The Latest from Iceland!

The Icesave talks have collapsed (Update: Elaine Byrne is right. They didn’t collapse, they just didn’t come to an agreement prior to the referendum.)  Most likely, negotiations will resume after the referendum gets a resounding no. More positively, Iceland’s economy grew by 3.3% in the last quarter of 2009. This is good news. If indeed it is the case that the difference between Ireland and Iceland is one letter and six months, then we should see an economic recovery here during the summer.

47 replies on “The Latest from Iceland!”

Can somebody clarify for me what has happened to domestic Icelandic depositors and borrowers?

Is it the case that most individuals’ debts are denominated in euros while their income is in local currency?

Is it also the case that they lost any deposits in excess of approx €20K when the banks collapsed?

That was mainly an estonian/latvian phenomenon I think.
Iceland! is as we all know a terrible place. Economic growth, single digit unemployment….i do pity the poor iceland!ic people. No, much better to be here, with ….eh…..hang on….ah…oh, yes…no…..

Surely the continuation of single-digit unemployment, growth etc. is dependent upon getting a favourable deal from the negotiations and putting their IMF money to good use. I mean, they seem to be doing well but let’s not declare them to be geniuses just yet.

Iceland nationalised their banks. The icelandic economy is growing.
By LeniLogic then (b follows a, thus b is caused by a) we should do …..what?

Just browsing around Icelandic statistics, it looks like the value of their currency has roughly halved relative to the euro, while the inflation that followed this only raised nominal prices by about 35% and the nominal cost of labour by something of the order of 10%. I think they may have had a boost to their cost competitiveness.

A simple question.

What is economic growth in Iceland measured in? Dollar? Krona? Or something else that has taken account of the swings in the various currencies values over the past year or so?

And then from that, is it genuine growth or funny numbers, Its a genuine question looking for information.

@Brian Lucey


I like it.

I invented a new word myself yesterday – for some photojournalist friends.


I will get them to do one for this government in the not too distant future I hope.

At least Iceland appears to be coming back from the living dead…. unlike some zombies I know.

@Zhou – “Is it the case that most individuals’ debts are denominated in euros while their income is in local currency?”

I think that’s more Eastern Europe and Baltic states. I recall friends in Hungary and Latvia mentioning this to me. Will undoubtedly cause problems there if not already.


Can somebody clarify for me what has happened to domestic Icelandic depositors and borrowers?

It depends on the nature of the accounts held. I believe with former Glitnir accounts for example some higher yield deposit accounts have lost 85% while others only 15%. Many of these accounts have only recently been unfrozen and on the basis of the experiences of Icelanders I know, I would not be surprised if, on average, most people have lost over 50% of larger deposits. This may go some way to explaining their anger at the current Icesave repayment schedule.

Is it the case that most individuals’ debts are denominated in euros while their income is in local currency?

I believe it may have been common to take out loans denominated in Yen. Icelanders with commitments abroad, i.e. students etc. have been hammered as the exchange rate has gone from about 90 Kronar to the Euro to about 180.

Not knowing the finer details, I would say the Icelanders will be out of the woods before Ireland because they are more straight-talking and focussed on solutions (action), have a better educated population, excellent infrastructure, and a more coherent national identity translating into better civic responsibility.

@Brian Lucey

Iceland nationalised their banks. The icelandic economy is growing.
By LeniLogic then (b follows a, thus b is caused by a) we should do …..what?”

I appreciate your point, but… what does it have to do with Iceland’s long term prospects?

“…what does it have to do with Iceland’s long term prospects?”

That is how we’ll judge this. I tend to be of the view you take your medicine and then move on. Iceland had no choice but to take their medicine and their currency has halved but that has given them a competitiveness boost. You would have thought it hasn’t done them much good in terms of inflation. They’ll all be holidaying at home!

On the other hand we are stuck with the Euro so if we had followed their path we wouldn’t have the competitiveness gain from a devaluing currency. Not sure where we’re going to get our boost from as long as Nama prevents the big propery correction we need – particularly commercial rents.

Meanwhile Iceland are looking to join the EU.

It will make an interesting study in ten years time.

@ Brian Lucey

Eugh….their unemployment went from 1.9% in Sept 08 to 9.1% in Jan 10. Whats that, like a 400% increase? And its still climbing. And this is after a 50% collapse in their currency. And when losts of mortgage borrowing is in EUR. And while Q4 economic growth was positive, wasn’t there overall 2009 economic growth revised down? And with 9.5% base interest rates in ISK?

I dunno, is this really better than here?

@ DE

with or without a 50% currency devaluation which was unavilable to us? Unless you’re suggesting we leave the Euro?

@Bond. Eoin Bond
No I’m not suggesting we leave the €, but it does show it is possible to negotiate with bondholders without being over run by plagues of locusts etc etc…

@ DE

huh? Iceland is currently begging to become part of the EU, at the same time as trying to negotiate a massive loan from (a) the UK/Holland and (b) the IMF, both of these coming after massive loans from Scandinavia, and after somewhat scary negotiations for loans from Russia. It is doing this after a four fold increase in unemployment despite a 100% improvement in relative competitiveness (which caused a similar increase in relative indebtedness for many homeowners). I know its not quite locusts, but i thinks its eminently fair to say that Iceland has fallen far far far more than we have, and is nowhere near to climbing back out of that hole. Im sure Zimababwe has better growht prospects than us too, but…

There may be an issue as to which Icelandic unemployment statistics to trust. The correlation between Iceland’s Labour Force Survey unemployment rate and numbers registered unemployed looks quite iffy. We tend to trust LFS data more in Ireland (we call it QNHS), and if we want to compare like-with-like we should in principle go to their LFS. This shows 9.1% unemployed in Q2 2009, 6.0% in Q3 and 6.7% in Q4.

@ Con

the same “unemployment rate” per your description also went to 1% in 2008, which seems “iffily” low and unprecedented by global standards.

You are, I believe, conflating the live register numbers and the unemployment rate as we would call them in Ireland. Given 400,000 on the live register, you are not going to tell me there is 20% unemployment here?

GDP growth was -5.3% in Iceland in 2009, better than us, but I don’t know if that was in constant currency terms.

Krona mortgages in Iceland are, I believe, index-linked, so inflation is increasing the debt burden even for those without foreign debt.

As someone with savings, I know where I’d rather be. But that is just me. Others will differ.

If you are referring to the Labour Force Survey unemployment rate for Iceland, it didn’t go to 1% in 2008. It went Q1 2.3%; Q2 3.1%; Q3 2.5%; Q4 4.0%.

If you are referring to an estimate of the unemployment rate based on the numbers registered as unemployed, I think perhaps you are reinforcing my point.

im not saying Iceland! is better/worse than Ireland. I am saying….be careful Minister with the comparisons you go with.
Hurt Locker – bloody fantastic intelligent movie….

The talks have not collapsed, they have been “adjourned”. The timing was bad, the timing of the referendum got in the way of an agreement, which will more than likely happen in the next week or two.

“The Government of Iceland has for the last three weeks been engaged in a dialogue with the Governments of the Netherlands and the United Kingdom, hoping for a resolution of the Icesave matter. Discussions to date have been constructive and Iceland is confident that a mutually acceptable solution can be reached. The Icelandic negotations committee returns today from London. Iceland remains committed to a continued dialogue and is hopeful that discussions will resume as early as next week..”

Reference to Slide 11 and the Minister for Finance’s reference to Iceland! was given a half page in the main newspaper here in Iceland today under the title “Rísi upp eins og Íslendingar”.

I don’t speak Icelandic but it sounds like “Icelanders(!) rise up”.

While the compensation of €3.9bn being sought by Britain and the Netherlands gets the headlines, it is seldom mentioned that the assets of Landsbankinn, the parent of the Icesave online bank, are estimated to be worth about 90% of the compensation level, if they are not disposed of in a firesale.

“There is a good probability that the total assets of Landsbankinn will be sufficient to cover the deposits in IceSave,” then Prime Minister Geir Haarde said in early Oct 2008.

Stories of plucky Icelanders resisting being impoverished by the arrogant Brits make better copy than presenting the relevant facts.

Ólafur Ragnar Grímsson, the president of Iceland, remarked to Simon Carswell of the Irish Times, at the World Economic Forum in Davos, Switzerland, last month that the Irish people might be interested in how the devaluation of Iceland’s currency has made the export sector “much more profitable in a matter of weeks.”

“This has been an extremely good year for the fishing sector – – the fishermen are getting higher salaries than ever before,” he said.

The fishing sector is responsible for more than 50% of Iceland’s goods exports while in Ireland, US-owned pharmaceutical and medical device firms have such a role, with a high import content.

Besides, about 90% of Irish goods and services exports are made by foreign-owned firms and the majority of the trade is intra-company.

So devaluationists should find some more credible crutch.

I love the way politicians talk.

Finance Minister Steingrimur Sigfusson: “It is of the utmost importance that we don’t over-interpret whatever message comes out of this”

I suspect there’s only one message coming out of this Minister.

Shouldn’t take long to get the result. You can probably do it by a show of hands over there? 😉

Listening further….. it sounds like they are going to claim the referendum invalid once voting is over, claiming that what is on the ballot paper is no longer the case and the deal being offered to Iceland by UK/Netherlands is different (better) so how can you vote on something that is no longer there? etc. etc.

What’s the difference between Ireland and Iceland? I will tell you if they re-run a referendum after getting a no vote 🙂

From poster BrendanGalway on another forum:

“Q. Whats the difference between Iceland and Ireland?

A. One letter and six m……

Well, if we are being honest…..Vertebrae.”

As poster Mouroux remarks when he opens the discussion FF/PDs/Bankers/Brokers/Bank Investors are doing their best to discredit Iceland in internet discussions and the media:
“Okay, I’m readying myself for a barrage of smart-alex one-liners about how ‘idiotic’ Icelandic voters are, about how they need to ‘get real’, accept the ‘system’, and generally be a good little electorate like Ireland, with the typical sit-down-the-back-of-the-church mentality…”

It reminds me of Minister Lenihan’s dishonourable attempts to get the wolf pack to go after Greece, which also featured furious FF/broker attacks on the “idiocy” of the Greeks. What a wretched country we are that we allow the worst of Ireland to control our public debate – and us.

Latest from Iceland…

Professor Andrew Wawn of the University of Leeds will give a public talk at the National Library of Iceland on Wednesday, March 10, entitled “The English grab with both hands at anything coming from Iceland.”

I suspect that will be well attended!

The mixed-media exhibition “Stripped Away” by Icelandic artists Birgir Snaebjörn Birgisson, Helgi Hjaltalín Eyjólfsson and Helgi Thorgils Fridjónsson opened at the Tintype Gallery in London last week.

For an interesting report on how MP’s debate on radio over there please go to:

For live blogging (in English) on the referendum, go to:

@Elaine Byrne
“Reference to Slide 11 and the Minister for Finance’s reference to Iceland! was given a half page in the main newspaper here in Iceland today under the title “Rísi upp eins og Íslendingar”.

I don’t speak Icelandic but it sounds like “Icelanders(!) rise up”.”
Our MfF is rapidly becoming the international face of bond market tyranny.

Apropos ‘begging’ to join the EU – when I was there during the Summer the distinct impression I got was that that viewpoint was engendered by the EU, the opportunity presenting itself to get EU hands on Icelandic fish…..

The man in the sweater was saying, hold on, what’s the rush? Which I think is the present situation.


On 18,000 votes counted – 98% vote NO – 2% vote YES.

Referendum on NAMA anyone?

@David O’Donnell
I would be surprised if the final result in Iceland is quite so resounding but the message is clear. Ireland should now have a referendum on NAMA but we MUST have a referendum on Anglo/Nationwide. The deliberate slowing down of the Garda Anglo investigation is effectively a cover up. This should be the last smack in the face our establishment ever give us on Anglo/Nationwide. The people must be given the full truth about Anglo/Nationwide immediately and then they must be allowed to decide what to do. Actually that’s too much to expect.

“With half the vote counted 93.6 per cent voted against the plan to reimburse money lost by British and Dutch depositors in the failed Icesave bank when Iceland’s banking sector collapsed in 2008.

Only 1.5 per cent supported the deal, with another 4.8 per cent casting empty or spoilt ballots.

The resounding rejection reflected deep public anger over a deal which critics said would punish taxpayers for the mistakes of bankers and regulators and pile more debts on a country of 320,000 people struggling to rebuild its shattered economy.”

@ David O’Donnell & Oliver Vandt

There won’t be a Referendum.

Cowen, Lenihan and Gormely have sold this country down the drain. A Referendum and a proper investigation of Anglo Irish Bank and Irish Nationwide Building Society would prove it.

This is the man who has had 18 months since the collapse of Lehman Brothers (his favourite touchstone) and now he tells us that he has a “plan” to recapitalise the banks within the next month.

Cowen pledges to reveal bank plan ‘within weeks’

“Mr Cowen stressed the importance of the Government’s plans to restructure the banks next month. And he confirmed that recapitalisation would form part of the overall plan.”

Disgusting. Absolutely disgusting.

€11bn already wasted and another €10bn (?) to go.

Nobody arrested on suspicion of fraudulent accounting. Key individuals pensions off.

No. There won’t be a Referendum. They’re going to protect theirs and what’s theirs.

We get to pay.

Bye bye Democracy. Bye bye Republic.

Welcome debt slavery.

What’s the difference between Iceland and Ireland?

They have democracy. We don’t.

It seems to be the weekend for referendums – one is taking place in Switzerland on a proposal to give animals the constitutional right to be represented in court.

I hope they ‘paws’ for thought before passing that one.

What’s the difference between Ireland and Switzerland?

The number of rich Irish people who live there.

I am very happy that our cousins in Iceland have spoken so clearly!

Those who rely on foisting “cheap” credit on others must occasionally take a loss…. Just increase interest rates in Ireland to make up for it!

Seems like a precedent. Bet someone is now regretting putting the Icelandic nation under such pressure! Early retirement for that incompetent!

@ Greg

Go easy on the victimhood stuff.

As in Ireland, the political class allowed a group of businessmen wreck the economy.

After 13 years as prime minister, David Oddsson became governor of the central bank and after being ousted in 2009 became editor of the country’s only broadsheet newspaper.

It makes Irish cronyism look like small beer.

Bertie Ahern becomes governor of the central bank and then editor of the Irish Times!!

“93 percent of those voters overwhelmingly said “no” in Saturday’s referendum, compared to just 1.6 percent who said “yes.””

eh, isn’t that a lot of spoilt votes in a Yes/No referendum?

And yes, we clearly have no democracy in this country, what a fantastically accurate thing to say, not at all stupid…

@ Bond. Eoin Bond…

Glad you agree.

I’d hate to think that giving €10,000,000,000 to Anglo Irish Bank was the democratice will of the people.

That would be stupid.

@ Greg
“What’s the difference between Iceland and Ireland?

They have democracy. We don’t.”

they have the balls and passion to take on Gov like the French do. Ever seen protests of a proper scale in Ireland? rarely.
And when they are ‘big’, they hardly represent in numbers the real amount of people that back the protest’s motives and desires. The people follow, shout a bit, and then have a few cans down the back of the march and that’s a hard days work done!

Its the irish mentality thats the problem, not so much the democracy…

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