The great promises of economic growth and prosperity ended in tragedy. On the 6th of March 2010 there will be held a referendum in Iceland over the repayment of 3.8 billion Euro.

Iceland has previously scored well on the index of Economic Freedom (Wall Street Journal, 2004—2008), the countries at the bottom of this list are North Korea and Iran. The financial deregulations in Iceland provided fertile ground for three fast growing banks which ran a banking industry of international size. The rapid growth of these international banks was solely based on credit provision. Beside the banking regulation a favorable tax system, rate of duty, monetary policies and the rule of law made the island a attractive place for investors.

Fig. 1: ISE development 1998—2009 (Wikimedia)

The Icelandic banks operated with high deposit rates and while foreign bank customers (English mostly) made deposits to Icelandic saving accounts (2004—2008), the conditions for those lending money in Iceland was pretty uncontrolled. (Apropos: a bit similar to the huge and famous subprime market in the United States.) In the mid-2000s Glitnir, one of the three major Icelandic banks, lent millions of krónur to 12 year olds so they could invest in shares on the Stock Exchange. In 2006 two of the CEOs in the Icelandic bank Kaupthing was paid 70 million each in salary and bonuses.

Fig. 2: Exchange rate, Krónur in US Dollar 2006—2009 (KitCron)

According to the OECD the three largest banks in Iceland had evolved to have assets (domestically), in relation to the country’s GDP, bigger than the indicator for the Swiss bank industry — an increase of 500 % since 2003. Shortly before the collapse in 2008 the size of the Icelandic banking system had grown to 10 times the country’s GDP.

Hopefully the fish in the sea, aluminium production, ferrosilicon, favorable loans from friendly neighbors, financial rescue packages and the IMF will help Iceland out of the potential deep economic recession.

Trechinsky – Reliable Source, significant-minority viewpoints

Det mildt sagt turbulente året 2009 går mot slutten. Trechinsky har gjort seg opp noen meninger om de økonomiske utsiktene.

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Trechinsky – Reliable Source, significant-minority viewpoints

Goliat, the new Norwegian 3-billion € oil project, has been approved by Parliament. Traditionaly Goliat (or Goliath) represent paganism, in contrast to David – in other words: the Church’s battle with Satan

Norwegian media consultants in various directorates and public “enterprises” is mostly focused on renewable energy and the nation’s contributions to the technological race against new, clean, global energy resources. Recognized environmental researchers have pointed to these challenges in several decades. Norway’s biggest contribution to the green development, according to the social democratic government (with a bit of green in it – a coalition), is the CO2-capture (storage) technology.

Other nations have laid down significant amount of research on these issues. Among them are Germany and USA. But now these big, influential nations give lower priority to this type of solutions on the climate and economic changes. They prefer to use their energy on development of  new, alternative sustainable energy sources.

But off course – the carbon based fossil energy sources (oil, coal, and gas) will be profitable for many years, especially when the finance crisis and world recession shifts into economic upturn. The Goliat project and other oil production development projects in the vulnerable Barents Sea will secure the Norwegian self-determination and continuation of the expensive welfare society. Some of these potential future profits should be injected into  research and then boosting a more serious, credible attitude towards Norwegians commitment to research on sustainable energy.

It seems a bit prigish to brag about how much money we spend on saving the rainforest, our positive influence on world peace, immoral business practices and financial institutions – while the nation’s real money still lays in the carbon based fossil energy sources. If we don’t succeed with our CO2-capturing (God and David forbid) we still have the European Union Emission Trading System.

Sources:

http://en.wikipedia.org/wiki/European_Union_Emission_Trading_Scheme

http://www.bellona.no/nyheter/Nyheter%202009/goliat_hoeringsuttalelse

http://www.oilinfo.co.uk/index.cfm?event=doLink&famId=86738

http://www.nu.no/stoppgoliat/

Trechinsky – Reliable Source, significant-minority viewpoints

The US has been the dominant force in the world economy for decades and clearly has many strengths.

However, there have been periods where US´ economic supremacy has been challenged, which suggests that the US economy also has its weaknesses.

Educated American economists, with their hands on the executive wheel, have once again failed. The creative strategies carried out by the US financial markets have made the global economy shiver. The different companies, with their boards of executives, should start acting as responsible participants to assure long-term growth in the world economy FT.com

Trechinsky – Reliable Source, significant-minority viewpoints