Svein Harald Øygard skrifar á Facebook síðu sína:
Interesting days. As many Icelanders marched in the streets in the cold winter days of late 2008 and early 2009, one of their asks was that my predecessor should resign. Which he refused. The majority in the Parliament then passed a new law that effectively ousted him. Some felt that the experiment of unregulated banking had gone astray. The ousted Governor then went on to become editor, and this week, two months after the launch of my book, the one architect of the liberal experiment is the one chosen by the editor to review my book. The reviewer, the one who coined me as „the man from the mountain“, has read the book into its finest details. He was present as all the pre-cirisis mistakes were made, hence he should be well placed to make the speech of defense. And, yes, he reveals that I have misspelled the name of one of the IMF heads, the Danish team lead who later went on to lead the IMF-team in Greece. I will apologize to the Dane when I meet him next, and yes, in the book I do compliment some of his efforts. Maybe, however, my misspelling was just a smail parapraxis, a small freudian slip. And if so it was in return for the IMF-head´s yelling at me in Washington DC as I defended the positions of the Icelandic Central Bank in a meeting with the IMF. I still remember how angry I was, back then. We wanted to reduce the interest rate while also implementing non-orthodox measures to strengthen the krona. While he used authority and the threat of us losing the support of IMF, not rational arguments, to stop us. He threatened to stop the flow of IMF-funds, that by then, due to Icesave, already had been stopped. Which made me even more angry. IMF had lost its moral high ground. But, we didn´t give in. Obviously. We defended our positions and made our arguments. In line with the best Icelandic traditions. And, frankly I am more happy that I hopefully got the Icelandic names right. Many Icelanders did a fantastic effort in the days, weeks, months and years after the collapse. I interviewed some, but the contributions of many more from different parties, institutions and constituencies could have been highlighted. But, there might have been a reason for why the review had to await Black Friday. A witty Icelander wrote; „Asking the party ideologist to review my book was a bit like asking the turkey to write the review of the thanksgiving dinner.“
Ég svaraði í nokkrum liðum:
A very revealing comment. Øygard regards me and some of my compatriots as turkeys to be slaughtered, for a feast. But we refused to be slaughtered and reserved our right to reply to criticisms. One of the main criticisms I would make of Øygard’s book is that he reads far too much into a meeting at the governor’s house in March 2006: I have spoken to all present and they all deny Øygard’s version. Again, and that is a major criticism: he criticises the liquidity help the Central Bank of Iceland gave to the commercial banks in 2007–8, the “love letters” as Governor David Oddsson called them. But The CBI actually followed stricter rules about acceptable bonds than the European Central Bank or the Fed (that for a while even accepted stocks as collateral for loans). If the Central Bank had made the rules still stricter, going against the judgements and reports of rating agencies and accounting companies, then it would have felled the bank system in one day, sometime in late 2007 or early 2008. Øygard seems to think that the CBI should have done so! It should be added, too, that Øygard’s appointment was a violation of the Icelandic Constitution whose Article 20 expressly stipulates that no foreign citizen can be a high official of Iceland. This is especially relevant at the Central Bank which has to guard Icelandic interests against the whole world. Unfortunately, Øygard does not seem to have read the report I published for a Brussels think tank, even if he quotes it: https://newdirection.online/2018…/LESSONS_FOR_EUROPE.pdf
Enn sagði ég:
I should add that the treatment of Iceland by the Scandinavians in our hour of danger was nothing to be proud of. The Scandinavians supported the unreasonable demands of the British government that the Icelandic state should reimburse the UK for outlays it had taken upon itself, in the so-called Icesave dispute. They made help conditional on surrendering to the UK in the dispute. This demand of the UK for direct reimbursement guaranteed by government was not made in Sweden or Germany where deposit collection by Icelandic banks was done in the same way as in the UK (in branches, not subsidiaries). There the assets of the estates were sold in a normal way and the proceeds used to reimburse depositors. Then the UK government invoked an anti-terrorist law on Iceland, a country that does not even have a military! And in the midst of the ruins, well-connected Norwegian businessmen, with the connivance of the Norwegian Central Bank and the Norwegian Depositors’ and Investors’ Guarantee Fund forced the estate of Glitnir to sell a robust and solid Norwegian bank for 10% of its real worth, profiting immensely from this. Unlike the Scandinavian governments, the Faroese and the Polish extended loans to the Icelanders without any conditions.
Og enn sagði ég:
And for the record, I think the banks were reckless and that some mistakes were made, although overall it was a Catch-22 situation: you are damned if you do, you are damned, if you don’t. What were the mistakes? The Financial Supervisory Agency should not have allowed collection of ID numbers in 1999 when an early bank privatisation took place. It should not have allowed the purchase of Glitnir in 2007 with full voting rights of the buyers and thus their taking over of control (they were too financially weak). The Foreign Office should have shelved a bid for a place on the Security Council and visits to Syria and cultivated instead closer ties with the UK and the US. Landsbanki should have transferred the Icesave accounts from a branch to a subsidiary. Kaupthing should not have tried to buy the Dutch bank NIBC. Glitnir should have sold its Norwegian bank and downsized. All this was possible at some moment in time. Most other things were inevitable, unless of course one uses wisdom of hindsight.
Og bætti við:
And what were the successes? Why did Iceland recover so quickly? 1) Because the Icelandic economy was essentially sound as a result of the liberal reforms in 1991–2004. It fell because it was kicked down, but not because it was weak and lost consciousness. The main thing is not whether you fall, but whether you stand up again. 2) It was a brilliant stroke to limit the responsibility of the treasure by the Emergency Act of 2008 whereby to compensate, the depositors received priority claims in the estates of the fallen banks. 3) Another brilliant stroke was how the creditors were dealt with in 2015 whereby the stability of the economy and the currency were ensured, in a legal and fair manner.
Og að lokum:
The crucial questions to which Øygard does not really provide an answer in his book are those: Why did the US Fed provide liquidity to Sweden, Norway and Denmark and refuse it to Iceland? Why did the UK government close down British banks owned by Icelanders at the same time as it rescued all other British banks (with time showing that the Icelandic-owned banks were perfectly solid, while some other banks were not)? Why did the UK government invoke an anti-terrorism law against Iceland while governments in other countries where the Icelandic banks had operated in the same way (collecting deposits in branches and not subsidiaries) did nothing of that sort?
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