Iceland’s New Government Has Cunning Plan Of Tapping Banks To Boost Growth, Improve Infrastructure

We like Iceland, we’ve never been there, but that doesn’t matter. Besides the outstanding natural beauty, Iceland, unlike the US, UK and practically everywhere else, holds bankers accountable. Last time we checked, 29 had been jailed. As we discussed, it also holds its leaders accountable (partially – see below) when they are complicit in exonerating convicted child rapists. Such an event brought down Iceland’s government in September.
Last week, it emerged that Prime Minister Bjarni Benediktsson knew of attempts by his father, Benedikt Sveinsson, to have the Ministry of Justice grant ‘restored honor’ to a convicted child rapist. Benediktsson kept this secret as the rapist, a friend of his father’s was essentially exonerated.
Restored honor is the controversial process by which convicted criminals can have their crimes expunged and return to society with all rights and privileges restored. It requires that the convicted person serve between two to five years of their sentence on their best behavior and that they have multiple letters of recommendation. Sveinsson provided one such letter.

This post was published at Zero Hedge on Dec 2, 2017.

Blain: “The High-Yield Market Is Where The Bond Supernova Will Erupt”

It’s a US holiday and markets will be thin through today. To show my solidarity with our American cousins, I’m off for a proper lunch with clients in the West End and Malbec rules* will probably apply.
What happened in China this morning? Stocks down sharply (the steepest decline this year), on the back of rising inflation worries. Dong! – that strikes a chord. It seems yesterday’s Porridge – dealing with the threat of an inflation shock – was perfectly timed. Suddenly everyone is waking up to the I-threat.
China is in sharp focus – bond yields keep climbing despite the PBOC injecting liquidity. My colleague Ara Levonian downstairs on the BGC floor points out we’ve got over $1 trillion of Chinese corporate debt coming up for refinancing next year. Put all the clues together: an inflationary environment, supply-side policies driving up wages and inflation, rising rates, and a large number of highly geared companies facing rate risk?
Do you think it might end up messy? (Messy? Yes, but terminal probably not.. the Chinese can press the money spigot again and again.)
And how different is the US? That’s why I’m watching the high-yield market – that’s where the bond supernova is going to erupt. Just like the next Icelandic volcano we can feel the high-yield market spluttering beneath our feet as an ominous cloud of steam rises above the glacier….

This post was published at Zero Hedge on Nov 23, 2017.

The Politics of Change – Iceland – New Zealand – Czech Republic

The Prime Minister Bjarni Benediktsson’s Independence Party won the most votes in the Iceland election but he saw his party’s support eroded as voters turned to smaller parties in protest. This leaves the country in a position of uncertainty as the election has opened the door to power for the nation’s charismatic and very attractive left-wing leader, Katrin Jakobsdottir. Now Jakobsdottir has the chance to form together a narrow majority for a center-left coalition. She is a 41-year-old who is very popular on her own with pre-election polls that showed one in two voters wanted her as the premier.

This post was published at Armstrong Economics on Nov 1, 2017.

“It’s Sad As Hell” – Swedish Ambassador Admits, We’re “In The Process Of Dismantling Democracy”

Sweden’s new ambassador to Iceland has sparked a major controversy after warning that Sweden is “in the process of dismantling democracy” and could be on a slippery slope towards technocracy or a dictatorship.
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Hkan Juholt, a former leader of the centre-left Social Democrat party and ambassador to Iceland since September, made the comments in an interview with the Svenska Dagbladet newspaper.
“How old is your son? Four?” he asks the reporter.
“When he is old he won’t be living in a democracy but in a technocracy, or a dictatorship. It’s sad as hell. I am sorry to say it, but I am 100 percent sure. We are in the process of dismantling democracy.”

This post was published at Zero Hedge on Oct 18, 2017.

Icelandic Government Collapses After Plot To Pardon Pedophile Rapist Exposed

Iceland’s justice system has received praise in recent years for its successful prosecution of multiple bankers who helped bring on the 2008 financial crisis. Though some of those bankers have been released early from prison, the latest controversy in the country stems from an entirely different miscarriage of justice.
***
Last week, it emerged that Prime Minister Bjarni Benediktsson knew of attempts by his father, Benedikt Sveinsson, to have the Ministry of Justice grant ‘restored honor’ to a convicted child rapist.
Benediktsson kept this secret as the rapist, a friend of his father’s was essentially exonerated.

This post was published at Zero Hedge on Sep 20, 2017.

The Secret History Of The Banking Crisis

Accounts of the financial crisis leave out the story of the secretive deals between banks that kept the show on the road. How long can the system be propped up for?
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It is a decade since the first tremors of what would become the Great Financial Crisis began to convulse global markets. Across the world from China and South Korea, to Ukraine, Greece, Brexit Britain and Trump’s America it has shaken our economy, our society and latterly our politics. Indeed, it has thrown into question who ‘we’ are. It has triggered both a remarkable wave of nationalism and a deep questioning of social and economic inequalities. Politicians promise their voters that they will ‘take back control.’ But the basic framework of globalisation remains intact, so far at least. And to keep the show on the road, networks of financial and monetary co-operation have been pulled tighter than ever before.
In Britain the beginning of the crisis was straight out of economic history’s cabinet of horrors. Early in the morning of Monday 14th September 2007, queues of panicked savers gathered outside branches of the mortgage lender Northern Rock on high streets across Britain. It was – or at least so it seemed – a classic bank run. Within the year the crisis had circled the world. Wall Street was shaking, as was the City of London. The banks of South Korea, Russia, Germany, France, Belgium, the Netherlands, Ireland and Iceland were all in trouble. We had seen nothing like it since 1929. Soon enough Ben Bernanke, then chairman of the US Federal Reserve and an expert on the Great Depression, said that this time it was worse.

This post was published at Zero Hedge on Aug 9, 2017.

Geopolitical Risk, Business, and Investment

When people think about geopolitics, they tend to think about war, as if the two issues were the same. But that is only partly true.
Geopolitics is the study of the power of nation states, and war is certainly a determinant of power. But it is only one of many. Things like economics, politics, ideology, and technology work together to form national power, and however useful it may be to learn about any single element, they are inseparable. It’s for this reason that the situation in North Korea is (rightly) seen as a geopolitical problem but the Italian banking crisis (wrongly) is not.
Before we begin…
At the risk of stating the obvious, Warren Buffett is an extraordinary forecaster. At the risk of displaying hubris, I am struck by how similar his approach to forecasting the future of companies is to our method of forecasting geopolitics.
At Geopolitical Futures, we have pinpointed a way that our similarities can benefit you. You’ll find out more at the bottom of this issue.
But for now, let’s dig in to This Week in Geopolitics.
Rooted in Geography
Multifaceted though it may be, geopolitics is nonetheless rooted in geography. Geography dictates what is possible and what is impossible. Iceland, for example, can never conquer Europe, nor will it become a major industrial power.

This post was published at Mauldin Economics on JULY 10, 2017.

US Is A “Second Tier” Country, According To Social Progress Index

Most Americans’ idea of happiness involves lounging by the water or on a beach somewhere. But it turns out, human happiness can flourish even in freezing climates far from the equator.
To wit, the Social Progress Imperative, a US-based nonprofit, released the results of its annual Social Progress Index report, which purports to rank countries based on the overall wellbeing of their citizens. Four Scandinavian countries – Denmark, Finland, Iceland and Norway claimed the top spots, while the US placed 18th out of 128, leaving it in what the SPI defines as the ‘second-tier’ of countries based on citizens’ wellbeing, according to Bloomberg.
Luckily, being ‘second-tier’ doesn’t seem that bad, according to a definition found in the report.
‘Second-tier countries demonstrate ‘high social progress’ on core issues, such as nutrition, water, and sanitation. However, they lag the first-tier, ‘very high social progress’ nations when it comes to social unity and civic issues. That more or less reflects the U. S. performance. (There are six tiers in the study.)’
‘We want to measure a country’s health and wellness achieved, not how much effort is expended, nor how much the country spends on healthcare,’ the report states.

This post was published at Zero Hedge on Jun 21, 2017.

Iceland’s recovery shows benefits of letting over-reaching banks go bust

It looks set to be a week packed with big financial milestones. In the U.S., the Federal Reserve will raise interest rates, putting the country on a path towards getting back to a normal price for money. In the Netherlands, a tense election may deal the fragile eurozone another blow. In this country, Theresa May could finally trigger Article 50, starting the process of taking the U.K. out of the European Union.
The most significant event, however, as is so often the case, may well be something that hardly anyone is paying attention to. On Sunday, Iceland ended capital controls, finally returning its economy to normal after a catastrophic banking collapse back in 2008 and 2009.
Why does that matter? Because Iceland was the one country that defied the global consensus and did not bail out its bankers. True, there was shock to the system. But it was relatively short, and once the pain was dealt with, the country has bounced back stronger than ever.
There is, surely, a lesson in that. It might well be better just to let banks go to the wall. Next time around, we should follow Iceland’s example.

This post was published at The Telegraph

SPAIN SETS MASSIVE PRECEDENT – CHARGES ITS CENTRAL BANKERS IN COURT

First, Iceland, and now Spain has taken on the Big Bankers responsible for financial calamity, as the country’s highest national court charged the former head of Spain’s central bank, a market regulator, and five other banking officials over a failed bank leading to the loss of millions of euros for smaller investors.
This, of course, markedly departs from the mammoth taxpayer giveaway – commonly referred to as the bailout – approved by the U. S. government ostensively to ‘save’ the Big Banks and, albeit unstated, allow the enormous institutions to continue bilking customers without the slightest fear of penalty.
Errant bankers and financiers, it would seem, typically manage to either evade actually being charged, or escape hefty fines and time behind bars.
Spain’s Supreme Court last year ruled ‘serious inaccuracies’ in information about the listing led investors to back Bankia in error, thus the bank has since paid out millions of euros in compensation.
But Spanish authorities could not abide the telling findings of a yearslong investigation into the failed listing, as Wolf Street explains,
‘As part of the epic, multi-year criminal investigation into the doomed IPO of Spain’s frankenbank Bankia – which had been assembled from the festering corpses of seven already defunct saving banks – Spain’s national court called to testify six current and former directors of the Bank of Spain, including its former governor, Miguel ngel Fernndez Ordez, and its former deputy governor (and current head of the Bank of International Settlements’ Financial Stability Institute), Fernando Restoy. It also summoned for questioning Julio Segura, the former president of Spain’s financial markets regulator, the CNMV [National Securities Market Commission] (the Spanish equivalent of the SEC in the US).
‘The six central bankers and one financial regulator stand accused of authorizing the public launch of Bankia in 2011 despite repeated warnings from the Bank of Spain’s own team of inspectors that the banking group was ‘unviable.”

This post was published at The Daily Sheeple on FEBRUARY 21, 2017.

Iceland’s GDP Soars 10%, so Residents Are Preparing for the Next Crash

Iceland’s history is of booms and busts.
So as the inhabitants of a volcanic rock in the middle of the North Atlantic ocean roar back from their 2008 economic meltdown (this latest boom was fed by tourism and construction), the talk in the streets is of what shape the next crisis will take and when exactly it will hit.
‘We’re just going through the up-cycle at the moment,’ Einar Jonsson, a retired driver, said in an interview while grocery shopping in Reykjavik. ‘For the next few months – – might even be a year or two – – Icelanders will step all over each other to make as much money as they possibly can in an effort to live through the next collapse.’
Don’t just take the man in the street’s word for it. Titans of industry, local economists and even the European Union and the International Monetary Fund are all warning that Iceland’s economy risks overheating.

This post was published at bloomberg

Stagnation and the OECD’s Solution

Summary
We are in an Age of Stagnation. The OECD proposed solutions not unlike President-elect Trump’s to revive growth. Short-term growth may increase at the expense of the deficit and higher debt The resolution of these problems is going to take years. Introduction
Last week, Financial Sense published an article that I wrote called ‘Stagnation and the Secular Bear Market’ describing my adventure to understand why the US (and the world) have been experiencing slow economic growth and how long it will continue. This update is based on ‘Using the Fiscal Levers to Escape the Low-Growth Trap’ from the Organization of Economic Co-operation and Development’s (OECD) Economic Outlook which I received just this morning. It recommends global solutions to the problems that I described in my article.
In summary, a continuation of the current low growth environment undermines fiscal sustainability. Structural reforms in entitlements – particularly healthcare, pensions, taxes and spending – should continue to be made. These reforms with low-interest rates have increased the ability of countries to increase fiscal spending. The OECD recommends a more expansionary fiscal policy than what the US is currently planning. Austria, Hungary, Iceland, Norway and Spain are planning fiscal stimulus of one percent or more for 2016. ‘The likely shift towards more expansionary fiscal policy in the United States in coming years will provide support to economic growth, although the mix between tax cuts and spending may unduly favor tax cuts.’

This post was published at FinancialSense on 11/29/2016.

Iceland Today, the US Tomorrow?

During the 2008 economic crisis, Iceland’s government froze offshore accounts held by foreign investors in that country’s currency, the krona. Recently, the government of Iceland announced it would unfreeze the accounts if the account holders paid a voluntary ‘departure tax,’ which could be as high as 58 percent. Investors who choose not to pay the departure tax would have their investment ‘segregated’ into special funds that only invest in CDs issued by Iceland’s central bank. These CDs are expected to only provide a rate of return of at most 0.5 percent a year. So investors in offshore accounts can thus choose between having their money directly seized via the departure tax or indirectly seized via the inflation tax.
Iceland’s freezing of offshore krona accounts was part of a ‘stabilization and recovery’ program implemented under the guidance of the International Monetary Fund (IMF), which also provided Iceland with a $1 billion loan. So US taxpayers not only helped the IMF bail out Iceland’s government, they may have helped the IMF advise Iceland on how best to steal property from American investors!
The IMF’s role in Iceland’s seizure of the property of foreign investors shows the hypocrisy of IMF officials, who recently expressed concerns about the increasing support for protectionism supposedly exemplified by the Brexit vote. However, freezing of assets held by foreign investors is a particularly harmful form of protectionism, while Brexit was more about rejecting the European Union’s bureaucracy than rejecting free trade. Perhaps what the IMF and its supporters are really worried about is losing their power to use taxpayers’ money to force other countries to adopt IMF bureaucrats’ favored economic policies.

This post was published at Ludwig von Mises Institute on Oct 18, 2016.

Iceland Sounds Alarm After Largest Volcano Rocked By Big Earthquake Cluster

Six years after the eruption of Iceland’s Eyjafjallajokull volcano in 2010 caused the cancellation of more than 100,000 flights across Europe on concern that glass-like particles formed from lava might melt in aircraft engines and clog turbines, Iceland met office raised the alarm after its largest volcano was hit by the biggest tremors since 1977. Katla, named after an evil troll, is in southern Iceland about 140 kilometers (87 miles) from the capital, Reykjavik.
Two quakes larger than 4 in magnitude early Monday rocked the crater of Katla, the country’s Met Office said in a statement. That was followed by at least 10 more tremors at the volcano, which rises 1,450 meters (4,757 feet) into the air on the North Atlantic island’s southern coast.
The good news is that the Icelandic Meteorological Office is reporting that so far no tremor is currently recorded currently at Katla, which suggests that at least for the moment, no magma is making its way to the surface. Icelandic officials have not changed the alert status for Katla from normal at this point.
As Bloomberg notes, there were no immediate reports of casualties or damages to property.

This post was published at Zero Hedge on Aug 29, 2016.

The Trouble with Trade

The Flatline Economy
Angry Charts
Two Out of Three
Second Thoughts on Free Trade
Free & Fair
Maine, New York, Montana, and Iceland
‘When goods don’t cross borders, armies will.’
– Frequently attributed to Frdric Bastiat
‘Free trade agreements are trade agreements that don’t stick to trade.’
– Ralph Nader
‘The future has arrived. It’s just not evenly distributed yet.’
– William Gibson, circa 1993 in an interview (original version of the quote)
The political speech-fests are finally over. Republicans and Democrats conducted largely violence-free quadrennial conventions – but not because everyone loves each other. The disdain was palpable, both within and between the two parties.
On one topic, however, both campaigns agree: global free trade has jumped the shark. We haven’t seen this kind of protectionist rhetoric in a long time, at least from major party candidates. Globalization is taking the blame for a wide variety of ills. The trouble with all this dissing of globalization and free trade is that, like some generals, both major political parties are fighting the last war, not the ones we face today and tomorrow. And the Libertarian Party seems to think that the correct philosophy by itself will cure the problems, which it may do in the long run; but philosophy doesn’t pay the bills or create jobs in the short run.

This post was published at Mauldin Economics on JULY 31, 2016.

Wake-Up Call America: Iceland’s New President Has Never Been A Politician

With admiration, many have been observing Iceland’s handling of the banking crisis that jolted the entire world in recent years. Now experiencing a unique economic recovery, the Icelandic public became aware in 2008 that the nation’s private banks had borrowed some $120 billion dollars, ten times the size of Iceland’s economy, creating an economic bubble which forced housing prices to double, and saddled the nation’s people with debt.
While other Western nations initiated bank bailouts in 2008, a popular uprising in Iceland led to a peaceful revolution against corrupt government and banks, and has since become the example for the global movement for liberation from central banking and unaccountable government.
‘In the duration of five months, the main bank of Iceland was nationalized, government officials were forced to resign, the old government was liquidated, and a new government was put in its place.’ [Source] The resolve of Iceland’s people to correct the systemic problems in their government and economy was again demonstrated in 2015 when dozens of high-level financial executives were jailed for their involvement in manipulating Iceland’s financial markets after financial deregulation in 2001.


This post was published at Zero Hedge on Jun 28, 2016.

First the UK, then Scotland … then Texas?

That didn’t take long. Only hours after the final results came in for a British exit from the EU, political leaders in Scotland are talking about renewing their drive to secede from the United Kingdom.
Pointing to the fact that a large majority of Scots voted to remain in the EU, Scottish advocates for independence are now claiming (convincingly) that Scotland is leaving the EU against its will.
Many of us who advocated for Scottish secession in 2014 were, of course fine with Scottish secession at the time. And we’re still fine with it now. Scotland should be free to say good bye and got its own way.
Some opponents of Scottish exit, however, have claimed that Scotland is too small “to go it alone.” Defenders of Scottish independence call this the “too wee, too poor, too stupid” argument.
Even the most rudimentary analysis, however, shows that size is not an issue for Scotland. With an official GDP of approximately 245 billion, Scotland is not too much different from Ireland, Finland, and Denmark. It’s economy is much larger than that of Iceland (16.7 bln) and New Zealand (172 bln).
With a population of 5.3 million, this puts Scotland either similar to or larger than Denmark, Norway, Finland, New Zealand, and Ireland.

This post was published at Ludwig von Mises Institute on 06/24/2016.

Switzerland Withdraws Application To Join EU: Only “Lunatics May Want To Join Now”

Resentment toward the EU hit a new high yesterday when the upper house of the Swiss parliament on Wednesday followed in the footsteps of Iceland, and voted to invalidate its 1992 application to join the European Union, backing an earlier decision by the lower house. The vote comes just a week before Britain decides whether to leave the EU in a referendum. Twenty-seven members of the upper house, the Council of States, voted to cancel Switzerland’s longstanding EU application, versus just 13 senators against. Two abstained the Neue Zrcher Zeitung reported.
Thomas Minder, counsellor for the state of Schaffhausen and an active promoter of the concept of ‘Swissness,’ said he was eager to ‘close the topic fast and painlessly’ as only ‘a few lunatics’ may want to join the EU now, he told the newspaper.
In the aftermath of the vote, Switzerland would give formal notice to the EU to consider its application withdrawn, the country’s foreign minister, Didier Burkhalter, was quoted as saying by Neue Zrcher Zeitung. The original motion was introduced by the conservative Swiss People’s Party MP, Lukas Reimann. It had already received overwhelming support from legislators in the lower house of parliament in March, with 126 National Council deputies voting in favor, and 46 against.

This post was published at Zero Hedge by Tyler Durden – Jun 17, 2016.

Iceland Has Offered Foreign Bondholders A “Choice”: Sell Now, Or Have Cash Impounded Indefinitely

Iceland has had a difficult past few months politically, as its Prime Minister Sigmundur David Gunlaugsson became the first casualty of the Panama Papers.
Economically however, the story is more upbeat, as the country has rebounded since the financial crisis. The Icelandic Krona has stabilized against the Euro, the rate of change in inflation has slowed, and the country has recorded year-over-year growth in GDP each year since 2011.
However, in a shocking turn of events, a law passed on May 22 by Iceland’s parliament is offering the foreign holders of about $2.3 billion worth of krona-denominated bonds a choice of either selling out in June at a below-market exchange rate, or have the money they receive upon maturity be impounded indefinitely in low interest bank accounts. In other words, Iceland is trying to kick out foreign investors.

This post was published at Zero Hedge on 05/28/2016 –.

Iceland’s Biggest Political Party Is Now The “Pirate Party”

Submitted by Michaela Whitton via TheAntiMedia.org,
Iceland’s anti-establishment Pirate Party continues to lead nationwide polls as the most popular choice for the next elections. The party – whose policies include internet freedom, drug decriminalisation, and open democracy – has consistently led the polls for the last year and, as a result, has secured more funding than any of its rivals.
The 2008 financial crisis hit Iceland hard. The following year, the krona was devalued by around 50%, unemployment doubled, and capital controls were introduce. Miraculously, the country rose from the ashes to become one of Europe’s top performers in terms of growth. More recently, the political establishment has been in turmoil since three government ministers were implicated in the global Panama Papers scandal.

This post was published at Zero Hedge on 05/19/2016.