CARI Infonet

 Forgot password?
 Register

ADVERTISEMENT

12Next
Return to list New
View: 3379|Reply: 22

[Dunia] Iceland Negara Bankrap? Hamjadah

[Copy link]
Post time 6-7-2015 02:45 AM | Show all posts |Read mode
Edited by Acong at 6-7-2015 02:52 AM

INTERNATIONAL BUSINESS
How Iceland Emerged From Its Deep Freeze
By JENNY ANDERSONJULY 3, 2015


Reykjavik, the capital of Iceland. The country has a population of 320,000. Credit Bara Kristinsdottir for The New York Times

When the financial crisis hit Iceland seven years ago, Gudmundur Kristjansson, a 55-year-old fisherman with a wide smile, weathered face and mischievous eyes, almost lost his business. Interest payments on his loans soared 300 percent. He had to sell his two fish factories and two of his five fishing boats. “We didn’t invest for many years,” he said, “because we were only paying interest.”

His tribulations were shared by the whole country. After Iceland’s three largest banks fell in the space of three days, the currency collapsed, the stock market fell 95 percent and nearly every business on the island was bankrupt.

Short-term suffering followed, but today, Iceland is buzzing: Unemployment is 4 percent, the International Monetary Fund is predicting 4.1 percent G.D.P. growth for 2015, and tourism is booming. Mr. Kristjansson has just bought Nanoq, a used boat from Russia that recently was being prepared for a fishing trip to Greenland.

But just as Iceland returns to the fold, Europe is again bracing for a financial catastrophe in a renegade nation. Greece, having missed crucial debt payments, has in recent days moved closer than ever to an exit from the euro. Leaving the common currency — and having to suddenly create its own new money — could plunge Greece into an even deeper economic downturn.


Prime Minister Sigmundur David Gunnlaugsson said of the country’s controls: “They worked better than anyone expected them to work. But they of course are not a sustainable situation for an economy.” Credit Bara Kristinsdottir for The New York Times

The Greek people may vote for a deal with the creditors in a referendum that is scheduled for Sunday, and Greece and Europe may have announced the contours of a settlement before then.

But even if that happens, uncertainty will hang over Greece for a long time, raising important questions about whether it makes sense for a country to go it alone, as Iceland did.

Iceland is not Greece. As a tiny island with a population of 320,000, it was able to muster political will more easily than most countries. (Meeting the prime minister is no big deal to locals.) Greece has a population of 11 million, a gross domestic product that is $242 billion, or 16 times Iceland’s, and a history of political antagonism and government corruption. The two countries blew themselves up, though in different ways. Greece, as a nation, spent too much; in Iceland, the private banks went on a bender that ended badly.

But Iceland came out the other side of disaster in part because it had its own currency, which devalued, and it imposed draconian capital controls. If Greece ends up with its own currency, it would most likely descend into an economic Hades in the months after dumping the euro before even having a chance to emerge on the other side.

Yet, even as Iceland is in the bloom of health, its comeback is about to be tested again. The government recently announced it would start to lift capital controls imposed at the peak of the crisis. Meant to last a few months, the controls have been in place for seven years, creating a shelter under which Iceland has mostly thrived.

Their success, paradoxically, has made their removal all the more precarious.

“They worked better than anyone expected them to work,” said Sigmundur David Gunnlaugsson, the prime minister. “But they of course are not a sustainable situation for an economy.”

The Aftermath of the Collapse

To say the case for capital controls was strong in 2008 would be a huge understatement. If the United States and Europe got drunk on easy money, Iceland was the guy at the party who was unconscious in the corner.

When the Icelandic krona crashed in 2008, the country’s three largest banks had assets worth 10 times the country’s G.D.P. Eighty-five percent of the financial system collapsed.

Iceland’s banks got into the international banking business in a big way, despite having very little international banking — or regulatory — experience.

“Iceland wanted to be a big financial player, which was crazy for a population of 320,000,” said Bogi Thor Siguroddsson, chairman of Johan Ronning, an electrical wholesaler.

At the same time, Iceland became a target for hot money. Because Iceland had high interest rates, international traders — and plenty of ordinary people — would borrow dollars at, say, 5 percent, convert them to Icelandic krona and buy Icelandic bonds paying 9 percent. They would profit from the difference between the 5 and the 9 percent.

At the time of the collapse, the carry traders’ positions were estimated to be 41 percent of G.D.P. Without capital controls, that money would flee, further depressing the krona.

There was no chance Iceland could bail out its banks, so it let them fail. But first it saved local depositors by moving them to new “good” banks.

The Icelandic government, with the support of the International Monetary Fund, imposed strict capital controls, barring capital from leaving the country and prohibiting individuals from buying foreign currency or foreign stocks.

As real wages fell 11 percent from 2007 to 2010, the government did not take a hacksaw to social services, but instead raised taxes and also offered debt relief to the country’s mortgage holders.

And Iceland did what no other developed country has seemed particularly eager to do: It jailed a bunch of bankers.

When the banks collapsed — combined, the third largest corporate bankruptcy in world history in one of the smallest countries — shareholders were wiped out. Foreign creditors lost billions, but hoped to recover some assets. International hedge funds spotted opportunity and bought some of those claims, reportedly for cents on the dollar.

As the economy improved, the claims — including positions in two of the country’s “good” banks — increased in value. That meant that the hedge funds effectively owned a significant part of Iceland’s financial system.

“We are the only country to let crazy hedge funds own our banks for seven years,” Mr. Kristjansson, the fisherman, said.

The capital controls caused a lot of other weird things to happen. Overnight, the central bank gained enormous powers over how money could be spent. Mr. Siguroddsson, the chairman of the electrical wholesaler, was in Japan with his family when his credit card was rejected because he hit his foreign currency limit. He had to call a special number in the middle of the night.

“You have the feeling that there’s a system watching you and telling you what you can do with your money,” he said.

Iceland’s pension funds, which are nearly fully funded, were suddenly prevented from investing in new foreign assets; today a whopping 75 percent of pension fund assets are in krona-based investments. Overnight, homegrown private equity and real estate funds were born as a place to invest the rapidly expanding pot of local money.

Individuals faced foreign currency limits. When Magnus Arni Skulason’s son had a confirmation celebration five years ago, his son asked to invest his savings of $2,000 in Apple stock (the price was $32.50). “It’s illegal, Jonatan, we have capital controls,” his father recalled telling him. (The stock is now at $127.)


Reykjavik, Iceland Credit Bara Kristinsdottir for The New York Times

There were, however, salutary effects to capital controls and currency devaluation.

Devaluation made exports cheaper and imports more expensive. It became cheaper to travel to Iceland. And, if wages fell, Iceland did not face the crippling unemployment of many European countries.

“In my opinion the last six to seven years have been an open class on the discussion of whether or not to have your own currency and what it means to be a member of a common currency that is not taking your economic situation under consideration,” said Bjarni Benediktsson, Iceland’s finance minister.

But the capital controls also caused pain for businesses. Investors, worried about how the controls would affect them, stayed away. Foreign investment fell and is still only about 16 percent of G.D.P., far below precrisis levels.

Mr. Kristjansson, the fisherman, wants to buy a new, more energy-efficient fishing boat. But he can borrow only in local currency at high rates, and most banks have not been keen on lending, hence the purchase of the secondhand boat.

“We are losing competition with companies coming from the outside,” he said.

Mr. Benediktsson, the finance minister, sees that problem.

“We are enjoying the longest sustainable growth period in recent history,” he said. But the capital controls “are very damning for investment interest in Iceland but also very damaging to the real economy where we are losing opportunities.”

Paving the Way to Lift Controls

Iceland is a place of stunning natural beauty. Visitors can hike down a volcano and across glaciers, and see Niagara-Falls-like cataracts.

Since the financial crisis — and, weirdly, since the 2010 eruption of a smallish volcano that darkened the skies on airline pathways to Europe — tourism has flourished.

“When you enjoy the right conditions — lower exchange rates, more attention because of eruptions in Iceland — the stars align and things start happening,” said Mr. Benediktsson. In 2014, tourism was up 100 percent from 2006.

“It’s a much healthier place than it used to be,” Gylfi Magnusson, a professor of finance at the University of Iceland, said, sitting in a cafe in downtown Reykjavik.

The city center used to be peppered with banks and finance companies; now there are cafes and shops catering to tourists. Among Iceland’s current concerns: Wage increases are expected to lead to higher inflation.

Tourism has helped the recovery, but Iceland was built on fishing and power industries. Iceland’s capital controls worked because there was a real economy underlying its temporary bout of insanity as a global banking giant.

And Iceland was willing to prescribe itself tough medicine to repair its tattered reputation.

“There was a consensus that they did not want to be seen as the village idiot,” said Jon Danielsson, co-head of the Systemic Risk Center at the London School of Economics, and an Icelander. As the economy recovered, however, Iceland’s capital controls became more and more of an albatross.

Recently, after years of acrimonious facing off, the hedge funds and the estates came to an agreement that prepares for lifting capital controls.

The government offered creditors the choice of taking a loss on their claims of about 3 billion euros, or 22 percent of G.D.P., by the end of the year.

If they do not accept those conditions, they would face a one-time “stability” tax that is estimated to reach Euro4.6 billion, or 34 percent of G.D.P. It also put forward a plan to resolve the leftover carry trades.
While everyone agrees lifting the controls is necessary, the settlement has also stoked fear about what life will be like on the other side and whether Iceland can survive with its own currency.

The prime minister and finance minister — who are from different parties — say having its own currency allowed Iceland to save itself and stage a remarkable comeback. Greece, Spain and Italy, which use the euro, have not been so lucky, they note. Their adjustment has not been only through wage deflation, but also through job losses, which have proved more intractable.

But others think the world is too global for an island nation of 320,000 with a free-floating currency.

“It’s crazy for us to keep our own currency,” said Mr. Siguroddsson, the chairman of the electrical wholesaler. He advocates joining another currency, though he sees the struggles of Greece. “We need options.”

While the government hopes to lift the controls next year, individuals, businesses and pension funds will still face limits.

Mr. Kristjansson, the fishing executive, is looking forward to borrowing money in international markets at lower rates, as in Norway where his competitors borrow at 1 percent.

“We are fishing for the same mackerel,” he said.

http://www.nytimes.com/2015/07/0 ... ep-freeze.html?_r=0



bangkrap? pe masalah?   
Reply

Use magic Report


ADVERTISEMENT


 Author| Post time 6-7-2015 04:43 AM | Show all posts
Greek debt crisis: Lessons from Cyprus and Iceland
By Anne Sibert
Birkbeck, University of London
3 July 2015


As people across cash-strapped Greece wait to vote in a referendum on Sunday on whether to accept proposals made by creditors, what can be learned by examining similar economic crises in Iceland and Cyprus?

What happened in Iceland?


Kaupthing bank's headquarters in Reykjavik in 2008

In 2007, the Icelandic economy appeared healthy. Its real Gross Domestic Product (GDP) was 35% higher than it was in 2002, unemployment was 2.3% and government debt was a modest 27% of GDP.

However, the assets of its three largest banks had grown to over nine times GDP, a size that made it impossible for the Icelandic central bank to act as an effective lender of last resort.

Thus, regardless of the quality of the banks' assets, the predictable consequence was a bank run and the subsequent collapse of the Icelandic banking system.

Following the demise of its banks, Iceland imposed capital controls to prevent massive outflows and a plunge in the value of its currency.

Intervention

Recapitalisation of its banking system and other crisis-related expenses caused government debt to rise to 95% of GDP by 2011.

However, a successful International Monetary Fund (IMF) programme cushioned the impact: real GDP fell by a less-than-expected 6.6% in 2009 and 4.1% in 2010, before returning to growth.

Icelandic authorities protected the holders of domestic deposits, who enjoyed uninterrupted access to their accounts; the UK and Dutch governments stepped in to protect deposit holders in UK and Dutch branches of Icelandic banks.

In 2013, the European Free Trade Association (Efta) court ruled that Iceland did not breach its obligations, either by treating domestic deposits differently or by not accepting legal obligation for foreign branch deposits.

Today, Iceland faces the difficult challenge of removing its capital controls in an orderly fashion but the IMF expects real GDP growth of 4.1% in 2015.

What happened in Cyprus?


Bank customers queue in Larnaca, Cyprus, to withdraw cash in 2013

In 2008, the Cypriot economy was more like that of an emerging market nation than a modern European one, but the country was enjoying an economic boom.

Cypriot real GDP had grown by 27% between 2002 and 2008. The growth, however, had been fuelled by inflows of foreign bank deposits and foreign loans to banks.

As a result, the assets of commercial banks with Cypriot parents expanded to over five times' Cypriot GDP.

Unlike the Icelandic banks, the Cypriot banks had a credible lender of last resort: their central bank was a member of the Eurosystem.

Unfortunately, they were heavily exposed to Greece.

Cypriot banks were hit hard by the restructuring of Greek sovereign debt in 2012.

Bank deposits

In March 2013, the Cypriot authorities were in a desperate situation. Either they had to make a sizable contribution to a European Stability Mechanism/IMF rescue package or the emergency loans Cypriot banks had been receiving through its central bank would be cut off.

Without the rescue package, saving the Cypriot banking system would be likely to require exiting from the euro area, adopting a new currency and recapitalising the banks by printing money.

This would cause the value of the new currency to plummet, taking with it the real value of Cypriot pensions, wages and bank accounts.

To avoid catastrophe, the Cypriot authorities looked to the one source of readily available funds: Cypriot bank deposits. Initially they planned to impose a levy on all deposits but ultimately insured depositors were spared.

To stem a run, capital controls were imposed. Banks were closed for two weeks and when they were reopened there was a limit on daily withdrawals.

Real GDP fell by 2.4% in 2012, 5.4% in 2013 and 2.3% in 2014. Unemployment rose to 16.2% in 2014 and government debt has climbed to 107% of GDP.

Currently, the outlook for Cyprus is guarded.

The country finally returned to economic growth this year and the capital controls were removed entirely in April. However, further economic reform is necessary to ensure sustainable growth.

Are there direct comparisons with Greece?


Pensioners in Athens queue to withdraw funds from a bank

Greece currently faces a choice similar to the one faced by Cyprus in 2013.

Its banking system depends for its survival on emergency lending controlled by the ECB.

Bank runs have forced the imposition of capital controls, temporary bank closures and limits on deposit withdrawals.

The consequences of leaving the Eurosystem are likely to be as dire for Greece as they would have been for Cyprus. Reaching an accommodation with its creditors is the preferred outcome.

Real GDP has fallen by almost 30% in Greece since 2007, partly because of severe fiscal austerity.

Unemployment was 26% in 2014 and there has been an exodus of skilled labour.

As with Cyprus, and unlike with Iceland, any lasting recovery will require significant economic and fiscal reform.



Greece ranks 61st in the World Bank's Ease of Doing Business Index, edging out Russia and Cyprus (at 64) but behind Tunisia; Iceland is 12th.

Government debt was already a massive 113% of annual GDP in 2008 and now stands at 180%.

Capital controls were necessary in Iceland and Cyprus, and in Greece today, but they come at a cost.

Many view them as an assault on civil liberties; others see them as a chance to profit.

Even in Iceland, a remote island nation, evasion and avoidance appear to have been widespread.

Some say they promote disrespect for the law and the belief that once again the wealthy, sophisticated and corrupt are benefiting at the expense of the rest of society.

Anne Sibert is a professor of Economics at Birkbeck, University of London, a fellow of the Centre for Economic Policy Research. She is a former member of the Monetary Policy Committee of the Central Bank of Iceland.

http://www.bbc.com/news/world-europe-33354036

Reply

Use magic Report

Post time 6-7-2015 06:32 AM | Show all posts
malas nak ngomen pasai ekonomi ....

just nak habag .. teringin nak pi negara ais nie ... shantek sesangat view negara nie ....
insha Allah ... one day akan pijak kaki ke negara nie
Reply

Use magic Report

Post time 6-7-2015 07:04 AM From the mobile phone | Show all posts
Greece dah voted NO dalam referendum. Kemungkinan besar Greece akan keluar dari EU
Reply

Use magic Report

Post time 6-7-2015 07:08 AM | Show all posts
ultra78 replied at 6-7-2015 07:04 AM
Greece dah voted NO dalam referendum. Kemungkinan besar Greece akan keluar dari EU

so..apa kesannya sekiranya greece keluar dari EU?..
Reply

Use magic Report

Post time 6-7-2015 07:39 AM | Show all posts
MissNigga replied at 6-7-2015 06:32 AM
malas nak ngomen pasai ekonomi ....

just nak habag .. teringin nak pi negara ais nie ... shantek  ...

Tiket kapai torbang pon sampai 8K akak oiii...
Negara sejuk giler...bawah takat beku...kalo ada asthma...baik usah pegi...
Reply

Use magic Report

Follow Us
Post time 6-7-2015 08:01 AM | Show all posts
negara mereka sudah... negara kita bila lagi?, hanya abam jibbam ngn kak mah yg tahu
Reply

Use magic Report

Post time 6-7-2015 08:03 AM | Show all posts
Nokiaman replied at 6-7-2015 07:39 AM
Tiket kapai torbang pon sampai 8K akak oiii...
Negara sejuk giler...bawah takat beku...kalo ada a ...

kak nigga tu vogel kat iceland pun takde pape...kulit tebal kateko...
Reply

Use magic Report


ADVERTISEMENT


Post time 6-7-2015 08:03 AM | Show all posts
md.jie replied at 6-7-2015 08:01 AM
negara mereka sudah... negara kita bila lagi?, hanya abam jibbam ngn kak mah yg tahu

simpang lah...cantas bijan dan rossy sbelum mereka beranak pinak...
Reply

Use magic Report

Post time 6-7-2015 06:03 PM | Show all posts
Nokiaman replied at 6-7-2015 07:39 AM
Tiket kapai torbang pon sampai 8K akak oiii...
Negara sejuk giler...bawah takat beku...kalo ada a ...

mak aihh.... 8K ....

abe tony fernandez ... mohon AA tambah route ke Rekjycjvik ... tol ker ejaan nie

and i love being forzened
Reply

Use magic Report

Post time 6-7-2015 06:04 PM | Show all posts
kentel replied at 6-7-2015 08:03 AM
kak nigga tu vogel kat iceland pun takde pape...kulit tebal kateko...

uols... iols dah tak tahan dok kat malaysia ...

panas tawww... melting kulit iols.... lagi lagi ar musim panas membahang nieee
Reply

Use magic Report

Post time 6-7-2015 06:16 PM | Show all posts
ultra78 replied at 6-7-2015 07:04 AM
Greece dah voted NO dalam referendum. Kemungkinan besar Greece akan keluar dari EU

rasanya dia tak keluar dari EU, cuma dia vote untuk keluar dari eurozone iaitu tiadak lagi pakai matawang euro dan greece akan pakai matawang sundri...

Reply

Use magic Report

Post time 7-7-2015 07:58 AM | Show all posts
MissNigga replied at 6-7-2015 06:04 PM
uols... iols dah tak tahan dok kat malaysia ...

panas tawww... melting kulit iols.... lagi lag ...

huhu..ckp psl bahang, baru pagi td ujan lebat...ase mls bangkit tido g keje..hahah..
Reply

Use magic Report

Post time 7-7-2015 09:02 AM | Show all posts
puak kapirun memang suka bantu sesama puak kapirun...puak kapirun juga sebulat suara suka tindas negara Islam...itu lumrah..aku tak heran pun...
Reply

Use magic Report

Post time 7-7-2015 09:09 AM | Show all posts
kentel replied at 7-7-2015 07:58 AM
huhu..ckp psl bahang, baru pagi td ujan lebat...ase mls bangkit tido g keje..hahah..

khenzzz... nikmat sangat biler hujan turun pagi tadi ...
mujur tido sorg jer .. kalo berdua ... harus melekat teruih atas katil berselubung dalam selimut
Reply

Use magic Report

Post time 7-7-2015 09:16 AM | Show all posts
MissNigga replied at 7-7-2015 09:09 AM
khenzzz... nikmat sangat biler hujan turun pagi tadi ...
mujur tido sorg jer .. kalo berdua ... h ...

melekat terpisah xper sis..jgn melekat terus takleh tanggal..hikss
Reply

Use magic Report


ADVERTISEMENT


Post time 7-7-2015 09:24 AM | Show all posts
kentel replied at 7-7-2015 09:16 AM
melekat terpisah xper sis..jgn melekat terus takleh tanggal..hikss

hamboi .. gam gajah ker yang kuar tue uols .... sampai unseparatable
Reply

Use magic Report

Post time 7-7-2015 09:29 AM | Show all posts
MissNigga replied at 7-7-2015 09:24 AM
hamboi .. gam gajah ker yang kuar tue uols .... sampai unseparatable

gam kena la kuat..kalau tak kuat gugur luruh mcm teloq laba notello
Reply

Use magic Report

Post time 7-7-2015 09:40 AM | Show all posts
Anak_Nogori replied at 6-7-2015 02:08 AM
so..apa kesannya sekiranya greece keluar dari EU?..

Kena wat duit matawang sendiri...kot? kos lagihhhh.
Reply

Use magic Report

Post time 7-7-2015 09:50 AM | Show all posts
kentel replied at 7-7-2015 09:29 AM
gam kena la kuat..kalau tak kuat gugur luruh mcm teloq laba notello

ntahnya .. kat mana ler si laba tu keciciran tulurnya ... gegeh merayap ke segenap bod nak mencari tulurnya yang ilang

Reply

Use magic Report

12Next
Return to list New
You have to log in before you can reply Login | Register

Points Rules

 

ADVERTISEMENT



 

ADVERTISEMENT


 


ADVERTISEMENT
Follow Us

ADVERTISEMENT


Mobile|Archiver|Mobile*default|About Us|CARI Infonet

29-3-2024 03:13 PM GMT+8 , Processed in 0.085753 second(s), 45 queries .

Powered by Discuz! X3.4

Copyright © 2001-2021, Tencent Cloud.

Quick Reply To Top Return to the list