Reykjavík Grapevine - 07.04.2006, Blaðsíða 10

Foreign Analysts on
Iceland’s “Stocks Carnage”
‘Black Tuesday’, 4 April, was the
single worst trading day the country
has seen in 13 years, and cost the
Icelandic economy more than 85
billion krónur. According to reports
by analysts from Landsbankinn,
the ICEX-15’s one-day drop of
4.65 percent hit financial firms the
hardest, with KB Banki alone losing
nearly 27 billion krónur of its overall
worth in the day’s trading.
A dramatic downturn in
Iceland’s stock markets, including a
nearly five percent drop in its main
index, has sparked fresh concerns
over the country’s economy. The
Financial Times, the International
Herald Tribune and Bloomberg
News all reported on the market
dive and its possible implications
for Iceland’s economic outlook,
with Bloomberg calling the event
“Iceland’s stocks carnage.”
The sudden depreciation of
the ICEX-15 index – lead by the
banking sector – is believed to be
largely due to the latest in a series of
recent ratings downgrades by credit
agencies. Moody’s Investor Services
this week warned of “increasing chal-
lenges” for Iceland’s banking giants.
The ICEX-15 index was praised
by the aforementioned media outlets
for having far outpaced other Euro-
pean markets in terms of growth and
increasing in value nearly fivefold
since March 2003. However, last
Tuesday saw its worst performance
in 13 years when the index fell by
nearly five percent on the day and
dipped the market into negative ter-
ritory for the year in dollar terms.
According to the Financial
Times, the current crisis is closely
tied to Iceland’s currency woes and
the large influx of foreign capital
into the economy. The so-called
“carry trade”, says the FT, consists of
investors borrowing large amounts
of capital in countries where inter-
est rates are low and then in turn
investing in high-yield markets,
such as Iceland’s. While promoting
quick growth, this has also lead to
unprecedented corporate debt levels
and soaring inflation.
On the positive side, all com-
mentators and analysts have stressed
the fact that the liquidity levels of
Iceland’s largest banks and corpora-
tions remain strong – providing a
much needed safety buffer in the
event of a recession.
Morthens Wins Suit Against 365
Veteran musician and Idol judge
Bubbi Morthens won a suit he
launched against tabloid magazine
Hér og nú last year that reported
he’d begun smoking again. Former
editor Garðar Örn Úlfarsson will
have to pay Morthens 1.2 million
ISK, far less than the 20 million
ISK Morthens sought from the 365
media group that owns Hér og nú.
The case revolved mostly
around the use of the word “fal-
linn” (literally, “down, prostrate”)
in the headline, which in Icelandic
means to relapse, particularly after
being clean of alcohol or drugs. The
ruling judgement said that the story
- which featured photos of Morthens
in his car - was a violation of his
privacy.
City Council: Left Gaining, Independ-
ence Party Still Holds Majority
According to the latest results of an
ongoing Gallup poll, support for
both the Social Democrats and the
Leftist-Green Party has increased in
the past month. At the same time,
support for the Independence Party
continues to decline, as it has since
November, but still holds a clear
majority.
Support for the Social Demo-
crats increased marginally in the
past month, from 35 percent to
36 percent while support for the
Leftist-Green Party has gone from
7 percent to 11 percent Meanwhile,
support for the Independence Party
is currently 47 percent down from 52
percent last month.
If elections were held today, this
would mean that of the 15 seats in
Reykjavík City Council, the Inde-
pendence Party would have eight,
the Social Democrats would have six
and the Leftist-Greens would have
one. Neither the Progressive Party
nor the Liberal Party, who garnered
3 percent and 2 percent respectively,
would earn a seat.
Svandís Svavarsdóttir, who holds
the first seat for the Leftist-Greens
in the city elections, wrote on her
website that the upswing in support
for her party indicates that, “there
is support for [Leftist-Green city
councilman] Árni Þór Sigurðsson
and he will bump out the eighth man
for the Independence Party, thereby
opening the possibility of a Social
Democratic-Leftist-Green majority.”
Defendants Cleared of All Remaining
Charges in Baugur Trial, New Trial
Looming
The District Court of Reykjavík
acquitted all six defendants last
month in the so-called Baugur trial.
The defendants, which included
the Baugur son and father team of
Jóhannes Jónsson and Jón Ásgeir
Jóhannesson, were originally charged
with 40 counts of various economic
crimes – 32 of which were thrown
out of court but might be re-filed at
a later date.
In a brief verdict, delivered in
a courtroom packed with journal-
ists and photographers, the judge
simply declared the six acquitted and
announced the duty of the state to
pay various legal costs, which he then
listed. None of the defendants were
present, and in the mad rush to get
comments from the legal representa-
tives for the two sides, the press had
to make do with rehearsed state-
ments and a clear lack of willingness
to comment on a verdict that had not
yet been studied in detail.
“I have not yet read the whole
verdict, you will have to allow me to
do that before I can comment much
further,” said an obviously disap-
pointed Sigurður Tómas Magnús-
son, district attorney. He was then
queried on a possible connection
between this case and plans to re-file
32 previously dismissed charges.
Magnússon said it was clear from
a previous Supreme Court verdict
that no connection should be made
between the two.
On 4 April, Magnússon levied
new charges of fraud and embezzle-
ment against Baugur CEO Jón
Ásgeir Jóhannesson, former assistant
director Tryggvi Jónsson and Nor-
dica Inc director Jón Gerald Sullen-
berger. The trial is due in Reykjavík
District Court 27 April.
An Abundance of Serious Errors
Found in Icelandic Textbooks
In a March article for Morgunblaðið,
Ingólfur Shahin pointed out a total
of 34 errors in only eight pages of
text about Islam, which appear in
textbooks widely used by second-
ary schools in Iceland. Shahin did
not examine the other 664 pages of
the books for factual errors, but he
quotes Dr. Jón Ormur Halldórs-
son, an expert in Islam and Middle
Eastern affairs, as saying the chapters
on Islam are “not fit to be used as
educational material.”
Ingólfur Shahin told the Grape-
vine that he was very cognisant of the
need for keeping his report objec-
tive. “There are things in there that
aren’t exactly factual errors but do
feed off stereotypes and give a very
offensive overall picture of Muslims,”
said Shahin. He added that while he
didn’t have the time and resources to
check every single textbook on every
topic, the only way to be certain that
this was an aberration was to form
a committee to look at Icelandic
textbooks.
Amongst the notable errors in those
chapters were the false assertion that
Shia Muslims believe all caliphs to
have been descended from Mu-
hammed, and the claim that there
are only 315 million Muslims in the
world, when in fact the true figure is
believed to be closer to 1.3 billion.
PM: The People Asked for Smelters
Heated debate continued last month
in parliament between Social Demo-
cratic chairman Ingibjörg Sólrún
Gísladóttir and Prime Minister
Halldór Ásgrímsson over the issue of
the Icelandic economy.
Gísladóttir asked the Prime
Minister what his response was to
economic reports from both Fitch
and Standard & Poor’s, which she
said have given Iceland “the yellow
card.”
“There is too little information
and too many expectations,” said
Gísladóttir, “because the government
built them up with endless talk about
factories and heavy industry.”
Ásgrímsson responded by saying
that the government isn’t responsible
for the great expectations that have
been placed on heavy industry, and
that the government didn’t hand
over heavy industry on a silver platter
but rather that the people pressured
the government for it.
“There are people in the north
trying to get it,” said Ásgrímsson.
“There are people in Reykjanes
who are trying to get it. There is a
company in Hafnarfjörður that wants
to expand in size. This isn’t because
the government is trying to convince
anybody of anything.”
News in Brief
by paul f nikolov, gunnar hrafn jónsson
and sveinn birkir björnsson photos by gúndi
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