat pots and pans in what was dubbed the “Saucepan Revolution.” Five days later, the government dominated by the neoliberal Independent Party collapsed.
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EU aims to swallow Iceland before its people can change their minds
(Daniel Hannan-January 30th, 2009)
The Guardian slaps an “exclusive” label on its main story: “Iceland to be fast-tracked into the EU”. Regular readers will recall that this blog carried the same story a month ago.
The new Social Democratic government is preparing to make a formal application in April, which Brussels plans to rush through before Icelanders get the chance to change their minds.
You can see what’s in it for the EU: Iceland will be a handy source of energy and of fish, as well as a net contributor to the budget. More to the point, it will no longer refute by its example the notion that small countries cannot survive outside regional blocs – a notion on which European integration depends.
What, though, is in it for Iceland? True, the krona has been devalued. But joining the euro would lock in the present exchange rate in perpetuity – and would, at the same time, lumber the little island with the Social Chapter, the 48-hour week, the Common Agricultural Policy and the rest of the apparatus of Euro-dirigisme. More to the point, Iceland is a successful democracy, with high voter turnout, responsive politicians and the oldest parliament in the world. EU membership would replace its parliamentary model with a corporatist one in which 84 per cent of legislation is proposed by unelected European Commissioners.
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In the Wake of Economic Collapse. Iceland’s Election: It’s not about Left and Right
Prof. Michael Hudson-29 Apr 2009
I can hardly believe the news reports on Iceland’s election on Saturday, April 25. Evidently in an attempt to interest readers in an island few know or have cared much about, the papers tried to attract reader attention by talking about the “left” unseating the “right.” No doubt this political swing is going to continue for many years to come throughout the world. But for Iceland’s voters the issues were more pragmatic. Reckless neoliberal bank privatization is indeed the main problem, but the proposed responses are not inherently left or right as such. At issue is whether voters have become so desperate in the wake of crooks wrecking the financial system that they will seek a more stable currency (the euro) by joining Europe on terms that forfeit control over Iceland’s North Atlantic fishing waters and burden taxpayers with unprecedented public debt to compensate British, Dutch and other European bank depositors and speculators for their losses?
Europe would not dare make such a demand on the United States for the bad packages of junk mortgages it bought and for its losses when Lehman Brothers went bankrupt. But Iceland is a small country and may be easier and riper for plucking.
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Rejecting Icesave deal could be akin to declaring war
(Ice News-Jun 26, 2009)
If Iceland’s Althingi parliament does not pass the bill confirming the state’s overall responsibility for dealing with the Netherlands and the UK’s Icesave claims, the entire country’s economy would be put on a war footing. Iceland would not receive further loan payments, companies would be unable to finance themselves and fall increasingly into bankruptcy, and the Icelandic nation would find itself no more respected than Cuba and North Korea among the community of nations….
“On the other hand, it is up to the government to outline more clearly the pressure being put on the Icelanders and what exactly the consequences would be if Althingi refuses to pass the bill. It is not good to experience how isolated and friendless Iceland could become in the world in this way.”
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Iceland: Lessons to be Learned from The Economic Meltdown
by Eva Joly
August 7, 2009
In the wake of the failure of the Icelandic banks Messrs Brown, Barroso and Strauss-Kahn prove that they have understood nothing
From G8 to G20, many heads of state and government seem to delight in repeating that nothing will ever be the same again. The world is changing, to the point of being turned on its head by the crisis; the way we think and act in terms of financial regulation, international relations and development aid must therefore, according to them, change too.
However, numerous examples contradict all this big talk. The situation in which Iceland now finds itself following the implosion of its banking system and the emergency nationalisation of its three main banks (Kaupthing, Landsbanki and Glitnir) is undoubtedly one of the most significant of these examples.
This small country of 320,000 inhabitants is now reeling under the weight of billions of Euros of debt, which has absolutely nothing to do with the vast majority of its population and which Iceland cannot afford to pay.
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