Encuentro digital con Olafur Margeirsson (en directo ahora) Todo lo que siempre quisiste saber sobre Islandia y nunca te atreviste a preguntar

Hoy 8 de noviembre a partir de las 20 horas realizaremos un encuentro digital con el doctorando en economía y ex trabajador de banca islandés Olafur Margeirsson, profundo conocedor del sistema financiero de su país y de las cloacas que encierra.


Olafur ya está con nosotros.

Hi Olafur, I shot you the first question

1.- Who own the Icelandic banks, are they owned by the people of Iceland?

We sincerely don’t know the whole list of owners. The Icelandic state owns 81% in New Landsbanki, 13% in Arion bank (the new Kaupthing) and 5% in Islandsbanki. The rest is owned by the bondholders of the old banks through the receivership committees. Those bondholders can be anybody. Many have speculated that they are hedge and vulture funds. Some say Mitt Romney owns some of the bonds through some hedge fund, but that’s speculation as far as I know.

2.- If Icelandic government had had enough money would they have bailed out Icelandic banks?

Yes, they would have! They tried everything they could, but in the end the cash wasn’t there. So the “choice” to let the banks go was a forced one.

3.-Did Iceland “clean” the country from the people who politically and economically caused the crisis? 

No, I cannot really say that, though plenty of things happened. We did have a lot of cleansing in the 2009 elections: 27 of the 63 members of the parliament were new and had never been elected into the parliament before. But unfortunately, the “Big Four” traditional parties are still around, and in fact gaining ground for the last year or so. The business people weren’t literally thrown out but the most significant ones chose not to be as prominent as they had been. Many moved ashore, Luxembourg was a very popular destination for ex bankers.

4.-  Is the former central bank governor and prime minister in jail? Are the CEOSs of the banks in jail?

The former prime minister and later governor of the central bank, David Oddsson, is certainly not in jail! He is today the Editor in Chief of the daily newspaper Morgunbladid, which traditionally has backed the political party, Independence Party. He was also the head of that party before he became the governor of the central bank. Everybody knows the newspaper is owned and financed with some Icelandic oligarchs’ money. The paper has a clear stance against the possible EU entry of Iceland and takes sides with the owners of the fishing quota who do not want the fishing system to be reformed – which, surprise, are also owners of the newspaper.

5.-How and when is Iceland going to pay back the money that owns to the investors and people who had bank accounts in the bankrupt banks?

Ohh, the Icesave dispute. Right, so to be clear from the start: there is still doubt if the Icelandic government was legally obliged, according to EU law, to back up the deposit insurance scheme of the Icelandic banks. That dispute is now in EU courts. That beside, the Icelandic government, in October 2008, passed “The Financial Emergency Act” where depositors were put in front of the common bond holder on the list of payees when the old banks are finally liquidated (this act made is possible to set up the new banks on the ashes of the old ones). That act in fact made sure that in the end, the common depositor will get most (Landsbanki’s receiver committe says everything) of his/her money back. Landsbanki has already begun to pay out the funds to depositors.

6.- Is Icelandic economy self-sufficient in the energy field? Does Iceland need to import energy?

Yes, we do need to import all fuel (petrol and diesel). We have geothermal and hydroelectric plants to supply the electricity. Some people want to lay a cable down to UK and sell the over-capacity of hydroenergy to Europe but that’s at its infant stages at best. Hot water takes care of heating up houses, swimming pools etc.

7.- How much did Iceland debase the krona?

The price of 1 euro was 82 krona in July 2007. It was 120 krona one year later. It topped at 187 krona in December 2008. It has since then come down a bit, it’s about 163 krona today. But that’s the official rate! Due to the capital controls in Iceland, there is also an offshore-rate which foreign banks buy and sell the krona on. That rate is, last time I knew, around 230 krona for 1 euro.

8.- How much of a “factor” were the demonstrations of Icelandic people during the crisis? Would hd behaved the same way the Icelandic government if they had had a supermajority in the Parlament of Iceland?

The “pots and pans” revolution was very very important! People felt they had been swindled. They saw the economy being flushed down the toilet and hated every single politician that had told them that “everything will be fine”. And no, I don’t think it would have mattered if we hadn’t had a coalition. It would had been ousted out all the same.

 9.- How did people manage to get united duting the crisis overcoming lefty and conservative ideology and got focused in their demands?

It was the anger! People were united in anger! They demanded that somebody shouldered responsibility for the collapse. They hated politicians, especially those that had had ties with the business elite. Some politicians got very unfriendly visits from the crowd, politicians both from the Social Democrats party and the Independence Party (conservatives). Remarkably, nobody was hurt. A lot of politicians got scared however.

10.- Could it be posible for a big country (like Spain) to use the same way that Iceland used to get out from the crisis ?

Tricky question. Very tricky! Spain could never do exactly like Iceland did because we managed to bail ourselves out for the time being by letting the value of the krona collapse. So we got a huge boost from exports which have basically kept us alive since 2008. Spain cannot do this. Second, I am not entirely familiar with how the payment system in Spain is. If it is all run through the central bank of Spain, then you have the hope of letting all the small banks and even the big ones go directly into bankruptcy. The bankruptcy of the Icelandic banks certainly helped, otherwise we would have been just as much in trouble as the Irish. In case Spain goes off the euro, they better be ready to set up capital controls immediately. But I think the EU contract forbids that. We got exception because of “extraordinary troubles”. And that exception can be revoked any time.

11.- How is the state of Icelandic finances now?

On knife’s edge. The government just published a new financial parliamentary bill and expects as good as no deficit. Plenty of people doubt that will come true. But we’ll see.

12.- Do people know in Iceland that banks got haircuts?

Yes, everybody knows it. Bloggers are still hammering on it and the media hasn’t forgotten it either.

 13.- Is Iceland now under a housing bubble?

I don’t think so, no. There is a risk of another one forming however as the capital controls lock all capital in the economy, supply of bonds is short and investors are looking for something to put their money in. I know that one asset management company has set up a fund for private investors and even pension funds which’s sole objective is to buy residential buildings in Reykjavik. They’ve already bought around 100 flats.

14.- “Hello Olafur, How is iceland preparing for the upcoming energetic crisis. (peak oil) Don’t you think that ignoring this reality can lead us to a situation somehow similar to the financial crisis? I mean, is somthing you can see coming, right now it’s not profitable to stop, but if you don’t… you are creating a big snow ball, and this will bring drastic consequences.”

I think Iceland, as the whole world, has to get a bit more realistic about energy, yes. We have had some endeavours of powering the car fleet with methane gas. Hydrogen was also tested some years ago but that one died out. I think the general consensus (at the moment) is to emphasise electric cars, especially since we have ample supply of such energy. The government has been pushing for “green growth” lately.

Global wise: yes, ignoring the needed investment in something else than fossil fuels can spark a panic amongst financial markets. This is especially so if oil prices rise, manufacturing costs in the wake of that, supply-price inflation then, interest rates, GDP drops, and boom… we have reached unfounded cash-flow structures that can never be serviced macro-wise. So peak oil has definitely a financial-crisis risk in it.

15.- Government gave control of the banks to the creditors with a 70% haircut following IMF instructions, with the intention that this 70% haircut would had also been applied to the families with loans but they did not apply it and instead they made them pay back 100% What’s your opinion on that?

Well, I don’t think the deal was ever to get the discount onwards to households and firms. That’s the government’s mess, they should have had better negotiators. Of course, the creditors of the banks are trying as much as they can to charge the full face value of the mortgages and the bonds they got all the discount on. That is to be expected. My opinion on it: the government messed up. They lost a golden opportunity in cutting the Icelandic economy from the debt snare it’s in. But of course, I suspect there would have been some serious legal problems if that had been done. And I don’t know it that would have been worse than the present situation.


2 comentarios sobre “Encuentro digital con Olafur Margeirsson (en directo ahora) Todo lo que siempre quisiste saber sobre Islandia y nunca te atreviste a preguntar

  1. Pingback: Anónimo
  2. Hello Olafur,

    How is iceland preparing for the upcoming energetic crisis. Don’t you think that ignoring this reality can lead us to a situation somehow similar to the financial crisis? I mean, is somthing you can see coming, right now it’s not profitable to stop, but if you don’t… you are creating a big snow ball, and this will bring drastic consequences.

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