

Icelandic logic behind the meltdown  - wave
http://www.vanityfair.com/politics/features/2009/04/iceland200904?printable=true&currentPage=all

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vidar
I am Icelandic, living in Iceland so I know a thing or two about the
situation. The article has some simplifications obviously but the overall
picture is pretty much as he describes.

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jimbokun
If it is true that Icelandic males are over educated (for local industries)
and aggressive risk takers, maybe software startups would have been a better
outlet for them? Focus that aggression on being ramen profitable, instead of
risking huge sums on assets you don't understand. At least then you have risk
taking focused in a way that does not risk national solvency. (I suppose this
advice would have also been good for Wall Street quants.)

What other economic activities would be a good fit for an educated population
willing to take risks?

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joe_the_user
Uh, Wall Street did a excellent job at screwing at being Wall Street. Why do
we have to blame some special Nordic trait for Iceland screwing up at being
Wall Street?

~~~
jimbokun
"(I suppose this advice would have also been good for Wall Street quants.)"

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ocskills
"You have a dog, and I have a cat. We agree that they are each worth a billion
dollars. You sell me the dog for a billion, and I sell you the cat for a
billion. Now we are no longer pet owners, but Icelandic banks, with a billion
dollars in new assets."

What a wonderfully simple explanation of mark-to-market!

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Eliezer
Summary: Silly, foolish, naive young Icelanders who obviously couldn't play in
the big leagues with the trained financial professionals, lost billions and
billions of dollars loaned to them by... um...

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jibiki
Michael Lewis is kind of famous for saying that those trained financial
professionals don't actually know what they are doing.

<http://en.wikipedia.org/wiki/Liar%27s_Poker>

But yeah, your point is good. Iceland could yet end up a net winner from its
financial dealings, depending on what their creditors decide to forgive.
Certainly those creditors will end up net losers no matter what.

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dpapathanasiou
" _Iceland instantly became the only nation on earth that Americans could
point to and say, 'Well, at least we didn’t do that.'_ "

I'm not sure if that makes me feel good or bad.

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ojbyrne
I think Zimbabwe also qualifies. Probably plenty more...

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vidar
The big difference is that Zimbabwe isn't playing in the big leagues, Iceland
was supposedly a rocksolid 1st world country.

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ojbyrne
Seems like that's just better PR. 10 Years ago Iceland was, in most people's
minds, something akin to Greenland now. Cold, desolate, poor.

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jayp
These people obviously weren't well read. Iceland was well to do even 10 years
ago.

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coconutrandom
This is one of the funniest and more informative articles I have read in a
long time.

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fortes
I loved this bit:

"Alcoa, the biggest aluminum company in the country, encountered [problems]
peculiar to Iceland when, in 2004, it set about erecting its giant smelting
plant. The first was the so-called “hidden people”—or, to put it more plainly,
elves—in whom some large number of Icelanders, steeped long and thoroughly in
their rich folkloric culture, sincerely believe. Before Alcoa could build its
smelter it had to defer to a government expert to scour the enclosed plant
site and certify that no elves were on or under it. It was a delicate
corporate situation, an Alcoa spokesman told me, because they had to pay hard
cash to declare the site elf-free but, as he put it, “we couldn’t as a company
be in a position of acknowledging the existence of hidden people.”"

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sethg
Compared with some of the things American financiers were believing during the
height of the bubble, elves and trolls seem downright rational.

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occam
A rebuttal: <http://isteve.blogspot.com/2009/03/bubbles-and-sex.html> True,
but it's still a great article.

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jibiki
That's a really terrible rebuttal. I was struck by the fact that Sailer seems
to think it's impossible to be both aggressive and "cultivated." In my
experience, these two traits are almost uncorrelated.

Also, his argument (insinuation, really) that female consumer spending in the
US was a driving force of the sub-prime crisis completely is completely
tangential to Lewis's argument, which is about male financial workers. (To my
mind, both arguments seem unlikely and rather sexist. I'd like to think Sailer
is being ironic, but no, he's not.)

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occam
Sailer agrees with you about the male/female thing. He's saying it doesn't
seem to be a factor.

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lionhearted
I was in Europe during the Great Banking Failure of 2008. I was in London and
was heading up to Stockholm. A quick kayak.com search found the cheapest
airfare was on an Icelandic airline named "Sterling". I'd never heard of it,
but then, I'm an 'merican, so I haven't heard of most of the European carries.
So I sign on, for like 80 euro one way to Stockholm as I wouldn't be returning
directly to London.

My flight was at around 7 in the morning, which meant getting up at 4 and
hurrying from the Islington area in Central London to the airport. I still
have to hustle to make sure I'm on time, and I really make tracks to get
there.

And then the plane is late, and I'm stuck waiting at Stansted Airport for a
couple hours. Ah whatever, such is the nature of airports. It really wasn't
such a big deal.

But then I get the most surprising, strange, somewhat wonderful email I've
ever gotten from an airline:

__________________________________________________________________________________

Dear Guest,

Please allow me to be the first to apologize for the very unfortunate
circumstances surrounding the delay of your flight on the 15th of October
2008.

We are aware of our responsibility and we would of course very much like to
maintain the trust your have shown Sterling. Having said this I would like to
explain the cause for this delay and hope you can accept this apology on
behalf of Sterling and myself.

I can inform you that we did everything possible to avoid the delay, which
unfortunately happened due to a number of different causes. Sterling had
unfortunately 2 aircraft that had to stay on ground because of technical
problems, together with the fact our route network, which is built up as a
coherent schedule, dependant on all aircraft serviceable and available,
resulted in multiple delays, including your departure.

Of course, we tried to find alternative flights, but we were not able to fly
at the precise time we needed them for and therefore had no other choice but
to delay your flight. Sterling sets safety above all other concerns which we
hope our guests understand and appreciate.

That being said, I can assure you that we are fully aware that the
circumstances that you endured in connection with the delay were neither a
pleasant beginning nor conclusion to your journey, and this is highly
regrettable.

In light of the above circumstances and by way of acknowledgement that your
experience was not the best with Sterling, I would like to offer you and your
possible travel companion a gift certificate for 1 one way flight within
Europe. The gift certificate will be valid until 10th of October 2009 and will
be sent by e-mail, together with another copy of this letter.

In closing, I would like to take the opportunity once more to offer my regrets
about the delay and I hope that you will accept the above offer and allow us
to welcome both you and your companion to enjoy a more positive experience
with us in future.

Best regards Sterling Airlines

Michael T Hansen Chief Commercial Officer

__________________________________________________________________________________

I got that email on October 17th, and I thought to myself, "Wow, those
Icelanders are alright." The airline went bust 12 days later.

------
ia
went to iceland on my honeymoon over the holidays, and i can attest to the
intense blame the general public places on the bankers and the politicians for
what happened. we took a few bus tours, and on each of the the tour guides
made a point to bad-mouth them.

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dublinclontarf
Would this have been worse (or better) if Iceland had not nationalised their
banks and simply allowed them to go bankrupt?

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petercooper
It depends if having all of your country's assets overseas seized and gunboats
arriving in Reyjavik would be better than the current situation or not.

When you owe other countries a ton of money and you're not paying, you either
need a quid pro quo, a payment plan, or you're going to get your balls busted.

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gaius
I did idly wonder if it would come to that, when Icesave announced it wouldn't
honour guarantees given to British savers. Iceland's defence strategy during
the Cold War was to umm, do nothing, and rely on NATO, knowing that it would
never permit the Soviet Empire to gain such a strategic foothold. Even tho'
the Royal Navy is but a shadow of its former self, invading Iceland would have
taken all of one afternoon, if that.

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petercooper
Economically the UK almost did that by seizing Icelandic assets. Quite the
_quid_ pro quo, pun intended ;-)

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bbuffone
I guess I would put it this way: The growth of societies needs and wants have
far outpaced the capacity to deliver those. Not from a physical resource
capacity but from an intellectual one. Combine this with the greed that is
part of human nature, these large spikes and collapses will be common place
until a new social-economic model is created. One that is a steady state
model, which allows for the obsolesce of the antiqued without punishment.

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vidar
For those interested in the back story (or interested in a great data
gathering startup) go to
<http://datamarket.net/request_data/icelandic_economy/>

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modoc
I'm headed to Iceland in a couple of weeks, so this was a very apropos read.
Thanks!

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signa11
There are no countries anymore, there are only hedge funds...

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rms
But there are all sorts of things your hedge fund can't do if it doesn't have
national sovereignty.

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electromagnetic
The title here to this article is stupid, and the summary is even more
moronic. However, the article is actually a pretty interesting read.

