Iceland's New Government Has Cunning Plan Of Tapping Banks To Boost Growth, Improve Infrastructure

We like Iceland, we’ve never been there, but that doesn’t matter. Besides the outstanding natural beauty, Iceland, unlike the US, UK and practically everywhere else, holds bankers accountable. Last time we checked, 29 had been jailed. As we discussed, it also holds its leaders accountable (partially – see below) when they are complicit in exonerating convicted child rapists. Such an event brought down Iceland’s government in September.

Last week, it emerged that Prime Minister Bjarni Benediktsson knew of attempts by his father, Benedikt Sveinsson, to have the Ministry of Justice grant “restored honor” to a convicted child rapist. Benediktsson kept this secret as the rapist, a friend of his father’s was essentially exonerated.

Restored honor is the controversial process by which convicted criminals can have their crimes expunged and return to society with all rights and privileges restored. It requires that the convicted person serve between two to five years of their sentence on their best behavior and that they have multiple letters of recommendation. Sveinsson provided one such letter.

Iceland held new elections on 28 October 2017 and a new coalition government came in to power this week. Iceland’s economy has been booming, in part due to the influx of tourists visiting its thriving capital city, Reykjavik, along with the Geysir geyser and the Gullfoss waterfalls. On any given day, tourists are likely to account for about 10% of the island’s population. However, as the FT explains, Iceland is paying a price for its success.

These challenges include everything from the poor quality roads and overburdened infrastructure to a lack of accommodation and simmering popular discontent over how tourism is being handled. At Geysir and Gullfoss in central Iceland, dozens of buses and cars park at both attractions for free before disgorging tourists who pay no entrance fee. The roads across Iceland are under intense strain from hire cars and a tourist died just after Christmas in a head-on collision on a single-track bridge.

“What are we sacrificing when we don’t put a levy on tourists? The roads here are dangerous,” says Asta Helgadottir, an MP for the anti-establishment Pirate party…Accommodation is also a problem. Cranes everywhere in Reykjavik attest to the surge in hotel construction but the increase in rooms still lags behind the growth in tourism.

However, all is not lost. The new government has a plan…which involves Iceland’s banks and tapping their excess capital. According to Bloomberg.

Iceland’s new left-right coalition government is gearing up for a spending drive to fix the nation’s dilapidated infrastructure after years of austerity and it could tap its banks for the some of needed cash.

Iceland got a new government on Thursday, in a coalition between the Left Greens, the Progressive Party and the conservative Independence Party. The parties have pledged to spend more on roads and other infrastructure to catch up on an estimated 400 billion kronur ($3.9 billion) in missing investments.

Even in Iceland, it seems, discredited politicians can bounce back into public life almost immediately, which is precisely what’s happened in the case of Bjarni Benediktsson, usually known as “Bjarni Ben”.

Bloomberg spoke to the man himself, “According to Finance Minister Bjarni Benediktsson the government has an ace in the hole that can help finance the spending: the excess equity in its three largest banks, Arion Bank hf, Landsbankinn hf and Islandsbanki hf. The banks have leverage ratios in the 16 percent to 18 percent range at the end of June, far above the 3 percent minimum, according to Iceland’s central bank.

“We have hundreds of billions of kronur, way more than any other European nation, tied up in financial institutions,” said Benediktsson, a former prime minister who will now take over at the Finance Ministry, in an interview on Thursday “And we in the three parties are ready to shake loose this capital to use it toward an infrastructure build up.”

With a plan like that, the government must have considerable leverage over Iceland’s major banks...and it does.

The government owns most of Landsbankinn and all of Islandsbanki and has a stake in Arion. The banking assets were acquired after the 2008 collapse when the government stepped in to save the financial industry. The crisis is now largely in the rear-view mirror and the new government is being handed a booming economy.

The government will now put together a white paper on the financial system and have a broad discussion in parliament.



We hadn’t fully appreciated how rapidly Iceland’s economy has been growing - last year it grew faster than China (6.7%) and even faster than India (7.1%). However, the growth rate is declining rapidly, so the coalition government’s plan might be timely, if it can be executed.

There are signs that the economy may be cooling after growing at a whopping 7.4 percent last year. Economist surveyed by Bloomberg are forecasting gross domestic product growth at 4.2 percent this year, while the central bank recently lowered its forecast for 2018 to 3.4 percent from 5.5 percent.

Despite the differing left-right ideologies in the new coalition government, Bjarni Ben and the new prime minister are cautiously confident, especially the former.

Internally, the government may find it hard to reconcile the policies of its two biggest party’s, the Left Greens and the Independence Party. But both party leaders on Thursday insisted they would make it work.

“The outer circumstances are working in our favor in forming this government,” Benediktsson. “We are the European nation that is growing at one of the fastest rates — we have no unemployment in Iceland to speak of, we have a budget surplus since 2014 and forecasts predict continuing growth, a great increase in tourism next year.”

Taking over as prime minister will be Left Green leader Katrin Jakobsdottir, the first time the party holds the top spot after emerging as the second biggest group in October’s election. While she faced some internal party turmoil for joining with the Conservatives, she is now “optimistic but realistic” that she can make it work.

Having cratered the economy during the crisis, it would be poetic justice if the major Icelandic banks were its saviour as we head towards the next one.

Comments

totenkopf88 Francis Marx Sat, 12/02/2017 - 21:04 Permalink

You're right- the banks should just sit on all of that money (money is yours and my STORED LABOR) and speculate on currencies and commodities with it like the Fed lets Goldman, Citi,  JB Morgue,  etc do instead of getting it out into the REAL ECONOMY where the people can get access to it. In fact, fuck it- let the benevolent banks have all of the money and we can fight for a meal like in The Hunger Games. Because Jamie Diamond and Lloyd Blankfein really give 2 shits about you and me.

In reply to by Francis Marx

CompassionateC… totenkopf88 Sat, 12/02/2017 - 21:06 Permalink

What a terrible comment.  Banking is hard work and until you've walked a mile in the head of Goldman Sachs' shoes (because he's never walked a mile in them) you need to just shut up.  It's not easy work like working in a steel mill or a coal mine.  Workers in steel mills and coal mines have it easy compared to a Goldman or JPM exec.  You sound like a fucking ANTI-SEMITE!

In reply to by totenkopf88

totenkopf88 CompassionateC… Sat, 12/02/2017 - 21:13 Permalink

Is it anti-semitic to point out that the reason Germany pulled out of the Depression so fast while the rest of the world languished in it is because Germany seized the banks and issued Labor Coupons instead of the fiat Jude Fetzen the rest of the world was using? And that nationalization of the Rothschild's banks in Germany was the main contributing factor to WW2 and that Muh Holocaust BS was just cover for the rest of it?

In reply to by CompassionateC…

MEFOBILLS totenkopf88 Sun, 12/03/2017 - 00:47 Permalink

The Reichsbank was brought back under Chancellor control to combat the hyperinflation, especially when Schact was invited.  The private banks were brought into line when Schacht refused to discount bills (pay cash for a bill... bills are three party instruments something like a check.)The private banks were not following Schacht's orders or guidance.  Schacht especially wanted rentenmarks covered at 100 percent for any sort of shorting scheme.  That way foreigners could not get new loan money to short his new currency.   The Rentenmark exchange rate to the mark was made up - not in any way related to labor.Germany's money got this labor reputation because the Gold men of that era could not understand how economy would work... the goldmen were getting high on their own supply.  Money's true nature is law, and Germany had brought their money into legal compliance.  Mefobills were also issued and this was the secret methods.  The tax roles increased almost three times between 33 and 39.  Mefobills were credit at first, and then when the receiving party, an industrial concern, discounted it, the reichsbank would issue marks.  In other words, Mefobills were created by a shell corporation, then the bill went in industry - especially armaments.  Then once the goods were produced the bill would be presented for discounting... meaning getting cash for it.  Banks would cash it out, and then present them to the shell corporation.  The Banks would get some interest money for their discounting action.  Then the Reichsbank would then buy mefobill from shell corporation.  The flow of reichsmarks was then from the Central bank and into industry, which then paid wages, and said wages were uptaken in taxes.Rentenmarks got Germany out of the hyperinflation, plus Schact was strong arming the banks to bring them into compliance; only later during Nazi period it was Mefobills and tax policy from Reinhardt that was the major economic stimulus.  

In reply to by totenkopf88

CompassionateC… Sat, 12/02/2017 - 20:53 Permalink

Sure, the banks are going to be a good help to getting Iceland back on it's feet but the KEY to success in Iceland is the mass importation of hundreds of millions of niggers and moslem terrorists.  The aging white population is going to need them to pay for their pensions after all!  Only a hardcore white supremacist nazi would resist being replaced in your ancestral homeland.  IT'S 2017/THE CURRENT YEAR FOR FUCK'S SAKE!!!  

Mena Arkansas Sat, 12/02/2017 - 21:44 Permalink

Why is Iceland such a phenomenal country that all those tourists come to visit?That's right. It's a predominately white christian homogenous country with almost no blacks, browns or jews.94% Icelandic, 6% otherhttps://en.wikipedia.org/wiki/Demographics_of_IcelandIn 2011, only 50–100 Jews were living in Iceland. https://en.wikipedia.org/wiki/History_of_the_Jews_in_IcelandHere's what an awesome country actually looks like. Then look out your window.Iceland performs ultimate 'Viking war chant'https://www.youtube.com/watch?v=mav2kkvakGYDid I forget Iceland has almost no violent crime? I wonder why.Why violent crime is so rare in Icelandhttp://www.bbc.com/news/magazine-25201471

Mena Arkansas Bigly Sat, 12/02/2017 - 21:58 Permalink

And here's what happens when you make a mistake and let in a lying nigerian asylum (welfare) seeker.Man claims not to have known he was HIV positiveThe man arrested yesterday on the suspicion of having infected numerous young women with the HIV virus claims that he did not know that he was HIV positive. The man is an asylum seeker in Iceland. http://icelandmonitor.mbl.is/news/news/2015/07/24/man_claims_not_to_hav…

In reply to by Bigly

DelusionsCrowded Bigly Sat, 12/02/2017 - 23:23 Permalink

And Masonic Infiltration ? If Iceland is taking Africans and ME's , then they are under PC-MC Masonic Control . Their game is to breed out Caucasian traits so as to intergrate the world as mestezo's without history , culture or allegance .White people are too visually unusual which creates unnessarcary competition . Jews are just camoflage and useful (greedy) idiots .

In reply to by Bigly

fleur de lis DelusionsCrowded Sun, 12/03/2017 - 13:15 Permalink

Like other Scandinavian societies that are currently being rotted from the inside out by NWO/UN/EU/IMF policies, Icelandic society is underpinned by a strong work ethic, a centuries old sense of social responsibility that evolved from a harsh environment, and a personal honor system that is carefully taught at the family level.Its relative isolation allowed this peaceful society to prosper modestly but evenly.They did not have MSM until fairly recently but had very high literacy levels by the time TV, movies, and MSM arrived with their characteristic cultural decay.Such a system cannot withstand the influx of scammers who bring primitive, reckless, antisocial, non-compliant, and often violent cultures.The overpaid and uncultured MSM guttersnipes only serve to denigrate traditional cultural mores and values whilst reinforcing destructive policies at the individual, family, community, and cultural levels. The scammer migrants and their scammer managers only see Icelanders as feeders and caregivers, as in the case of the Nigerian migrant with HIV.Iceland imported a walking talking biohazard trashbag.He was never taught social responsibility and anyone who thinks that he can learn it now is a delusional threat to wider society.Furthermore it would be impossible for the criminal migrant to improve himself as far as his own minimal personal cleanliness even if he tried -- too much information too late in life. He spent his life living from one day to the next, doing whatever he needed to do to get whatever he needed at that moment, regardless of how it affected anyone else.And the person he affected would have done it to him first given the opportunity.That is the mentality that he brought to Iceland.He brought absolutely nothing but trouble and every day he stays will cost Iceland more in every way.He should be sent back for lying if nothing else, but he won't.He will be given the finest care and he will lap it up like it is owed him but he will do nothing he is told, just as he was raised.He will show up to the clinic for freebies then go back to his primitive lifestyle and drag down anyone he can influence.The migrants have no intentions of working, nor abiding by the superior system that has foolishly taken them in as a matter of misplaced charity.The migrants know nothing of charity since they are inherent takers of what they want rightfully or wrongfully alike, they cannot improve themselves nor their new host countries, and are only capable of sizing up the landscape of benefits so as to exploit it, and then thank their hosts by dragging them all down.Most of the migrants will grow exponentially more expensive with every passing day and will give nothing in return.Icelanders should give the migrants a fat check and send them back -- it would be cheaper in the long run.  

In reply to by DelusionsCrowded

terrific Sat, 12/02/2017 - 21:49 Permalink

I love Iceland and Icelanders, having spent a year there as an enlisted man in the U.S. Navy in '76/'77, and I was unhappy to hear about the way they suffered in the Great Recession, largely due to the incompetence and corruption of the United States.  Keep in mind that the population of Iceland is about one-third the population of San Francisco, so when they talk about "Iceland's major banks" in this story, there's nothing really major about them.  Iceland relies primarily on fish and sheep for their survival.  Hopefully, they figure out how to get it together, and if I was a citizen of Iceland, I would be pushing to get the tourists out, because last I heard, tourists are really trashing the island.  Even if Icelanders have to live their lives without much in the way of luxury, anything would be preferable to having to see the scum of the earth trudging through the country nonstop.

Mena Arkansas Sat, 12/02/2017 - 22:28 Permalink

Here's what happens in Iceland when the banks and gov't try to fuck the population. Compare to the bankster bailout in the US.Massive demonstration outside parliament in Icelandhttps://www.youtube.com/watch?v=UduuOHdOw5MIcelandic members of parliament on the run from angry crowdhttps://www.youtube.com/watch?v=OFyOdJWt02YHere's what happens when you catch your PM hiding income offshore.Iceland: thousands protest, call for PM to resign over 'Panama Papers' leakshttps://www.youtube.com/watch?v=5dRIiJqDM4M

Thugocracy Sun, 12/03/2017 - 14:06 Permalink

Isn't this how Germany built it's infrastructure in the early twentieth century? Worked for a great rail system then autobahn. Devil's in the details, I suppose.