tag:blogger.com,1999:blog-7099204284953820132024-02-19T07:00:17.674+00:00Icelandic EconomicsAbout the Icelandic Economy, the European Economic Crisis, debt and deflation. "Words ought to be a little wild..."Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.comBlogger105125tag:blogger.com,1999:blog-709920428495382013.post-68370587047950666782014-11-11T10:02:00.000+00:002014-11-11T14:15:11.278+00:00The Icelandic Debt Relief: A Quick LookEdit: For those of you who don't know, Iceland's government recently presented the whole debt relief action. As of this morning, each individual who gets a debt relief (91,000 in total or a bit less than a third of the total population) knew how much (s)he is going to get. Here are some news about the whole thing in English:
Mbl.is
Iceland Review
Iceland Review
The Reykjavik Grapevine
=========Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com0tag:blogger.com,1999:blog-709920428495382013.post-26515438538042605762014-11-08T12:42:00.000+00:002014-11-08T12:48:36.807+00:00Interest rates and national savings in IcelandPétur Blöndal, MP of the Independence Party in Iceland, recently claimed that the reason for the high rate of interest in Iceland is that people don't save. In other words, if the people would save more and the amount of savings rise the rate of interest would come down. I beg to differ.
First, let's test Blöndal's hypothesis in the historical context: increased national savings would lead to a Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com0tag:blogger.com,1999:blog-709920428495382013.post-88612913307827778182014-11-06T19:01:00.002+00:002014-11-06T19:01:36.024+00:00The State of the Icelandic EconomyDespite the long silence I am quite healthy and fine. As I've got time from my PhD work - hopefully in its final stretches - I've got time to revive this blog, at least for this one time. Not the least because the Icelandic economy is, according to the governor of the central bank, in such a state that many other countries "envy" Icelanders.
Or so the story goes.
On the surface
True, on the Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com2tag:blogger.com,1999:blog-709920428495382013.post-6609682651716181642014-01-10T14:02:00.001+00:002014-01-10T14:17:18.411+00:00An Icelandic "Fisher Moment"?Irving Fisher is one of those economists that many know. At least, many economists know his work, and some of his work is better known, and acknowledged, than other. Fisher is the guy who brought us The Fisher Equation (real interest rates, nominal interest rates and inflation), the Quantity Theory of Money (PY=MV) and the International Fisher Effect (closely related to Interest Rate Parity Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com2tag:blogger.com,1999:blog-709920428495382013.post-89752719304413271502013-12-02T17:58:00.003+00:002013-12-02T23:02:22.556+00:00The Icelandic Debt ReliefThe hottest story coming from Iceland now is the one about the government-initiated debt relief to households. Here is my take on it, focused only on handful of all the questions and issues related to the act itself and, perhaps more importantly, the potential economic development in the future. Especially on that front we have a sea of unanswered questions. Is this going to be inflationary? WhatAnonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com8tag:blogger.com,1999:blog-709920428495382013.post-18060019976753886472013-10-30T13:33:00.001+00:002013-10-30T13:34:52.924+00:00Household debt and house pricesSteve Keen has an article on household debt and house prices in multiple countries, using BIS data. Since Iceland is not on the list - and we arguably had a housing bubble - I sat down and did the same (or at least similar) analysis on Icelandic data. Sources are the Central Bank of Iceland, Registers Iceland and Statistics Iceland.
First, the real (CPI deflated) house prices.
Real house Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com0tag:blogger.com,1999:blog-709920428495382013.post-43925557143524566862013-07-16T11:43:00.000+01:002013-07-16T11:47:33.270+01:00Icelandic Pension System: Only 700 billion missingThe FSA in Iceland recently posted a new set of figures regarding the pension system back home. The bottom line: only 674 billion ISK missing (i.e. the total actuarial position is negative by 674 billion). That translates into just over 39% of GDP which is an improvement from the 2009 figure when the gap was a considerably worse 50% of GDP. So even if the current situation is bad - good luck Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com0tag:blogger.com,1999:blog-709920428495382013.post-63084525559602578182013-06-27T12:59:00.000+01:002013-06-27T13:03:48.696+01:00UK & Iceland GDP comparisonAfter the recent GDP figures from ONS, the general reaction was rather pessimistic. FT had e.g. this tweet and article:
True, this doesn't look good. In fact, after the revisions, UK GDP volume is now further below its top before the financial crisis than Iceland's GDP is. The following graph is based on data from ONS and Statistics Iceland. The top is given the value 100 (3Q07 for Iceland Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com1tag:blogger.com,1999:blog-709920428495382013.post-71077859040087949442013-06-24T14:21:00.000+01:002013-06-24T14:31:03.560+01:00How much household debt was cancelled? UpdateIn April last year I wrote about how much of Icelandic households' debt was cancelled. Now, we've got new info on the topic.
And the amount: 247.5 billion ISK. This figure comes from the Icelandic Financial Services Association in their comment on the new government's 10-step plan of general debt relief to Icelandic households (they don't really comment on it, they are going to wait until the Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com1tag:blogger.com,1999:blog-709920428495382013.post-48229625547914486542013-06-11T11:29:00.001+01:002013-06-12T07:56:43.189+01:00Minister of Finance Comments on the Housing Financing FundThe new minister of finance, MP Bjarni Benediktsson, spoke with Bloomberg the other day. The topic was the Housing Financing Fund and its "red numbers" as Benediktsson put it.
The most notable part of the interview was when Benediktsson wished that creditors of the fund - the owners of HFF bonds - would be "flexible" if and when HFF would request discussions on changing the stipulations on the Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com0tag:blogger.com,1999:blog-709920428495382013.post-3479281140213948462013-04-26T12:41:00.002+01:002013-04-26T12:56:45.813+01:00A plea to the future government of IcelandStatistics Iceland released new figures on the labour market recently. According to them, the unemployment rate in Iceland continues to go down. It has reached 5.7% after having reached almost 8% in early 2011.
The unemployment in Iceland is slowly improving. I guess some nations would not complain too much about the rate of unemployment around 6%.
But here is the catch: even though Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com2tag:blogger.com,1999:blog-709920428495382013.post-58923719462337178212013-04-20T15:15:00.003+01:002013-04-21T15:49:36.739+01:00Islandsbanki's incredible profitsMbl.is has a story that appears today, 20 April, saying that Islandsbanki, the bank which was founded on the ashes of the old and bankrupt Glitnir bank, has written of 475 billion ISK of customers' loans since it was founded, i.e. in October 2008.
Now, no matter how you look at this, 475 billion ISK is a lot! The GDP of Iceland is around 1,700 billion ISK. So this bank alone has written of debt Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com3tag:blogger.com,1999:blog-709920428495382013.post-58099806531923992442013-01-28T17:32:00.003+00:002013-01-28T17:38:17.447+00:00The Icesave acquittal - Press Release from the Ministry for Foreign AffairsIn light of the acquittal in the Icesave case, I see a reason to post the press release from the Ministry for Foreign Affairs in its totality.
The interesting question which now remains is: are deposits in Europe safe? If e.g. Santander goes bankrupt, will the savers in the UK, which have deposited their savings at the Santander branches in the UK, be repaid? (Amongst other things, it depends onAnonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com0tag:blogger.com,1999:blog-709920428495382013.post-60699385571109061542013-01-24T21:14:00.001+00:002013-06-24T12:53:04.247+01:00The Economic Truth on Iceland
The following article is the original text of the articles published on Sintetia in Spain. The Spanish versions can be found here (part 1) and here (part 2), kindly translated by the Sintetia staff.
The Economic Truth on Iceland
There are truths and untruths in the media, the blogosphere
and in the minds of people when it comes to what really happened in Iceland and
its, acclaimed, Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com6tag:blogger.com,1999:blog-709920428495382013.post-9730224792699637962013-01-15T15:20:00.001+00:002013-01-15T15:21:27.439+00:00"Stock prices have reached what looks like a permanently high plateau"If only that would be true...
Blatant signs are for a classic bubble forming on the Icelandic stock exchange - again! Since the beginning of the year, stock prices have practically reached a lift-off speed and defied the market's law of gravity.
The stock index in the Icelandic stock exchange. Taken from Keldan.is. Click to enlarge.
Why this happens one can only speculate about but a not Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com0tag:blogger.com,1999:blog-709920428495382013.post-2614571688387367692013-01-09T17:33:00.004+00:002013-01-09T17:46:04.131+00:00The non-indexed mistake of the Icelandic government"By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens."
- John Maynard Keynes
I've mentioned before (here and here) that indexation in Iceland is a peculiar beast. In the first post on the indexation I mentioned that the main issuer of indexed (to the Consumer Price Index) securities in Iceland is not theAnonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com0tag:blogger.com,1999:blog-709920428495382013.post-24212510200164855362012-12-06T11:28:00.000+00:002012-12-06T11:41:55.884+00:00Households' expenditures in IcelandStatistics Iceland issued a survey on households' expenditures for 2011 today. Their press release notes that:
"Average household expenditure 2009-2011 is 443 thousand ISK a month and has increased by 0.4% from the 2008-2010 survey. The CPI rose by 4.0% between 2010 and 2011, hence the real household expenditure declined by 3.5%" Take note that this includes all expenditures, including housing Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com0tag:blogger.com,1999:blog-709920428495382013.post-37992386677765058402012-11-30T16:24:00.000+00:002012-11-30T16:33:19.021+00:00An Interview with Rás 2 RadioRUV (the Icelandic equivalent of BBC) interviewed me Wednesday on the cul-de-sac that the Housing Financing Fund is stuck in.
Some of the points I raised:
- HFF has a government guarantee (some concerns have been raised if it is truly bound into law) and therefore, a non-payment of its debt can be considered a default of the Icelandic State
- since the net interest differential has become Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com0tag:blogger.com,1999:blog-709920428495382013.post-14446381377908048042012-11-28T15:40:00.002+00:002012-11-28T20:20:25.952+00:00Icelandic CPI and the money supplyNew data on inflation in Iceland were published today. The verdict: 4.5% over the last 12 months.
In some sense, this high (rather mellow on Icelandic standards) rate of inflation is a collateral damage incurred after the bust of the bubble. The money that was created en masse before and during the fantastic bubble formation before the crash is simply still sloshing around, catching too few Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com1tag:blogger.com,1999:blog-709920428495382013.post-22871851241156884142012-11-22T13:24:00.000+00:002012-11-22T13:51:05.903+00:00The Upcoming Problems of Housing Financing FundThe Housing Financing Fund (HFF) in Iceland is a government sponsored entity that raises money on the capital markets and lends it onwards to Icelandic households in the form of mortgages. The total government guarantee on this fund is 950 billion ISK (58% of GDP and almost two times annual income of the State).
The problem is: the HFF is bleeding, slowly but securely. Consequently, it is a Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com0tag:blogger.com,1999:blog-709920428495382013.post-1456266168564417442012-11-15T10:53:00.000+00:002012-11-15T13:39:53.564+00:00The Prophetical Talents of the Central Bank of IcelandThe Central Bank of Iceland upped its policy rates by 25 points yesterday to 6.0%. Quite frankly, I think they made a bad situation worse by doing so when it comes to the outflow of capital out of the economy and the exchange rate of the krona. But that's another story that I'm going to analyse later.
For now, I'm only going to update the graph that I first posted in The Predictability of Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com0tag:blogger.com,1999:blog-709920428495382013.post-55035507286121012122012-11-14T09:27:00.000+00:002012-11-14T09:39:50.422+00:00Firms' cash flows3rd draft of the thesis is done! My supervisor is reading it over and I hope he will be all right with it. Will meet him in two weeks or so, until then, it's time I revive this blog a bit!
Statistics Iceland issued, not long time ago, new data covering the cash inflows of Icelandic firms, based on their VAT reports. The bottom line: the nominal value is back up above pre-crisis levels in 2008 Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com4tag:blogger.com,1999:blog-709920428495382013.post-79769419876376902822012-10-31T09:20:00.002+00:002012-10-31T09:22:12.428+00:00"At Dawn" on Bylgjan RadioThe long silence here is explained by the fact that I've been working on my PhD like crazy for the last weeks. The last chapter does not write itself. It is coming to an end though, one day this will all be finished!
Was on the phone in the radio show "At Dawn" this morning at Bylgjan radio back home. The topic was the pension funds and the idea of a member of parliament, Mordur Arnason, to Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com0tag:blogger.com,1999:blog-709920428495382013.post-20065749825674616262012-10-03T17:08:00.000+01:002012-10-03T17:28:01.955+01:00Wages in Iceland According to the Tax ManA Facebook friend of mine posted data on there about the gross wage income of tax payers for the last years. The data got me thinking and I came up with the two graphs below.
Explanations are in order. First, the data is gross pre-tax income in the form of wages, including wage-benefits (car sponsorships etc.) and pension payments. The gross income amount is divided by the number of those Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com0tag:blogger.com,1999:blog-709920428495382013.post-33668679960255205132012-10-02T17:17:00.000+01:002012-10-02T17:26:52.357+01:00The Optimistic GDP Forecasts and IMF's TurnaroundIslandsbanki published its economic forecast for the Icelandic economy late in September. Their expectations: 3.2% growth in 2012 and increasing after that.
I sat down and looked at some other forecasts in comparison to get a feeling for the realism behind them. I cannot say that any of them is realistic for 2012 except the IMF one. And funny enough, IMF is in fact turning around on its policy Anonymoushttp://www.blogger.com/profile/03708780532217726350noreply@blogger.com2