Sigrún Davíðsdóttir's Icelog

“Greek-save” – an Icelandic deja vu

with 17 comments

From the Icelandic point of view, the decision of president George Papandreou to call a referendum on the EU bailout-deal is a deja vu. The situation is similar: a political leader who has nothing to lose.

Papandreou’s situation is dire. He is leading austerity measures that, understandably, are profoundly unpopular among his countrymen. He seems to have concluded that his best option in a bad situation is a referendum. On what exactly isn’t clear, not easy to formulate the appropriate question. Nor is it clear when the referendum will be held but it will hardly be until January. The EU Greek deal, seen as essential to stabilise and calm the euro-situation is now up in the air.

The situation of a leader in dire strait is well known in Iceland. The president of Iceland doesn’t have the power that his Greek counterpart has but Olafur Ragnar Grimsson was widely unpopular after the collapse of the Icelandic banks since he had been a keen advocate of the Icelandic banks. His decision to call a referendum on Icesave, not once but twice, was widely interpreted as his attempt to regain popularity.

Needless to say, the Euro bailout is in jeopardy. Or, as comments on Citywire today go: ‘What’s wrong with democracy?’ asks one. The prompt answer is: ‘You are just about to find out.’

Follow me on Twitter for running updates.

Written by Sigrún Davídsdóttir

November 1st, 2011 at 2:40 pm

Posted in Iceland

17 Responses to '“Greek-save” – an Icelandic deja vu'

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  1. Sorry, but I fully disagree with the sentence of situations being similar. There are quite some differences between Greece and Iceland and the case to decide:
    A) Greece is part of EU and the rescue package + debt cut agreed some time ago and ongoing is part of negotiating (new) bilateral agreements. This is not to say that Greek bailout is probably against a number of EU treaties and Greek should have restructured two years ago, but until the referendum’s announcement it readily accepted the EU rescue loans for the last two years under certain conditions.
    B) Icesave on the contrary is a legal claim by governments (GB/NL) who helped their people taking unilateral action, later trying to recover their claim based on a legal opinion how a certain regulation should be read. This is the reasons while there was space for negotiating and now Icesave will go to court with a high probability.
    C) This is also the difference in the referendum question: In Greek’s case it is about an ongoing political decision of further EU integration (this is, the long term result – Eurobonds + EU tax) at one price or not with another price (Drachmen again) – thus before a treaty. In Iceland’s case it was about the consequences of applying a treaty and honoring, if existent, this obligation.
    D) Olafur played his game well, knowing the unpopularity of Icesave in Iceland, proving the left/academia elite wrong, doing what the Icelandic government should have done by sending it to court (I only heard one good explanation why they did not do it at that time), but only delayed the final outcome and in case can blame the “biased” decision.
    E) I wonder why nobody questions his (Olafur’s) story telling (see opening of ECPR conference August in Iceland or Poptech appearance in October) of him, the democrat, against the markets – there is no markets involved, but NL and GB.
    F) So it is about a political career but with high differences in both cases.
    G) Democracy would have been to have votes in every EU member state during the ongoing burocratic integration.
    H) The problem with democracy as practiced today is that a decision making process that takes time is difficult to use in a crisis.

    Guest Opinion

    2 Nov 11 at 7:36 pm

  2. Sigrún,
    Commenter ‘Guest Opinion’ is correct in his first paragraph, that the situations between Iceland since autumn 2008 and Greece since whenever are dissimilar, not similar. For a 2008 situation similar to the Greek situation of today look to Lehman Brothers. Lehman Brothers lived (or invested) high and spent lavishly, and then borrowed more to spend (invest) more, leveraging itself from risky to precarious to insane. It built a house of financial cards. When its card-house collapsed it went down with an implosion to nothing except debt for the cards it had built with.This is what Greece did, too.

    Iceland, on the other hand, built up a solid overseas banking structure. The structure has been called a house of cards (or three houses of cards) and when it was collapsed “experts” and reporters who were shills were given great space to shout the banks’ structures were unsound, and others, who knew little or nothing of economics and banking echoed, and were given space to echo, and many who did know, but did not know intimately, and so did not know for sure, were silent, which silence was perceived acquiescence. In this environment the common people, understandably enough, accepted what was noised and reacted as usual, as a mob, and with howls for instant “correction” of the situation, amongst their ideas for “correction” being to hang whoever they were told were perpetrators. Mobs never want to wait the time it takes to investigate, correlate and try, or to wait to see what will collapse and what will stand and show itself solid.

    Others, in the Icelandic banks case specifically Britain, a culpable perpetrator, and Holland, Britain’s partner, sought to take additional advantages, and to push their additional advantages through under the smoke and dust of the confusion the crash Britain, most directly, had caused. This was like attempting to loot after causing a destructive riot.

    Icelanders suffered privations and austerity, but not for their leaders and financiers having leveraged foolishly, but for having their fundamentally conservative (but with some dizzy and carnival structures built on it) economy collapsed upon them. Naturally Icelanders complained, but they dug themselves out and handled their situations while complaining.

    As time has gone by the Icelandic international banks’ remains have remained. In some cases those remains, sold at auctions to new owners carried on business with no changes, functioning successfully for new owners. In other cases the supposedly empty shells, instead of collapsing, have continued to increase in value and to prove, quarter after quarter, more substantial and more solvent, and even able to cover the costs dropped upon them by Britain, with Holland helping, deliberately wrecking them. Thus far frantic efforts by the perpetrators of Iceland’s financial disaster to paint surviving components of the old Icelandic international banking venture as corrupt and engaged in illegal enterprises and swindling have failed to produce anything, except public relations noise and a rising tide of fear of backlash and being found responsible (particularly in now ex-government, in Britain, where Alistair Darling is now trying to pass himself as idiot enough back then to really have believed the Icelandic international banks were what Barclay Capital and others invested in Credit Default Swap insurance against them wanted them, and collapsed them for fear they might collapse, instead of to help swindler investors pull out their insurance-fraud investments).

    Does this sound like the Greek situation? Does it sown like Lehman Brothers? How much is any of Lehman still worth today, after three years? How many of Lehman’s investors can look forward to any return of any kind from their investments in Lehman? Can anyone look at Lehman today and see that it, if not wound up this year would be worth more next, and more yet the next, and could be calculated to ultimately recoup everything? (Landsbanki, put back into the hands of its bankers could even recover. How many failed banks could do that?)

    How much chance is there that Greece’s economy, if left alone, could recover itself and pay back investors? The answer is about as much as of Lehman Brothers, or Bear Stearns, recovering.

    You being literary, you might appreciate a literary analogy. For such a one, read the book “Zorba The Greek”, by Nikos Kazantzakis. You can read Zorba as Greece and the more cautious and practical “repressed” narrator persona as an Icelander. You may recognize then how Greeks may have had more fun the last few years, but Icelanders were in better position to recover from setback, without destroying their national social structures.

    Finally, a word about Iceland’s Referenda and President Ólafur’s invoking them. Both yourself and ‘Guest Opinion’ paint political motives for his invoking the Icelandic law that allows Referenda. In truth, it does not matter why President Ólafur invoked the Referenda. Even if he had had a reason for invoking them more ridiculous than hope for renewed popularity, jealousy of Queen Johanna getting ahead of him in the polls, or to show he was still the old-hand at political maneuvering, as ‘Guest Opinion’ suggests, invoking the Referenda was a fundamentally intelligent thing to do, even if accidentally. It would have been even more important to have done if the vote had gone the other way, if a majority of Icelanders had obligated themselves to live in penury while paying out to Britain and Holland ridiculous sums in “reparation payments” for those nations having wrecked her economy, plus interest at usurious rates (much more than the legal ‘penalty interest’ rates permissible in each country, which penalty rates you you may have noticed specifically stated [with no comment comparing] in Iceland’s EV’s 30 September Supplementary Response to the ESA). With the Referenda Icelanders would have had only each other to look upon as the cause for their suffering then, as the banks whose destruction costs they were committed to paying, and businesses they financed, continued to rack up wealth for their new owners, and the governments, in Britain and Holland. Without the Referenda Icelanders would have had their government to look to, and to blame, as time proved the “Icesave Agreements” what they are, viciously predatory extortion efforts perpetrated incredibly callously by two nations proofed by their efforts to impose those agreements to be vicious bully nations.

    Without the Referenda in that case Iceland’s government would have been thrown down, if it did not collapse for popular non-support. With the Referenda in that case Icelanders would have channeled their anger outward, toward the perpetrators, and remained resigned, for doing it to themselves, at home.

    Icelanders having made the right decisions in both Referenda, they justified Democracy and one of the ultimately democratic of democratic forms. In the process they made President Ólafur a Revolutionary, again, whatever his motives for invoking Icelandic law that provided the Referendum forum. Like it or not, today Iceland’s President Ólafur is up with Ché Guevara, a champion of popular revolución around the world. Referenda will be demanded and invoked for Iceland’s example,in right instances and wrong, by popular demands, and, as in Greece, by leaders trying to dodge a bullet (an economic one in that case).


    7 Nov 11 at 12:42 am

  3. Leaving aside the similarities and differences of the Iceland and Greek (now defunct) referendums, R.L. Dogh makes a case that the Icelandic banks were actually near paragons of virtue, smitten down in part by the dastardly Brits and certainly not like Lehman Brothers or Bear Sterns…..

    So can we have an updated account at this time: what percentage of assets outstanding have been recovered (expect to be recovered) from the 3 Icelandic banks compared to the Lehman brothers? All went bankrupt so the shareholders obviously lost out completely in all cases, but what about depositors and bondholders etc? How many cents in the dollar will finally be paid out? Not sure about the final numbers, but Lehman had $613B assets and $768B in debts when it went bust or around 80cents in the dollar. I may be wrong but I suspect history is being rewritten because there has been no hard numbers provided for the Icelandic banks.


    7 Nov 11 at 7:44 am

  4. R.L. Dough has outdone himself in hysterical ranting.

    We have mobs hanging people no less! And vicious bully nations. And a rising tide of fear of backlash (now there’s an interesting mixed metaphor). And leaders dodging bullets! Heavens above, if he manages to sell the film rights to this script it’s going to be a real action thriller.

    We have a total misunderstanding about why Kaupthing failed. It was because the bank was insolvent. Insolvency occurs at a moment in time – and that moment is when the money runs out. The value of assets and liabilities go up and down, and it is the value of those at a moment when refinancing takes place that determines whether an insitution is insolvent or not. You can’t say two or three years afterwards – “Hey, you see, the value of those assets were – after all – enough to cover the debts!” At the moment that the debts need to be repaid the assets have a certain value that can be realised as cash – their future value may go up or down, but at the moment of failure no one knows. (If we could make financial decisions on the basis of certain knowledge of the FUTURE value of assets we would all be millionaires.) The immediate cause of failure of Kaupthing was an incorrect capital structure – one that relied too heavily on short term debt. If you read the Kaupthing judicial review you will see that quite clearly. The UK authorities demanded increased liquidity to meet the demands of depositors – which is a perfectly normal request for a supervising body to make of a bank it regulates. Kaupthing promised to supply it. They didn’t. The depositors wanted their money back. The bank was insolvent. Period.

    And then Mr Dogh gives us an entire paragraph of rhetorical questions (such questions are always the hiding place of the conspiracy theorist: “Who really believes those fuzzy pictures are proof that man landed on the moon?”).

    Finally, Mr Dogh gives some “scare” quotation marks – the usual refuge of the undergraduate student who can’t make his point in a coolly argued way. So we get “experts” (no need to define who these are, the scare quotation marks are enough) and “correction”. Then we also have “reparation payments”. This last is probably a mistake by Mr Dough: one of the meanings of “reparation” is to make a redress or repayment for something taken illegally. Or does he really mean that the Icelandic authorities took the depositors’ money illegally? (Sorry about that rhetorical question – you slip into them so easily. Don’t you think?)

    “The smoke and dust of the confusion” which led to “attempting to loot after causing a destructive riot”. My goodness, the images that spring to mind. I’m betting on Speilberg making the film.

    Mike (UK Nordic analyst)

    7 Nov 11 at 9:54 pm

  5. D_Boone,
    On the main page of Sigrún’s Icelog count back five (5) headlines from “”Greek-Save” – An Icelandic Deja vu” to headline “Icesave, en route to the EFTA Court?”. Follow the link Sigrún provides in the first line, through the word “answered”. That will take you to a pdf of Iceland’s Epnahags-og Viðskiptaráðunneytid (EV)’s “Government-Response-to-ESA”.

    Although Sigrún seems to dismiss the Response as “matters irrelevant to the ESA opinion” (I suspect she read it hurriedly), it is relevant, both in the ongoing discussion the collapse of the banks initiated in regard to the independence of international banks’ operations and their abilities to operate from bases in small as well as large EEA member nations and to your questions.

    I suggest reading the whole, carefully, but the second section, in regard to “The Landsbanki estate – Payment to Depositors” will provide the most information in regard to what you ask, at least in regard to depositors. The welfare of depositors, not other bank investors, is the purpose of the EFTA legislation the discussion arises from, and so is the central issue. Hence, the Section 2 discussion centers around whose plan for depositor reimbursement produces better result, that of Iceland’s TIF (the Icelandic banks’ private enterprise guarantee Fund), or that of the EEA/EFTA. that the British and Dutch provided the Icelandic banks assistance to comply with timelily (you will notice that the EV, speaking as an Icelandic Government entity references the assistance given by GB and NL to have been to the banks, not the Icelandic government, with any obligation therefrom accruing to TIF, not to Iceland. You will want to notice the EV’s manner in presentation, reporting TIF progress, what the TIF reports to it, the EV, and so on. You may note in reading that the EV notes in passing the Icelandic view that GB and NL and TIF negotiated the depositor-helping agreements and that the Icelandic government only considered guaranteeing and decided it could not, and that the payments to depositors by GB and NL being subsequent to the Icelandic government decline to guarantee were made knowingly without that guarantee. This places the whole “Icesave agreements” matter in private hands [from Iceland’s perspective, NL and GB are governments], which frees Iceland to address the question of “Obligation of Result” as an equal and neutral party [with no axe hanging over it], that is, as an EEA member nation reviewing an interpretation of a provision that has not yet been invoked. This allows Iceland’s address to the question to be objective: What will be the effect IF the ESA advocated interpretation should sometime be applied to some small nation with an industry doing business in other larger nations on a scale average or small in the large nations, but that would be colossal for the small one? Would it be fair to restrict a free enterprise from growing large because its home nation is small?)

    The EV’s Response is really something of a masterpiece. It advances the discussion significantly and in a direction and to points that need resolution. The opportunity to produce the Response was provided by the President of the ESA College making some remarks to the media. The remarks were unnecessary and “imprudent”, as was speaking to the media at all. So why did the President of the ESA College spout off? This is a case like the President of Iceland invoking Iceland’s Referendum Provision. It was a wise thing to do, whatever the real reason may have been, if not the wise reason. It is fairly clear that the ESA opened the case to begin under pressure from GB and NL, who sought to pressure Iceland to accept sovereign obligation for private enterprise debts, which, if allowed, would stifle enterprise development in small and poor nations. That pressure-suit was mooted by recognition that the law required only the payment to the depositors be timely, as Sigrún notes Lee Buchheit noting. So extend its life, with a bit of a fillip now to permit address to a significant issue is an impressive accomplishment by both the ESA (at least its College President) and the EV. The ultimate result should be positive for all in the EEA/EFTA. This turn of address to needed subject makes the EV’s Response a very significant document.


    8 Nov 11 at 3:28 am

  6. Dear R.L. Dogh

    Thanks for the explanation, but all I was hoping for was 2 numbers for each bank: amount of debts outstanding when they went bankrupt and amount of assets (likely to be) recovered.

    I understand in the case of Landsbanki and IceSave they will recover enough to cover the depositors (in Iceland) or the 20K Euro guarantee (IceSave) but what about the bondholders and those with other arrangements?


    8 Nov 11 at 7:21 am

  7. Unfortunately you’ll often see vast reams of text from Dogh that fail to provide any detail.

    Essentially you’ve got it, although the domestic deposits are handled differently to how you suppose. It goes something like this:

    Assets of Landsbanki’s foreign operations
    PLUS: Net of assets/liabilities of Icelandic operations (after write-down)
    EQUALS: Total assets available for distribution.

    Those total assets are enough to cover ALL foreign deposits (i.e. not just the 20k euro deposit guarantee, which puts in context the claims of debt slavery re. Icesave).

    There will be nothing, or near as damn it, left for the bondholders.

    This article mentions $11.4bn as likely being available for distribution from Landsbanki, which tallies with what I remember Lee Buchheit saying was the total Landsbanki depositor liability.

    For the rest:
    “Glitnir bonds are trading at 25 cents on the euro, Kaupthing notes trade at 24 cents on the euro and Landsbanki bondholders can expect to receive 5 cents on the euro, according to the latest prices quoted on the website of Reykjavik-based brokerage H.F. Verdbref.”

    So, yes, your point is well made. A very low return – I thought the Kaupthing one was much better than that. Mind you, I don’t think Lehman’s worked out any better (looks like 20-40%):


    8 Nov 11 at 12:39 pm

  8. D_Boone,
    I apologize for not addressing your specific question directly enough.

    The direct answer is that the two numbers you ask for cannot be supplied. The reason is that the Icelandic banks did not go bankrupt as Lehman Brothers did. The Icelandic banks were thrown into bankruptcy. They were operating successfully when they were knocked down. They were leveraged, as banks always are, and were leveraged within the recognized prudent limit of the time, which limit we recognize today to have been more than prudent for the circumstances that arose, in large part because of the Lehman situation and the CDO and CDS and naked shorting and so forth that was going on. The Icelandic banks had been under attacks, however, in the preceding couple of years and were pulling back to defensible positions. For this they were less leveraged than they had been, but were still extended. Their portfolios were better than most, however, for policies to avoid riskier speculative investments. In the EV Response you may have noticed the assets spread provided on page 4 and the numbers given for classes of assets. Note specifically those for “Equity, derivatives claims…etc.” I presume you recognize the understatement in the EV’s definition of that class of assets as uncertain in quality, and the import of its next statements in regard to the quality of that class in Landsbanki’s portfolio, and can recognize the evidence of the portfolio being conservative.

    Mike(UK Nordic Analyst), in his hasty exposition above, notes the event that caused the Icelandic banks to fail, where he wrote, “The UK authorities demanded increased liquidity to meet the demands of depositors – which is a perfectly normal request for a supervising body to make of a bank it regulates.”, although he ascribes it to have been Kaupthing the increased liquidity was demanded of. It was Landsbanki, and there was more to the business than a request for more liquidity (reduction of leverage in ratio to depositor-provided funding) for insurance for those depositors. There was increase demanded, and then more increase, and other demands as well. The English portions of the Icelandic SIC report provides good reportage of the events. Reading them you have to ignore the opinions and conclusions gratuitously salted in with the evidence information.

    In summary, what the evidence indicates was that landsbanki was being forced to cease banking in Britain through increase of regulatory demands to whatever point it would be unable to comply. At that poinnt Landsbanki, and Icelandic bank, began remmoving itself to Iceland, and Britain’s government moved to stop it moving its British depositor invested capital from Britain to Iceland. The maneuver to block an Icelandic company moving Icelandic company assets involved invoking over-kill measures which either did, or seemed to, brand Iceland, and so all Icelandic enterprises, “terrorist”, which branding made EC members perceive themselves possibly unable to engage economically with Iceland. The stop of all economic interaction with Iceland stopped Kaupthing being able to do business and that caused it to fail to meet obligations and so, technically, fail, though it was not in a bankrupt state any more than Landsbanki was.

    It is for this the failings of Lehman Brothers and Bear Stearns, who both went bankrupt in free-market environments and the Icelandic banks, that went bankrupt for being estopped from normal business they were otherwise able to do and were financially capable of doing, are apples and oranges.

    Banks tend to operate between each other through loans whose contracts stipulate levels of capability and specific performance. Making a bank unable to perform causes contractually specified “calls” to occur on loans otherwise in good standing. Most of Landsbanki’s and Kaupthing’s ‘overweight’ was produced by the circumstances Britain threw them into triggering calls, not by any irresponsibilities of their banking practices, or overweights of naked or synthetic vapor-ware financial product on their books.

    In the aftermath much was speculated, much accused, much assumed, much bruited in the media, but as time passes and the banks’ investments mature in receiverships and vulture-capitalist ownerships the evidence appears to be building that the banks were solid and being well-run. Note that ‘vulture-capitalist’ is not used as a deprecatory term here. It means someone who swoops to pick up spoils, who does not leave good meat to rot.

    The above is as short and quick a summary explanation as I am able to on a moment’s notice provide. The whole situation is complex, with a variety of factors entering. If you pursue a study, to learn the integrations and progressions of causitives and continuations I think you will find them interesting, almost a Saga, if you are familiar with those.


    9 Nov 11 at 3:45 am

  9. @ Dogh
    If every thing were as well run as you suggest, Why would was it necessary for those banks to lend money for their cronies to buy shares in the same bank or the friendly one next door ?
    Don’t tell us there hasn’t be any market manipulation before being branded “terrorist”


    9 Nov 11 at 8:53 am

  10. “Reading them you have to ignore the opinions and conclusions gratuitously salted in with the evidence information.”

    Very funny. That explains why you keep getting basic details wrong. Unsurprisingly, Mike was correct when he said that the UK authorities demanded increased funding be supplied to Kaupthing, as you can see if you do read that Kaupthing judicial review. Top quote – “For my part, I have difficulty in seeing what other decision the Treasury could reasonably have taken in the circumstances.”

    Are you able to evidence these supposed increasing regulatory demands made of Landsbanki? Presumably you mean by the Icelandic regulators as the whole Icesave mess arose because of regulation of branches by the home state and not the host.

    Alda has posted a timely video that addresses some of your Landsbanki fantasy. It was made and shown on the 7th Oct, before the Landsbanki Freezing Order on the 8th. That is not the speech of a man talking about a functioning bank.


    9 Nov 11 at 9:16 pm

  11. My intended irony in my blog on Greece was probably not clear. I do realise that the Icelandic situation is in most ways different from the Greek one. There was just this little bit about a referendum to save or circumvent a difficult political situation.

    Interesting that this discussion has then veered towards the sustainability and sanity of the Icelandic banks. With the SIC report in hand, it’s fair to say already in early 2008, their capital had evaporated. All three banks tried to save themselves with creative accounting and creative sale of own shares by lending chosen customers to buy them.

    Icelandic authorities had no idea what to do and how to react. In the end, the British authorities stepped in. Horrified at what they saw and with no cooperation from Icelandic authorities (Icelandic authorities thought the FSA was being unfairly heavy handed with the Icelandic banks) the UK did what needed to be done and put an end to the banks’ operations.

    The grand question is if this was all purely unethical (ia screwing small investors and pension funds, rewarding big shareholders and favoured clients who are still profitting from their favourable deals) – or if there was fraud involved. Ask any Icelander and he/she (unless connected to the banks in some way) will tell you that for sure there was fraud going on in the banks. How well the Special Prosecutor manages to come to grips with the alleged fraud remains to be seen.

  12. I agree 100,000% with foreigner Dough’s numerous wordy assertions! Given the time, I’d read them all. That aside, there are not enough zeros to quantify my endorsement of his keenly complex, borderline-rational reasoning. My friends, how much longer must Iceland’s banking sector tolerate your vile slanders? Are you moved by envy? Yes. it is obvious. Consider this then…

    How many Englishmen have won Miss World? How many Dutch women Strongest Man? I tell you, I have witnessed Olafur Ragnar Grimsson bench-press his own weight in vodka. Can Gordon Brown do the same? No. I think not. Enough. I’ve said enough. I’ll not be drawn into hypothetical arguments.

    Accept that we are your moral, cultural, and financial superiors. Pay us back our money. Then maybe we’ll write nice posts.



    10 Nov 11 at 12:14 am

  13. Goupil,
    I would not think to tell you there was not market manipulation in 2007 and ‘8 and years before. It continues now after. A large number of people profit from the manipulations. They are, however, destructive to capitallism (the real thing, not the casino type, which is exploitationism) and honest regulators attempt to curb and control the manipulations. You might have heard talk of curbing short-selling, and especially naked shortselling. Both shortselling (borrowing from a broker and selling shares belonging to another, without the other knowing) and naked shortselling (selling ‘punted’ shares,, which exist as betting markers only) can be manipulated to drive real share values down. Real share values must be kept up against the manipulation, and the way that is done is selling some at normal market value after a manipulator has sold, or “sold”, lower to drive value down. The company and the shortseller do the same thing, sell shares to manipulate the market. What makes one wrong and one right is the purpose: One is predatory, one is defensive. Shares traded in small markets, like Iceland, are especially susceptible to shorting manipulation, because few shares are traded in the small market. Thus, to make counter-deals friends, who can be trusted, are enlisted to buy, and, since they do not need extra shares, may be lent money and or guaranteed against loss, since they are only helping, not really speculating.

    For more and fuller explanation google short selling and naked short selling. For an easy introduction to the present situation, see and and follow the links from those. For a step up, more difficult reading, visit zero_hedge at

    There was a lot of manipulation going on against the Icelandic banks, because they were fat and healthy and with small share market bases and so prime targets for predators. They, in fact, did fairly masterful jobs of fending the predators off. They did have some able assistants on their side, some of whom Sigrún has written of being investigated by the British authorities, who, significantly, walked away, arranging for non-disclosure, which usually means something worried them.

    I anticipate seeing some lawsuits, and from those we will learn more.

    One always cringes when one sees “investigators” spewing opinion into their investigation result reports, if one investigates, or analyzes investigation data. It is not funny, it is incompetent.

    The regulatory leaning on Landsbanki was by the FSA, which is British. They also demanded Landsbanki split, which split would have made two parts both smaller than loans made to Landsbanki by other banks required them to be to carry the loan (to avoid anyone selling down and leaving a tiny shell holding a giant loan) So Landsbanki could not split and could not comply with other FSA demands and remain viable, or set aside the increased and increased again liquidity amount. At least without taking a lot more deposits, which the FSA was not allowing. Read the SIC report Data. The information is there under the garnish of amateur analysis.

    Incidentally, Landsbanki bonds at a one in twenty rate I would advise picking up, if anyone is selling. As I advised Landsbanki depositors to hold onto deposits, if they could, and did not need the money immediately.

    My apologies to all I may offend.

    Sigrún, thank you for the space, and stimulation of discussion.

    As with an Icelandic Saga, the whole story is really good enough that wading into and sorting out all the complex connections is really worth taking the trouble to do.


    10 Nov 11 at 3:47 am

  14. @Dogh. Specifics please – if you can’t document it, it becomes some weird theory that only you can appreciate. For the record, I believe you are 100% incorrect on the 3 points below. I’d be happy for you to show that I’m wrong. Surprised as well, as no one else, including strong supporters (post crash) of the Icelandic banks, has claimed this was the case.

    >The regulatory leaning on Landsbanki was by the FSA, which is British.


    >They also demanded Landsbanki split


    >At least without taking a lot more deposits, which the FSA was not allowing.



    11 Nov 11 at 5:59 pm

  15. Bromley86,
    I don’t think I can, or could, provide you what you ask, which is citations satisfactory to you. I do not accept data in citation blocks, meaning I do not adopt the thoughts and convictions of others as they may present them. I critique the content in any citation and assess the quality and weigh the value for myself. I expect others to do the same. For this, when I present data I do not present beliefs I have adopted and anticipate others to adopt with me, and whoever I adopted from (whose citations I accepted on his or his employer’s authority). Instead, I present informational evidence for a receiver to analyze in turn, to apply his own logic to and conclude from in his or her own turn. Thus I present what you find “vast reams of text” That these seem to you to ” fail to provide any detail” appears to be for your expecting conclusive pronouncements upon cited authorities’ authorities.

    For example of this abyss of difference between our approaches to information, consider your citation of a British court’s finding in a consideration of a question carried to it by Kaupthing: I would cite that, your citation, to you as an authoritative citation providing all of the evidence you ask for in all three of your queries. I would add only my recommendation that you calendar all of the events the court references, and with those calendar other events occurring then, to create a historical time-line. If you read, or re-read, the statement by the court you will find that it leaves a good deal out, pays no attention to surrounding events, or their influences, and pays little, if any, attention to exacerbations sequencings could produce.

    There is also another element, that I recognize British courts fundamentally corrupt (American ones are, too, and for the same reason, assumption of judiciary authority to ‘make law’), which I assume you do not share with me.

    I will provide you two more cites here, the second of which I provided earler:
    The fundamental conditions referenced by the two writers that they both agree on would not exist if courts were not corrupt and regulatory authorities were checked, as must occur to maintain civil systems and civilizations.

    You have to dig into the ponds and bring up bits for yourself and do your own analyses. Otherwise you simply fall in with a ‘church’ and follow the dogma.



    13 Nov 11 at 1:49 am

  16. Ah, what I said on the weird theory then. You forget Dogh that I saw you put forward the same opinion when you said you were repeating what your “banker” said. It was ridiculous then and is the same now.


    15 Nov 11 at 10:02 pm

  17. My apologies, Bromley86, I answered in terms of Kaupthing and the Queen’s High Court’s synthesis of the Kaupthing Singer and Friedlander evidences. You asked in regard to Landsanki. The easily accessible Landsbanki evidence is in the SIC report. I have not looked at the SIC reports for some time and don’t know when I will have time, but I will try to at some point, and make notes.

    As I recall, the specifically relevant passages showed Oddsson, representing Seðlabanki, attempting with the Landsbanki people to figure out how the FSA’s concurrent demands, that Landsbanki, itself, cease taking deposits, that it divide its assets with its Heritage affiliate, including in which was to be transfer of its deposit books and deposit-taking business to Heritage, and the increasing increases in reserve capitalization, could be met, and realizing, at last, that they could not. Two insurmountable problems recognized were that the division of Landsbanki assets would trigger margin calls per loan agreements with other banks (one of which, I beleive, was Deutchebank), which contracts required Landsbanki remain over a minimum size. Playing into the consideration, as I recall, was information supplied by consultants and experience in the British market that British savers trusted “Icelandic” bank names and distrusted “British” ones, wherefore informing “Icesave” savers that their accounts were no longer “Icesave”, but “Heritage” was recognized likely to result in significan numbers closing their accounts. Exactly opposite what was needed by Landsbanki, and, ostensibly, opposite what the FSA wanted (unless the FSA wanted to force Landsbanki to fail or have to withdraw from Britain).

    My banker, who drew my interest to these matters, has followed his interests on to other (current) banking events. He refers to the events of 2008 as “ancient history”. The “zerohedge” url re ‘financial cancer’ covers much of his current area of focus. To sort through the laundry-list of, sifting meaning from the financial-sector jargon to define the financial manipulation and fraud techniques referred to, is a job all in itself. At least it is for me.

    The interest in the legal elements and events, and their political ramifications, that you see in what I have written recently is my own. This is my area of interest, or one of mine.

    In conjunction with this interest I am recommending reading, or re-reading, of “Njála”, “Njal’s Saga”. It chronicles a breakdown of civil structures, and civilization, brought on by focus being turned from just and equitable resolutions of differences to clever lawyering, trickeries and technical manipulations. To finessing the law to win technical advantages. This leaving the legitimate purposes for legal processes unfulfilled generates frustrations and angers, to compound those of the disputes to begin, and, of course, violence erupts. “Njála” is all about people being fiddled and swindled, their grievances ignored or shunted by tricks off the track to civil and civilized resolution, and about their throwing civility to the wind in the end and turning to burning and slaughtering to even scores.

    Manipulation of law and finessing, abusing powers of authorities to eliminate competition is what the SIC report and the EWHC records document. They show Her Majesty’s Treasury, FSA, Brown government and High Court of England and Wales engaging in. The Kaupthing v. Treasury EWHC decision record, for example, documents how KSF, a British Bank owned by Kaupthing shareholders (many of them British), was treated as an Icelandic, not British, entity by the FSA and Treasury. KSF Edge acount savers’ accounts, you will read it evidenced were never taken in hand by BofE, but were, instead, caromed off BofE by HM Treasury and dropped into ING, NV’s pocket. How, really was British saver confidence in Britain’s financial stability served by British savers’ Sterling deposits in British branches of British bank KSF’s Edge being thrown to a Dutch bank, out of Britain? And, the “bank-shot” was done all between 1230 hours and 1600 hours, at which time the accomplishment was reported to Parliament, complete with a fully prepped and professional Memo, indicating the whole plan had been worked out, OK’d and authorized in advance, by both British and Dutch parties. Moving the Edge Book to BofE for ‘depositor security’ could have been deemed to enhance depositor confidence in the financial system. Shunting British depositors’ British and Sterling deposits out of Britain and out of Sterling destroyed all illusion of that. Yet two High Court judges rubber-stamped without an askance glance to see ’round the blinders they, themselves, had donned.)

    I apoligize for the length, but here you have some specifics.


    16 Nov 11 at 3:51 am

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