Iceland: Protests of Generated Banking Crisis at Parliament
Today, a few thousand people protested downtown in Reykjavik, Iceland
People nearly surrounded the Parliement bulding. Motorcycles were there in force - and when they were asked to leave the area, they showed the power of the motorbikes, and filled the area with smoke.
Aggresive protesters, put a flag on the building, marked - BONUS - that is the flag of cheap food stores in Iceland owned by Jon More.. Asgeir Johannesson, the owner of the other media in Iceland, Channel 2 ( www.stod2.is )
People are getting very angry at the goverment and the Icelandic central bank
Eggs and tomatos were used to hit the parliament building
According to local news ,no arrests were made.
In the end of the video, people can be heard shouting- Where is Geir - who is the Icelandic Prime Minister.
Protests will be on still next Saturday
http://www.liveleak.com/e/2d9_1226199229
[GVideo]http://www.liveleak.com/e/2d9_1226199229[/GVideo]
Forced into Russia's arms
The run on Kaupthing, prompted by Britain's PM and chancellor, has had far-reaching economic and geopolitical effects
Eirikur Bergmann guardian.co.uk, Tuesday October 14 2008
While most stock exchanges have been climbing in the last two days, after EU leaders' joint effort to save the crumbling banking system was announced on Sunday, the Icelandic stock exchange has almost completely collapsed.
Since it reopened this morning it has fallen 77%.
This extraordinary fall is almost entirely due to the collapse of the three major banks last week. Glitnir, Landsbanki and Kaupthing amounted to more than half of the value of Iceland's stock exchange and they are now worth nothing.
Apart from the three banks and closely related firms, most Icelandic companies are still standing.
Iceland has few good options. The IMF is looking into our loan application and earlier today Icelandic representatives were warmly welcomed in the finance ministry in Moscow. Negotiations are reported to be well under way with the Russian government, which has offered a $5.5bn loan to the Icelandic government. This situation is not something that sits well with most Icelanders. The country has, since its independence in 1944, been committed to western cooperation, both as a founding member of Nato in 1949 and as an participant in the EU internal market after entering into the European Economic Area (EEA) in 1994. We are even fully a participating member in the EU border control scheme, Schengen. Our strongest allies have always been the Nordic states, the UK, the rest of western Europe and, for a while, America. There was a US base here until just two years ago.
Iceland's self-image is tied to western Europe: we like to think of ourselves as the small Atlantic state that links Europe and the US. So it is a major psychological U-turn for most Icelanders to suddenly turn to the east for help – all the way to Moscow, of all places! Yes, we are worried. We obviously ask ourselves why the Kremlin is suddenly offering us help. Of course, we know the gesture is only a calculated strategic move in Russia's geopolitical game. But we are running out of time. Perhaps we use the word "friend" a bit too lightly when we discuss bilateral relationships. As Otto von Bismarck said, nations don't have friends, they have allies. So now it seems we have to rethink our strategies.
And truth be told, we also need to face the fact that our own government is also to blame for getting us into this mess. Interest rates were kept much too high for much too long, encouraging a dangerous inflow of speculators' cash, and the failure to regulate the banks' operations abroad is a sign of utter incompetence on Iceland's part. Icesave's debt in the UK alone would be enough to pay the annual salary of every Icelander.
The irony, however, is that the Russians are offering us an amount close to the sum we lost when Gordon Brown and Alistair Darling's actions prompted the shameful run on Kaupthing early last week. Kaupthing was by far Iceland's largest private firm before the British PM and his chancellor drove it into the ground. I see from a few of the comments that Guardian readers posted on my article yesterday that there is still some misunderstanding about the whole horrible chain of events. The trouble started when two of the three major Icelandic banks had to be nationalised.
The government of Iceland instantly said it would fulfill all its legal obligations regarding Icesave, but that it might need some help to do so, simply because the money was not immediately available.
Then Darling found himself in trouble in an interview with John Humphrys during Radio 4's Today programme. It seems he saw no other way to escape Humphrys' questioning than by attacking Iceland. Then Brown killed off Kaupthing by invoking anti-terror laws.
This did not only have devastating consequences for the whole Icelandic economy, but also for the hundreds of thousands of UK citizens who trusted Kaupthing with their savings
The bankers who got us into this mess are not loved here in Iceland. But we should still keep in mind that while Kaupthing had nothing to do with either Landsbanki or the Icesave accounts, the UK government did not hesitate to prompt a run on the bank. And that is why the Icelandic government is now forced to look to Russia to find help.
[youtube]http://www.youtube.com/watch?v=4P0VAved0x8[/youtube]
October 14, 2008 - Russia helps Iceland to overcome the crisis - Iceland has asked Russia for a loan of around €4 billion to stabilise the country's financial system The talks on the loan are due to start in Moscow on Tuesday
Icelanders in Reykjavik protesting the government's handling of the financial crisis on Oct 8, 2008 The slogan on the shirt worn by the man at right reads "Your bank does not care about you
October 9, 2008 - Iceland is all but officially bankrupt
http://www.iht.com/articles/2008/10/09/ ... cebank.php
October 9, 2008 - UK Gordon Brown to sue Iceland over near £1bn of frozen bank deposits (so much for NATO friendship - more reason for Russia to destroy NATO)
http://www.telegraph.co.uk/finance/fina ... osits.html
Icelandic Shoppers Splurge as Currency Woes Reduce Food Imports
Oct 13 2008 (Bloomberg) -- After a four-year spending spree, Icelanders are flooding the supermarkets one last time, stocking up on food as the collapse of the banking system threatens to cut the island off from imports.
We have had crazy days for a week now,'' said Johannes Smari Oluffsson, manager of the Bonus discount grocery store in Reykjavik's main shopping center. Sales have doubled''.
Bonus, a nationwide chain, has stock at its warehouse for about two weeks.
After that, the shelves will start emptying unless it can get access to foreign currency, the 22-year-old manager said, standing in a walk-in fridge filled with meat products, among the few goods on sale produced locally.
Iceland's foreign currency market has seized up after the three largest banks collapsed and the government abandoned an attempt to peg the exchange rate. Many banks won't trade the krona and suppliers from abroad are demanding payment in advance. The government has asked banks to prioritize foreign currency transactions for essentials such as food, drugs and oil.
The crisis is already hitting clothing retailers.
A short walk from Bonus in the capital's Kringlan shopping center, Ragnhildur Anna Jonsdottir, 38, owner of the Next Plc clothing store, said she can't get any foreign currency to pay for incoming shipments and, even if she could, the exchange rate would be prohibitively high.
We aren't getting new shipments in, as we normally do once a week,'' Jonsdottir said. This is the third week that we haven't had any shipments''.
Bankrupt
Iceland's 320,000 inhabitants have enjoyed four years of economic growth in excess of 4 percent as banks and businesses expanded abroad, buying up companies from brokerages to West Ham United soccer club. Now, the three biggest banks, Kaupthing Bank hf, Landsbanki Island hf and Glitnir Bank hf have collapsed under the weight of about $61 billion in debts, 12 times the size of the economy, according to data compiled by Bloomberg.
The central bank, or Sedlabanki, ditched its attempt to peg the krona to a basket of currencies on Oct. 9, after just two days, citing insufficient support'' in the market. Nordea Bank AB, the biggest Scandinavian lender, said the same day that the krona hadn't been traded on the spot market, while the last quoted price was 340 per euro, compared with 122 a month ago.
There is absolutely no currency in the country today to import,'' said Andres Magnusson, chief executive officer of the Icelandic Federation of Trade and Services in Reykjavik.
"The only way we can solve this problem is to get the IMF into the country''
Imports Dependency
The International Monetary Fund sent a delegation to the island last week. Prime Minister Geir Haarde said on Oct. 9 his country may ask it for money after failing to get the response that we felt that we should be able to get'' from European governments and central banks. The state will also start talks with Russia over a possible 4 billion-euro ($5.5 billion) loan.
Iceland's rugged, treeless terrain, a barren stretch of volcanic rock, geysers and moss, means the country imports most food, other than meat, fish and dairy products.
Magnusson said last week that one of Iceland's largest supermarket chains was unable to get any foreign currency to make purchases abroad and another retailer's electronic payment didn't go through. Iceland will begin to see shortages of regular goods'' by the end of the week if nothing changes, he said.
We are struggling to make the economy survive from hour to hour,'' Magnusson said. There is an enormous amount of capital that wants to get out of the country''.
Sedlabanki told lenders on Oct. 10 that residents who want foreign currency should first prove they need the money for traveling by providing documentation for their trip.
Essential Goods
Wholesalers are demanding that importers pay before any goods are shipped, said Knutur Signarsson, head of the Reykjavik-based Federation of Icelandic Trade.
Under normal circumstances, wholesalers abroad would extend credit for 30 to 90 days, he said
Many of them ask us to pay cash before they send the goods to Iceland,'' Signarsson said.
Because of the situation, Iceland has become a country that no one trusts any longer''
Bogi Thor Siguroddsson, owner of Johan Roenning, an import and retail business which has about 7 billion krona ($71 million) in annual sales, says he's instructed his purchasing managers to only import the core goods, including light bulbs, lamps and electrical cables, they need to serve their customers
It's enough to have the credit crisis,'' he said. Then you have the currency crash.
Unfortunately, we have shown that we can't handle it ourselves''
Food Inflation
Icelanders, whose per capita gross domestic product is the fifth highest in the world, according to the United Nations 2007/2008 Human Development Index, will have to tighten their belts
Shoppers are paying more for the goods they do get.
The cost of fruits and vegetables, nearly all of which are imported, have gone up about 50 percent in recent months, said Steinunn Kristinsdottir, a 33-year-old Reykjavik resident who was leaving the Bonus store with her cart full
This situation really has been a bit troubling for people,'' she said.
They don't know what's going to happen''
To contact the reporter on this story: Chad Thomas in Reykjavik, Iceland, via the Helsinki newsroom at cthomas16@bloomberg.net
http://www.bloomberg.com/apps/news?pid= ... refer=home
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