Friday, April 11, 2008

Someone should take away all their toys and make them scrub toilets

Soon after the first news hit about the serious financial crisis the Icelandic nation was supposedly in the midst of, word started circulating that the whole thing was an elaborate set-up, orchestrated by unscrupulous individuals who stood to gain from the plummeting value of the Icelandic krona. I must confess that this sounded rather implausible, to my ears at least, and I more or less dismissed it as ineffectual spin by the Icelandic banks, since all over the world financial news reports were going on about their precarious positions and claiming they were on the verge of collapse. In the end, of course, the entire nation would go down the economic tubes with them.

Meanwhile, this was in no way mirrored in the day-to-day lives of the people. It was completely surreal.

A few weak voices tried their best to protest: the banks, of course, contested this the best they could [which one took with a grain of salt; if it were true that they were in trouble they would obviously be loath to admit it], and the government sent a delegation to New York [which included the Prime Minister] to hold press conferences and meetings in an attempt to dispel the rumours. However, nothing seemed to work, talk of Iceland's economic woes snowballed and before you knew it there was a kind of hysteria happening. Everywhere but here.

In the midst of all this, Iceland had one staunch ally, Dr. Richard Portes, a Professor of Economics with the London Business School, who had prepared a report for the Icelandic Chamber of Commerce about the state of the Icelandic economy. He has been a frequent guest on chat shows worldwide speaking about with the state of our economy, and has presented a vastly different picture than most other people, reiterating his opinion that Iceland is a well-run country with a strong institutional framework. He moreover maintains that our banks are healthy and strong [there is an excellent video here that well demonstrates the sensationalist media hype as well as Portes's level-headed take on things]. The main problem, according to Portes, is that "Iceland is being talked down because a lot of people stand to make money." I'm not an expert [by no means] but from what I understand, speculators bet on the devaluation of a particular currency and when it depreciates, it's ching-ching for them.

A couple of days ago, Kaupthing, one of the three main banks here, published the results of an investigation it had launched into the alleged attacks on the Icelandic economy. It named four UK hedge funds: Trafalgar Fund, Landsdowne Fund, Ako Capital and Cheney Capital, and claimed that they had systematically launched attacks on the Icelandic economy, primarily by spreading false and harmful rumours about it and the Icelandic commercial banks.

Now Richard Portes has come forth and revealed that sometime in the last two weeks he received a phone call from a large hedge fund in the UK [he has confirmed that it is one of the four that Kaupthing mentions] in which he was advised that if he valued his reputation he should stop talking so favorably about the Icelandic economy. Portes, clearly a force to be reckoned with, says that he immediately realized what this meant and decided to listen very carefully and take notes. He has since passed on his information to the Financial Authorities of both the UK and Iceland, who one hopes will investigate further.

To me, this is just outrageous. I mean, how can this be legal? The way I see it this is no better than some subversive mafia racket - underhanded, detestable, designed to feed off someone else's vulnerability. And Iceland is an easy target - a small economy that is undergoing temporary difficulties. If I wasn't such a pacifist, I'd say OFF WITH THEIR HEADS. But I'll settle for having them scrub toilets for the rest of their lives. In Guantanamo Bay.

IT'S ANOTHER GORGEOUS DAY
The light is slighly subdued, the sun covered with a thin layer of cloud, but make no mistake: spring is just around the corner. Walked to the bakery at noon and, as always, there was a fairly cool breeze by the sea, but no matter, the sun was out and hearts were buoyant with the promise of brighter days. Indeed, the day is growing longer and longer, and at 9.30 pm last night we actually still had daylight. Which always seems equally amazing, even though it happens every year. Right now 5°C [41F] and sunrise was at 6.09, sunset due for 8.50 pm. W00t!

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