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03/31/2009 03:59:25 PM · #1 |
I just read a very interesting article in my wife's Vanity Fair magazine. The article, by Michael Lewis, describes Iceland's bizarre banking practices and it's current financial problems. With so many Icelanders here on DPC I'm surprised that no one has even mentioned the issue. Maybe with all the other financial meltdowns going on around the world nobody noticed?
Anyway, here's a link to the Vanity Fair article: Wall Street on the Tundra
Can a country file for bankruptcy? If so, would that be Chapter 11 or Chapter 13? ;D
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03/31/2009 04:18:18 PM · #2 |
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03/31/2009 04:21:56 PM · #3 |
"Iceland was entirely new to his experience: a nation of extremely well-to-do (No. 1 in the United Nations’ 2008 Human Development Index), well-educated, historically rational human beings who had organized themselves to commit one of the single greatest acts of madness in financial history. “You have to understand,” he told me, “Iceland is no longer a country. It is a hedge fund.” (from the Vanity Fair article)
It's an extraordinary story. It brings to mind one of my favorite books of all time, Charles MacKay's Extraordinary Popular Delusions and the Madness of Crowds, a riveting study of human folly. You can read the book online here.
From the preface:
"IN reading the history of nations, we find that, like individuals, they have their whims and their peculiarities; their seasons of excitement and recklessness, when they care not what they do. We find that whole communities suddenly fix their minds upon one object, and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first."
This Icelandic collapse ranks as one of the bizarre stories of recent (or any) history.
R.
Message edited by author 2009-03-31 16:22:36.
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03/31/2009 05:39:40 PM · #4 |
Originally posted by Bear_Music:
"... We find that whole communities suddenly fix their minds upon one object, and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first." |
Not that I want to distort the subject, but hope that doesn't apply to DPC, in particular, and/or photographers, in general... :-P |
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03/31/2009 05:55:57 PM · #5 |
Originally posted by Mick:
Can a country file for bankruptcy? If so, would that be Chapter 11 or Chapter 13? |
Er, neither. They'd go to the IMF and say something along the lines of:
"Hello IMF, we're a bunch of lying idiots who in league with our incompetent bankers has managed to steal hard-earned cash off foreign individuals, organisations and even other countries. Although we had a deposit guarantee scheme we have ignored our international obligations to repay the deposits, but we were clever enough to protect our domestic depositors first so none of those have lost out. Please come and prop us up."
...or something similar. There are a large number of UK institutions which have lost out as well as individuals in places where the extended UK depositor protection scheme doesn't extend, like Jersey. Now these individuals will have a hard retirement having lost their savings. Nice one Iceland! Keep up the good work. |
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03/31/2009 06:13:10 PM · #6 |
it isn't just iceland that screwed us out of a ton of money.
iceland is a semi-unique case in that - as a country is very small, but at the same time became a very large banking system. had some intelligent banker ( outside of iceland ). been compentant enough to recognize that fact - the loss would have been far less.
but NO - all the banking types ( worldwide ) wanted to keep it under the snow ( so to speak ). so they could BANK a lot of cash - all the while knowing the bubble was just that - and going to burst any minute. yet at the same time assuring that their assests were safely invested....
to put it laymans terms - the world financial crisis is due to a few - who convinced a few more - who convinced a few more... etc. - the profits would exceed the risk.
then they sold the risk to us ( laymen ) in legitimate investments - while hiding the risk they undertook.
when the risk started to outweigh the profits ( the loans that were given were REALLY not gonna be paid back ) - things fell apart - and all those involved started crying and begging for help - or just plan bailing.
leaving a bunch of bad math, and worthless property behind.
BTW - to OP - i read a similar article about two months ago in the new york times - or washington post - i forget which.
Message edited by author 2009-03-31 18:21:15.
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04/01/2009 05:58:34 PM · #7 |
Originally posted by Bear_Music:
This Icelandic collapse ranks as one of the bizarre stories of recent (or any) history. |
Yeah, it's totally bizarre! I still don't understand most of it. I've never been an expert on things Icelandic (apparently nobody is), but I never would have pegged them as investment-bankers or financiers. If asked I probably would have said they were best known for their fishing industry. Banking wouldn't even be on my list.
$100 billion in banking losses!!?
$330,000 of debt for every Icelandic man, woman, and child!!?
Holy cow!
I also found it interesting that there are only about 300,000 people in the whole country... and they're all related! That isn't enough to make a decent sized city in the USA. It does explain why they all seem to know each other here on DPC though. :D
And what's the deal with Icelandic males deliberately bashing into people without any apology or explanation? Does that really happen? Would any Icelanders care to explain?
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04/01/2009 06:08:30 PM · #8 |
Sorry... double post.
Message edited by author 2009-04-01 18:09:54. |
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04/01/2009 06:09:01 PM · #9 |
Originally posted by asij:
Originally posted by Mick:
Originally posted by Bear_Music:
This Icelandic collapse ranks as one of the bizarre stories of recent (or any) history. |
I also found it interesting that there are only about 300,000 people in the whole country... and they're all related! That isn't enough to make a decent sized city in the USA. It does explain why they all seem to know each other here on DPC though. :D
And what's the deal with Icelandic males deliberately bashing into people without any apology or explanation? Does that really happen? Would any Icelanders care to explain? |
Maybe you shouldn't believe everything you read on the internet.
It was also in the american news few weeks ago that Iceland is now one of the top 10 dangerous Country´s in the World.
I live downtown ReykjavĂk and am still trying to figure out where the danger is. |
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04/01/2009 06:16:23 PM · #10 |
Originally posted by mikeee:
...or something similar. There are a large number of UK institutions which have lost out as well as individuals in places where the extended UK depositor protection scheme doesn't extend, like Jersey. Now these individuals will have a hard retirement having lost their savings. Nice one Iceland! Keep up the good work. |
Ouch! Bad news all around.
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04/01/2009 06:17:48 PM · #11 |
Originally posted by Mick:
[quote=Bear_Music]
...
$100 billion in banking losses!!?
...
And what's the deal with Icelandic males deliberately bashing into people without any apology or explanation? Does that really happen? Would any Icelanders care to explain? |
Maddoff lost $50 billion single-handed so, I'm not surprised. The joke is on creditors, really. For the Icelanders involved in this, the punishment will be to wake up from this and realize that they have to go back to fishing or aluminium smelting, or even worse, emmigrate to another country, outside the extended family. |
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04/01/2009 06:30:22 PM · #12 |
Originally posted by soup:
it isn't just iceland that screwed us out of a ton of money. |
No, it's not just Iceland, and it isn't just Americans getting the shaft either. It seems the entire world economy was running on greed and corruption. Who'da thunk it? ;D
The way I see it, politics is too important to let professional politicians run the show. The same goes for banking and finance. It's too important to let a bunch of greedy, incompetent fools manage the world's economies. But what do I know?
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04/01/2009 06:34:35 PM · #13 |
Originally posted by asij:
Maybe you shouldn't believe everything you read on the internet. |
I don't understand. Are you saying the whole story is untrue, or just part(s) of it? Could you be more specific?
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04/01/2009 06:38:47 PM · #14 |
I mean its true that Iceland started the global economy situation for example in the US things like General Motors, and UK real estate prices.
I just took my investments out just before the collapse and am now surfing in the Galapagos... :D |
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04/01/2009 06:41:04 PM · #15 |
Originally posted by mikeee:
[quote=Mick]
"Hello IMF, we're a bunch of lying idiots who in league with our incompetent bankers has managed to steal hard-earned cash off foreign individuals, organisations and even other countries. Although we had a deposit guarantee scheme we have ignored our international obligations to repay the deposits, but we were clever enough to protect our domestic depositors first so none of those have lost out. Please come and prop us up."
...or something similar. There are a large number of UK institutions which have lost out as well as individuals in places where the extended UK depositor protection scheme doesn't extend, like Jersey. Now these individuals will have a hard retirement having lost their savings. Nice one Iceland! Keep up the good work. |
OMG Mikee your post makes me sad. How can you be so ignorant? Blaming the bleeding Icelandic nation for the greed of your institutions.
Fucking British bullys, who misused terrorist laws on the peaceful people of Iceland and helped making things worse.
The greed of the bankers here knocked us down, we the ordinary people here in Iceland are shocked by their actions like every day.
Sorry for the misspells, but i dont like my nation being dragged into the dirt more than it already has.
Message edited by author 2009-04-01 18:48:55. |
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04/01/2009 08:35:32 PM · #16 |
Originally posted by mikeee:
"Hello IMF, we're a bunch of lying idiots... |
Where the f**k do you get off calling me and all of my countrymen lying idiots...?
I, and every single one of my friends and family and every person I meet everyday had NOTHING to do with this and are just as pissed or very likely more pissed off at the actions of a handful of individuals who are responsible. I want those guys strung up by their balls. |
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04/01/2009 08:56:23 PM · #17 |
| Absolutely. The last thing we should be doing is blaming the Icelandic people for this mess. They have to suffer everyday already for the actions of a small minority who have acted very badly. |
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04/01/2009 09:08:07 PM · #18 |
I say as Lalli... we here in Iceland got totally Fxxxxd also - we trusted these few persons knew what they were doing!!
The situation here is more than sad... So many people are loosing their homes, jobs, and health because of this...!
Old companies are collapsing, old people loosing their life savings and the rest of us which are not that old have lost so much also, some everything (and I am not only talking about money, this affects people lives in so many ways)...!!! The savings are gone, the loans are way up there and the people "running" Iceland are running in circles...
It is absolutely devastating reading posts where "Iceland" is put to blame... The financial problem is going on all over the world...! It hit us hard and we will be paying for the mistakes of a handful of people for the rest of our lives and so will our children. These few Icelanders did gamble with all of us... (although they probably had help from others)...!
Please believe me when I say that we don´t understand how all this could happen!! How were these few people let to gamble with "Iceland"??? Where does the blame start!! The roots are deep and I don´t believe we will ever know the whole troth...
Sadly, news are not always telling the full story but people should know that this was not something we, the people living in Iceland (at least 99%) of us, knew would happen! And we did not wish for it to happen either!!
The "tops" which put this "stamp" on us - are not even living here anymore! They have taken the rest of "their money" and fled...!
This affects all of us, all the world - and I can only hope that people can stick together through this crisis which is affecting a large part of our world...
Message edited by author 2009-04-01 21:15:07. |
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04/01/2009 10:42:24 PM · #19 |
Originally posted by LalliSig:
Originally posted by mikeee:
"Hello IMF, we're a bunch of lying idiots... |
Where the f**k do you get off calling me and all of my countrymen lying idiots...?
I, and every single one of my friends and family and every person I meet everyday had NOTHING to do with this and are just as pissed or very likely more pissed off at the actions of a handful of individuals who are responsible. I want those guys strung up by their balls. |
Lalli Sig, I apologise if you thought I was calling YOU, as an individual, an idiot or a liar. I was not. I was assuming it was your Govt that would approach the IMF for a bail-out, not every individual. My vitriol was aimed at the politicians the Icelandic voters elected and the financial institutions which failed to understand basic ecomomics, as well as the incompetent regulatory system which failed to regulate its incompetent banking sector.
Originally posted by Asima:
OMG Mikee your post makes me sad. How can you be so ignorant? Blaming the bleeding Icelandic nation for the greed of your institutions.
Fucking British bullys, who misused terrorist laws on the peaceful people of Iceland and helped making things worse. |
Asima, I am surprised that Terror laws were used, but when the Icelandic Finance Minister declared that the Depositor Protection Scheme would not be honoured and British institutions and individuals had substantial sums of money at risk, I guess the British Govt had to do whatever it could to protect its citizens. I don't understand how I was greedy investing in an Icelandic bank. My understanding was that I entered into a protected arrangement with a bank; they would pay me interest on my deposit and I could have it back when I wanted. I believe it was greedy Icelandic banks which ran out of money which caused the Icelandic economy to go into meltdown.
So I'll rephrase my initial sentiment. Icelandic Banks were inept and incompetent to the point of bringing your economy to its knees. FACT. The Icelandic Govt lied to other nations by saying deposits were protected and then saying the opposite. FACT. The Icelandic banking regulatory system was seriously flawed in that it did not spot the problem in the banking sector; its main task. FACT. The IceSave website went off-line in the UK to stop UK depositors withdrawing money while it was still open for Icelanders to remove deposits (from the parent company). FACT.
I do feel sorry for ANY individuals who lost money as a result of the crash, regardless of whether they're Icelandic or not. Had the British Govt reneged on its assurance that my money was safe I'd be equally outraged. So again, I apologise if I have offended any individuals, but my criticism of the banks, regulators and politicians remains and is totally justified.
Message edited by author 2009-04-01 22:45:38. |
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04/01/2009 11:15:49 PM · #20 |
| oh mikeee, you have certainly gone into the left field with this one. You have have managed to piss off a whole country. Not many can say that. |
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04/01/2009 11:18:37 PM · #21 |
New Zealanders suck. There, I said it!
See Mikee, I'm sharing the love around :) |
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04/02/2009 01:45:11 AM · #22 |
What are the Icelanders pissed off about? I have apologised if my original comments were taken to mean that I had anything against Iceland as a country or as individuals. However, as an investor in an Icelandic bank and coming from a country where a lot of institutions were ripped off, and knowing several people who weren't given the post-event protection from the British govt, I reserve the right to criticise the Icelandic govt, banks and regulatory system. In the same way I'd criticise Canon if their guarantee wasn't honoured or British Airways if they left me stranded somewhere.
Originally posted by JulietNN:
oh mikeee, you have certainly gone into the left field with this one. You have have managed to piss off a whole country. Not many can say that. |
ETA: Thanks for the support Lonni, I can't abide antipodeans and as for the non-British Europeans......
Message edited by author 2009-04-02 01:46:13. |
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04/02/2009 05:43:47 AM · #23 |
Originally posted by mikeee:
Lalli Sig, I apologise if you thought I was calling YOU, as an individual, an idiot or a liar. |
Don´t worry about it, it´s just that for the first time in 31 years I am actually ashamed of being from Iceland, all because of the actions of about two dozen guys who are responsible for this. It´s cost my job and the jobs of several friends and family and savings of a lot of people I know. Trust me, the general public of Iceland is very likely more pissed off at the guys responsible than anyone else out there. |
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04/02/2009 06:11:31 AM · #24 |
It takes financial practices in economies greater than Iceland's, even considering its disproportianally large banking sector, to send the shock waves we are witnessing across the globe.
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04/02/2009 10:50:23 AM · #25 |
Originally posted by LalliSig:
Don´t worry about it, it´s just that for the first time in 31 years I am actually ashamed of being from Iceland, all because of the actions of about two dozen guys who are responsible for this. |
Hey Lárus - don't be ashamed of being Icelandic. I come from a country where we have a lot of history to be ashamed of. Apartheid was also the consequence of decisions made by government officials and a minority of the population (though many ordinary [white] citizens benefitted from the government's policies, so they never did anything about it - probably in much the same way that a lot of Icelandic citizens benefitted from the economic boom, so never questioned the banking policies).
The thing is: I cannot change what happened back then. It's done. All I can do now is try to be positive about my country, and contribute in whatever ways I can to make it a better place for us all to live in. It doesn't help for us to be ashamed of our past, rather we must find pride in what we have now. I'm not ashamed to say that I'm a South African - regardless of some of its darker history - because of how special this country is today.
Your country will live with the suffering and hardships brought on by this economic turmoil for many years to come, in much the same way that we live with unemployment problems, lack of education, homelessness and crime that is the legacy of apartheid. And although those problems will serve as reminders of a painful history, you don't have to bear the burden of shame for that past. The only thing that would be shameful is if you didn't make the most of what you have now.
The article that started this whole thread stated that all Iceland had to offer the world was fish. Well, I disagree with that. Ever since I joined DPChallenge (some years ago now), Iceland has been top of the list of places I've wanted to visit. The images that you Lárus, and the other Icelandic photographers, have contributed to this site are phenomenal, and contain some of the prettiest and most unique landscape images I've ever seen.
And that's not an insignificant contribution to the world. The value of the magestic natural beauty of your country cannot be estimated: it's priceless.
So don't be ashamed of being from Iceland. Rather be proud of its rare beauty, and continue to show it off to the rest of us. Your photography will never be able to restore the monetary loss suffered by your countrymen nor the foreigners who invested there, but the beauty you spread through the world by your photography gives us all something that money can't buy. |
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