Comments on: "The first casualty of the crisis: Iceland" http://www.nakedcapitalism.com/2008/11/first-casualty-of-crisis-iceland.html Sun, 22 Nov 2009 20:56:49 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2008/11/first-casualty-of-crisis-iceland.html#comment-25478 Anonymous Wed, 12 Nov 2008 23:56:00 +0000 http://www.nakedcapitalism.com/2008/11/the-first-casualty-of-the-crisis-iceland/#comment-25478 I've been thinking now may be a good time to retire in Iceland. Prices are going down, and they have those lovely views. I’ve been thinking now may be a good time to retire in Iceland. Prices are going down, and they have those lovely views.

]]> By: Boomer http://www.nakedcapitalism.com/2008/11/first-casualty-of-crisis-iceland.html#comment-25476 Boomer Wed, 12 Nov 2008 23:43:00 +0000 http://www.nakedcapitalism.com/2008/11/the-first-casualty-of-the-crisis-iceland/#comment-25476 I suppose Iceland could dissolve it's gov't and ask Denmark to take them back. Then the entity that owes the money to the British and Dutch would no longer exist. <br/><br/>In such circumstances, what could the creditors do? Invade? I suppose Iceland could dissolve it’s gov’t and ask Denmark to take them back. Then the entity that owes the money to the British and Dutch would no longer exist.

In such circumstances, what could the creditors do? Invade?

]]> By: luther http://www.nakedcapitalism.com/2008/11/first-casualty-of-crisis-iceland.html#comment-25471 luther Wed, 12 Nov 2008 21:16:00 +0000 http://www.nakedcapitalism.com/2008/11/the-first-casualty-of-the-crisis-iceland/#comment-25471 "There is a middle ground."<br/><br/>here hear. this whole left/right paradigm is something that needs to be transcended if we all want to move forward with as much freedom, liberty & dignity as possible i/m/h/o.<br/><br/>it's a false prison...a noble lie. "There is a middle ground."

here hear. this whole left/right paradigm is something that needs to be transcended if we all want to move forward with as much freedom, liberty & dignity as possible i/m/h/o.

it's a false prison…a noble lie.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/11/first-casualty-of-crisis-iceland.html#comment-25465 Anonymous Wed, 12 Nov 2008 20:05:00 +0000 http://www.nakedcapitalism.com/2008/11/the-first-casualty-of-the-crisis-iceland/#comment-25465 Regarding the Horowitz link provided by Glory's List, I can't believe how many people want to believe they are not idealogues when they are clearly idealogues. Let me first state that I'm a measured libertarian centrist, and the Road to Serfdom is one of my favorite books. But at the same time, Hayek was no knee-jerk anti-regulation maverick. He was against state control of industry, real socialism, not the use of the state to control obvious market failures like externalities, misaligned incentives and asymmetric information. Why on earth would Horowitz title a piece against corporatism an open letter to the *left*? How in the world can he still see liberty as a left/right issue after what has happened in this country over the last 30 years? Has he read the Republican platform? I currently vote against the conservative establishment exactly *because* I have libertarian inclinations. While (in my opinion) he correctly states that corporatism is the most important issue, I have no idea why he thinks his letter needs to be addressed to the "left." Corporatism is the result of the right's policies in the country. The government did not shrink under Reagan or either Bush I or II. These are provable facts. Instead, there was a shift away from using government to protect the poor and to protect labor, and there was a shift toward using the government to protect the high wage earners and those with capital (i.e., regulation specifically geared toward thwarting competition rather than encouraging competition...my WWHS? What Would Hayek Say?). Despite all the enormous amount of rhetoric on the right, there was no reduction in regulation. Regulation was just used for other purposes, mostly to perpetuate the riches and the power of the rich and powerful. We've had a de facto plutocracy the last 8 years. So stop telling me and everyone else that "regulation" is bad. There are market failures. Regulation can limit those market failures. Just because sometimes the attempt to control a market failure backfires is not sufficient proof that we should never attempt to deal with market failures. I want taxes to be as low as possible, and I would like to have as much freedom as possible, but that does not mean that I think "regulation" is always bad. Try to attune yourself more to the subtleties of the world. There is a middle ground. Regarding the Horowitz link provided by Glory’s List, I can’t believe how many people want to believe they are not idealogues when they are clearly idealogues. Let me first state that I’m a measured libertarian centrist, and the Road to Serfdom is one of my favorite books. But at the same time, Hayek was no knee-jerk anti-regulation maverick. He was against state control of industry, real socialism, not the use of the state to control obvious market failures like externalities, misaligned incentives and asymmetric information. Why on earth would Horowitz title a piece against corporatism an open letter to the *left*? How in the world can he still see liberty as a left/right issue after what has happened in this country over the last 30 years? Has he read the Republican platform? I currently vote against the conservative establishment exactly *because* I have libertarian inclinations. While (in my opinion) he correctly states that corporatism is the most important issue, I have no idea why he thinks his letter needs to be addressed to the “left.” Corporatism is the result of the right’s policies in the country. The government did not shrink under Reagan or either Bush I or II. These are provable facts. Instead, there was a shift away from using government to protect the poor and to protect labor, and there was a shift toward using the government to protect the high wage earners and those with capital (i.e., regulation specifically geared toward thwarting competition rather than encouraging competition…my WWHS? What Would Hayek Say?). Despite all the enormous amount of rhetoric on the right, there was no reduction in regulation. Regulation was just used for other purposes, mostly to perpetuate the riches and the power of the rich and powerful. We’ve had a de facto plutocracy the last 8 years. So stop telling me and everyone else that “regulation” is bad. There are market failures. Regulation can limit those market failures. Just because sometimes the attempt to control a market failure backfires is not sufficient proof that we should never attempt to deal with market failures. I want taxes to be as low as possible, and I would like to have as much freedom as possible, but that does not mean that I think “regulation” is always bad. Try to attune yourself more to the subtleties of the world. There is a middle ground.

]]> By: Mara http://www.nakedcapitalism.com/2008/11/first-casualty-of-crisis-iceland.html#comment-25464 Mara Wed, 12 Nov 2008 20:00:00 +0000 http://www.nakedcapitalism.com/2008/11/the-first-casualty-of-the-crisis-iceland/#comment-25464 I suppose this is the moral of actually producing something useful as your primary means of sustenance. Looking for hot money flows, like prostitution, is not a good long term activity, tho it may seem very remunerative for a while.<br/>As for Britain and Holland being up in arms, I'm not particularly sympathetic. If you're getting "too good to be true" int rates, there's a good chance that they are also too good to last. Plus I feel that once you (the depositor) send your money out of the country, all of the laws, safety and guarantees you're used to are out the window, regardless of UK regulators OK'ing it.<br/>Inevitably folks tasked with keeping up outrageous returns (and the fees that go with them) will fudge the stats, camouflage holes and otherwise lie, cheat and steal to keep the party going. No one wants to hear that they're too old, too fat or that their investments aren't making it like they used to. I suppose this is the moral of actually producing something useful as your primary means of sustenance. Looking for hot money flows, like prostitution, is not a good long term activity, tho it may seem very remunerative for a while.
As for Britain and Holland being up in arms, I’m not particularly sympathetic. If you’re getting “too good to be true” int rates, there’s a good chance that they are also too good to last. Plus I feel that once you (the depositor) send your money out of the country, all of the laws, safety and guarantees you’re used to are out the window, regardless of UK regulators OK’ing it.
Inevitably folks tasked with keeping up outrageous returns (and the fees that go with them) will fudge the stats, camouflage holes and otherwise lie, cheat and steal to keep the party going. No one wants to hear that they’re too old, too fat or that their investments aren’t making it like they used to.

]]> By: Peter T http://www.nakedcapitalism.com/2008/11/first-casualty-of-crisis-iceland.html#comment-25463 Peter T Wed, 12 Nov 2008 19:56:00 +0000 http://www.nakedcapitalism.com/2008/11/the-first-casualty-of-the-crisis-iceland/#comment-25463 Glory's List:<br/>> The lesson seems to be: yes, markets fail -- but governments fail more, and bigger.<br/><br/>In Germany, definitely: Some commercial German banks got greedy and burnt themselves, but the biggest losses are with the banks that are sponsored by the government, Landesbanken and KfW. Their bosses are most often politically connected through patronage. Glory's List:
> The lesson seems to be: yes, markets fail — but governments fail more, and bigger.

In Germany, definitely: Some commercial German banks got greedy and burnt themselves, but the biggest losses are with the banks that are sponsored by the government, Landesbanken and KfW. Their bosses are most often politically connected through patronage.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/11/first-casualty-of-crisis-iceland.html#comment-25462 Anonymous Wed, 12 Nov 2008 19:30:00 +0000 http://www.nakedcapitalism.com/2008/11/the-first-casualty-of-the-crisis-iceland/#comment-25462 "What will be the destination of the30% of Icelanders wishing to migrate?"<br/>Scandinavia is probably the primary choice. Normally the UK would be the second choice but I have a feeling Icelanders are thinking anywhere but there. <br/><br/>This whole sorry episode reminds me of something Jared Diamond wrote in Collapse. Iceland underwent terrible ecological damage during it's first centuries of habitation. After that the Icelanders became incredibly conservative, preferring poverty over new ideas and inventions because in their fragile environment most changes only made matters worse. Can't help but look at these events and see yet another bright idea inflicting terrible pain on their island home. “What will be the destination of the30% of Icelanders wishing to migrate?”
Scandinavia is probably the primary choice. Normally the UK would be the second choice but I have a feeling Icelanders are thinking anywhere but there.

This whole sorry episode reminds me of something Jared Diamond wrote in Collapse. Iceland underwent terrible ecological damage during it’s first centuries of habitation. After that the Icelanders became incredibly conservative, preferring poverty over new ideas and inventions because in their fragile environment most changes only made matters worse. Can’t help but look at these events and see yet another bright idea inflicting terrible pain on their island home.

]]> By: Simon http://www.nakedcapitalism.com/2008/11/first-casualty-of-crisis-iceland.html#comment-25457 Simon Wed, 12 Nov 2008 18:13:00 +0000 http://www.nakedcapitalism.com/2008/11/the-first-casualty-of-the-crisis-iceland/#comment-25457 I think we'll see a lot of sovereign defaults in the future, and eventually it will dawn on people that sovereign default isn't such a bad thing. It was bad in Argentina only because Argentina didn't take advantage of the default to clear out old bad policies and create new good policies. Instead, they kept most of the old bad policies and then added some more new bad policies. Iceland could do a lot better than this.<br/><br/>Widespread sovereign default would lead to widespread distrust of government debt, especially by foreign creditors, which would in turn reign in government debt expansion--not a bad thing, in my opinion. I think we’ll see a lot of sovereign defaults in the future, and eventually it will dawn on people that sovereign default isn’t such a bad thing. It was bad in Argentina only because Argentina didn’t take advantage of the default to clear out old bad policies and create new good policies. Instead, they kept most of the old bad policies and then added some more new bad policies. Iceland could do a lot better than this.

Widespread sovereign default would lead to widespread distrust of government debt, especially by foreign creditors, which would in turn reign in government debt expansion–not a bad thing, in my opinion.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/11/first-casualty-of-crisis-iceland.html#comment-25454 Anonymous Wed, 12 Nov 2008 17:32:00 +0000 http://www.nakedcapitalism.com/2008/11/the-first-casualty-of-the-crisis-iceland/#comment-25454 I was going to post a comment that the Icelandic banks were for all intents and purposes Hedge Funds. Then I thought naaawwww, that's a stretch. I decided to do a quick scan of the Buiter and Siebert report to see what the resolution might be. Lo and behold there it was : "Iceland has indeed<br/>become a highly leveraged financial institution with<br/>massive asset-liability mismatch . a 'hedge fund'...."<br/><br/>There's more. Iceland banks had a teeny exposure to Mortgage backed securities. Their downfall was because they were offering extremely high interest rates to investors and attracted deposits from primarily the UK and Netherlands equal to 100% of their GDP. Their artificial exchange rate added fuel to the fire, or is that pyre. This simply proves that the basis of the worlds economic crises is not mortgages, it is leverage. I was going to post a comment that the Icelandic banks were for all intents and purposes Hedge Funds. Then I thought naaawwww, that’s a stretch. I decided to do a quick scan of the Buiter and Siebert report to see what the resolution might be. Lo and behold there it was : “Iceland has indeed
become a highly leveraged financial institution with
massive asset-liability mismatch . a ‘hedge fund’….”

There’s more. Iceland banks had a teeny exposure to Mortgage backed securities. Their downfall was because they were offering extremely high interest rates to investors and attracted deposits from primarily the UK and Netherlands equal to 100% of their GDP. Their artificial exchange rate added fuel to the fire, or is that pyre. This simply proves that the basis of the worlds economic crises is not mortgages, it is leverage.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/11/first-casualty-of-crisis-iceland.html#comment-25449 Anonymous Wed, 12 Nov 2008 17:11:00 +0000 http://www.nakedcapitalism.com/2008/11/the-first-casualty-of-the-crisis-iceland/#comment-25449 We don't trust you so we label you combatants. A financial war and nary a shot was fired. <br/><br/>Interesting when the slaves flee the ship, who pays the bills or the loss in this case?<br/><br/>Some argue that Germany's reparations were the direct cause of the Great Depression. This default is even worse.<br/><br/>Start printing Iceland, it's your only hope. We don’t trust you so we label you combatants. A financial war and nary a shot was fired.

Interesting when the slaves flee the ship, who pays the bills or the loss in this case?

Some argue that Germany’s reparations were the direct cause of the Great Depression. This default is even worse.

Start printing Iceland, it’s your only hope.

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