1. The latest writings on the mess that is Iceland: Winston Smith links to the New Yorker article, while here’s a link to a feature in Vanity Fair.
2. nottawa gives us a couple of links to the story of an island in the North Atlantic that feels isolated from its mother.
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The new Icelandic prime minister is the country’s longest serving parliamentarian with previous experience in cabinet.
She’s also openly gay, which is the thing most news media outside Iceland have picked up on.
Like that defines her much better than those first two qualifications.
Johanna Sigurdardottir will lead the country until elections this spring.
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Prime Minister Geir Haarde tendered his resignation after trying to reform a coalition. Elections were scheduled for May.
The protests this past weekend were relatively peaceful (left). Other recent protests ended with police, arrests and tear gas.
The whole thing is reminiscent of the situation in Newfoundland 75 years ago.
In the midst of a financial crisis, workers in St. John’s stormed the country’s parliament and besieged the prime minister, Sir Richard Squires.
A new administration formed under Frederick Alderdice following a general election which Alderdice fought on the pledge to consider placing under the government in the hands of a British-appointed commission.
In 1934, the country’s legislature voted to suspend the country’s constitution as a means of staving off bankruptcy. The government was administered by a commission comprising six commissioners appointed by the United Kingdom.
Responsible government was restored in 1949.
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From the New York Times, a story on the impact Iceland's economy collapse has had on ordinary Icelanders:
In Kopavogur, a suburb of Reykjavik, Ms. Runolfsdottir, the recently fired secretary, said she had worried for some time that Iceland would collapse under the weight of inflated expectations.
“If you drive through Reykjavik, you see all these new houses, and I’ve been thinking for the longest time, ‘Where are we going to get people to live in all these homes?’” she said.
The real estate firm that used to employ Ms. Runolfsdottir built about 800 houses two years ago, she said; only 40 percent have been sold.
By Icelandic law, Ms. Runolfsdottir and other fired employees have three months before they have to leave their jobs. At the end of that period, she will start drawing unemployment benefits.
Meanwhile, her husband’s modest investment in several now-failed Icelandic banks is worthless. “They were encouraging us to buy shares in their firms until the last minute,” she said.
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But no matter how you answer it, the Icelandic crisis is producing some interesting results: Sterling Airlines is filing for bankruptcy. It's part of of Northern Travel Group which also includes Astraeus Airlines.
Astraeus, the company that became embroiled in the St.John's-Gatwick fiasco a couple of years ago, is now out of the charter flight service and instead leases its aircraft to other companies.
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The view of Iceland then, for some. [h/t to Daimnation!]
His outline of how Iceland went from poverty to prosperity in less than two generations is an inspiration to the ambitions of small nations. In Newfoundland, the "Iceland Model" is a Holy Grail for politicians but they have a mental block when it comes to the reality that Newfoundland does not have control over certain economic policy that Iceland, as sovereign state, has and can make "top-level" policy to direct their economy. Fisheries management is only one example. While on the surface, Newfoundland and Iceland may appear to have a lot in common, in reality, they are two different planets. The nationalist minded in Newfoundland eye Iceland doe-eyed as the future Newfoundland never had.
Iceland now.
For the fans of prognostication, the Offal News view in 2007, and for those looking for the Bond-able treatment, you can check out:
Well, one of the costs of Iceland's supposed economic miracle is a currency that is dropping against the Euro. As a result, the Icelandic central bank has raised interests rates to 14.25%. It's been about 15 years since we've seen those kinds of interest rates in Canada.
Investors are keeping a close eye on the Iceland situation since the whole economic tension is coming from a government deficit on current account that is running at 27% of gross domestic product in the third quarter.
To put that in context, that's the equivalent of the provincial government here running a deficit - in a three month period just ended - of around $1.35 billion. That's just in one quarter, and assuming the economic output in the economy right at the moment is about $5.0 billion per quarter.
But anyway, if this little story is right Danny Williams is going to look at how Iceland generates energy since "if it can be done there, it can certainly be done in" Newfoundland and Labrador.
Minor problem.
Iceland happens to sit on some pretty special geological real estate such that they country has active hotsprings and a volcano that's been known to erupt every so often. 87% of the country's heating needs are supplied by geothermal energy. That's heat from the Earth to you and me.
So of course, not everything done there can be done here.
As noted in previous posts on this subject, the syllogism Iceland = Independent = Successful Fishery//Newfoundland=Not Independent=Fisheries Disaster doesn't stand up to closer scrutiny.
The idea of an independent Newfoundland managing the fishery as Iceland rests on a series of unfounded assumptions.
The local nationalists pushed the Iceland thing as hard as they could but events of the last few days have demonstrated unmistakably that their arguments were built on nothing but air.
A bit like the cartoons where the guy winds up running off the end of a cliff, only to find himself a few hundred feet up in the air.
Then he looks down.
Yep.
That's gotta hurt.
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According to bloomberg.com, Moscow is offering the Icelanders A loan of four billion euros to help it get through the current crisis.
If Russia can support its stock market and preserve growth, the current financial crisis represents a chance to demonstrate ``influence in the world economy and the diminishing influence of the U.S,'' said Sergei Markov, an adviser to the Kremlin who is a lawmaker in the ruling United Russia party.
Both Putin, 56, and Medvedev, 43, have criticized the U.S. for spreading financial contagion around the world.
U.S. ``irresponsibility'' led to the global credit squeeze, which may reduce Russian growth to as little as 5.7 percent this year, according to the finance ministry, Putin told a cabinet meeting Oct. 1.
One former bank official is quoted as using the line that Iceland is becoming the little Cuba of the North.
Bit of a stretch, but still a cute line.
If things get tough will the locals here start recalling the pre-Confederation ties between Newfoundland and Tsarist and revolutionary Russia?
Maybe.
But don't mention Trotsky and the Cochrane Hotel.
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1. "Iceland teeters on brink of bankruptcy". (Forbes.com)
LONDON - Iceland is getting closer to becoming the first nation to go bankrupt as a result of the subprime mortgage crisis and resulting squeeze on lending. Late Wednesday afternoon in Europe, Fitch Ratings said it had cut Iceland's long-term sovereign currency issuer default ratings to "BBB-," from "A," putting them firmly in "junk" territory. Moody's also cut Iceland's sovereign rating to "A1," from "Aa1," and said its ratings were on review, according to TradeTheNews.com.
2. "Iceland sinks further into crisis". (ABC7 Chicago)
Today, the government said it was abandoning a plan to nationalize the country's third-largest bank (Glitnir) and is instead putting it into receivership.
Further details at Marketwatch.
3. The Icelandic meltdown jeopardises British citizens who have cash in a British subsidiary of Landesbanki.
More than 300,000 British customers had around £4 billion deposited in Icesave accounts, which until yesterday offered higher rates of interest than British banks.
The UK government last week issued a general guarantee that British account holders will be able to reclaim their money if their financial institution goes bankrupt - but only up to a maximum of £50,000 each.
4. The Icelandic bank collapse will affect the fishery in Atlantic Canada.
"The big impact that people probably are not aware of is that these Icelandic banks, Glitnir and Landesbanki, both those banks (finance) a lot of Atlantic Canadian seafood companies," said the chief executive officer of Black's Harbour-based Cooke Aquaculture Inc. on Tuesday.
"Glitnir has a very small piece of Cooke," he said. "These Icelandic banks they're banking a lot of firms - Clearwater Fine Foods, they're part of the syndication in Connors Brothers, they back the Barrett Group [sic. Perhaps he meant the Barry Group] out of Newfoundland."
So much for the claims Newfoundland and Labrador is protected by a magic bubble.
5. CBC Radio Noon (St. John's, ram audio). Rob Greenwood of the Harris Centre at Memorial University discusses the Icelandic crisis in the context of local proponents of the Iceland model for Newfoundland and Labrador.
Rob gives it a nice try but it must be getting really hard to push the Icelandic model and fanciful notion of "subsidiarity" with any degree of seriousness.
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Odds are you won't hear Newfoundland nationalists speaking too loudly about Iceland these days.
Not so very long ago it was a source of inspiration.
Iceland's prime minister and central bank officials held emergency talks on Sunday to deal with the country's growing economic problems.
That's just the latest effort.
But last week the Icelandic government nationalised Glitnir, one of its largest banks, and a large investment house collapsed. Now Kaupthing, Iceland's largest bank, is the focus of nervous investors, and the Icelandic krona plunged more than 20 per cent against the dollar last week as traders fretted about the implications of the bail-outs.
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