zap
4th January 2013, 09:00 PM
http://www.independent.ie/business/irish/dan-white-the-economic-return-of-iceland-has-proved-that-the-joke-was-on-us-3327164.html
Dan White: The economic return of Iceland has proved that the joke was on us
PRINT (http://www.independent.ie/business/irish/dan-white-the-economic-return-of-iceland-has-proved-that-the-joke-was-on-us-3327164.html?service=Print)
EMAIL (http://www.independent.ie/business/irish/dan-white-the-economic-return-of-iceland-has-proved-that-the-joke-was-on-us-3327164.html?action=Email)
NORMAL (http://www.independent.ie/business/irish/dan-white-the-economic-return-of-iceland-has-proved-that-the-joke-was-on-us-3327164.html#font-normal)
LARGE (http://www.independent.ie/business/irish/dan-white-the-economic-return-of-iceland-has-proved-that-the-joke-was-on-us-3327164.html#font-large)
EXTRA LARGE (http://www.independent.ie/business/irish/dan-white-the-economic-return-of-iceland-has-proved-that-the-joke-was-on-us-3327164.html#font-xlarge)
12.5K 4916 2480
Also in Irish
ISEQ soars to four-year high on signs economy is recovering (http://www.independent.ie/business/irish/iseq-soars-to-fouryear-high-on-signs-economy-is-recovering-3342926.html)
Curistan declared bankrupt (http://www.independent.ie/business/irish/curistan-declared-bankrupt-3342927.html)
UPC swings to €5m profit as upgrade yields dividends (http://www.independent.ie/business/irish/upc-swings-to-5m-profit-as-upgrade-yields-dividends-3342936.html)
Irish-owned firms create nearly 4,000 more jobs than they shed (http://www.independent.ie/business/irish/irishowned-firms-create-nearly-4000-more-jobs-than-they-shed-3342226.html)
Going from basketcase to top of the class (http://www.independent.ie/business/irish/going-from-basketcase-to-top-of-the-class-3342931.html)
Irish Home (http://www.independent.ie/business/irish/)
1 oz US Govt Gold Coins (http://www.googleadservices.com/pagead/aclk?sa=L&ai=ClqtqObLnUL0l6_zaBY_8gLAE46T33gKD3dr0O8CNtwEQAS Dgw6kIKAVQxqSB5QVgye68iZCkoBGgAZ3U-PwDyAEBqAMBqgTMAU_QGd36up5USo7pbk6_xarQ_ocWuu-wXF1W0EAHCoIxuFXAUBzFc6cj89wiwXe553kvFTNHyC5DKvOPg E1IKvMyxuq3Vxpl1Wx6BPgx3BboV4LLDlBfNTAdDMYorLjapoc IXe6SonnhaoFT2jy5waFQBc2Su-0YycI5aldJtV-zDD8PW84L3qhrCPPdy8NS4S9pwjnww-PvrmbKK1udU5kdvONw--1-oPDRoSIbJpNDbeaNS78H9TUHrMpYvznAtInHC-CLWK_IWFMpG4gGAYAHy6uHAw&num=1&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_2RHRDFpVGpM8Hk-nPOQKD5HXNqZA&client=ca-pub-9024837700129787&adurl=http://Media.usmoneyreserve.com/DG012/%3Futm_source%3DGoogle%26utm_medium%3Dcpc%26utm_te rm%3Dwww.independent.ie%26utm_content%3DDollar-Crash%26utm_campaign%3DCN-Recession-Terms%26utm_nooverride%3D1%26acp%3DDG012)Markup Free! Buy US Gov't Gold At Cost. First-Come, First-Served.
USMoneyReserve.com (http://www.googleadservices.com/pagead/aclk?sa=L&ai=ClqtqObLnUL0l6_zaBY_8gLAE46T33gKD3dr0O8CNtwEQAS Dgw6kIKAVQxqSB5QVgye68iZCkoBGgAZ3U-PwDyAEBqAMBqgTMAU_QGd36up5USo7pbk6_xarQ_ocWuu-wXF1W0EAHCoIxuFXAUBzFc6cj89wiwXe553kvFTNHyC5DKvOPg E1IKvMyxuq3Vxpl1Wx6BPgx3BboV4LLDlBfNTAdDMYorLjapoc IXe6SonnhaoFT2jy5waFQBc2Su-0YycI5aldJtV-zDD8PW84L3qhrCPPdy8NS4S9pwjnww-PvrmbKK1udU5kdvONw--1-oPDRoSIbJpNDbeaNS78H9TUHrMpYvznAtInHC-CLWK_IWFMpG4gGAYAHy6uHAw&num=1&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_2RHRDFpVGpM8Hk-nPOQKD5HXNqZA&client=ca-pub-9024837700129787&adurl=http://Media.usmoneyreserve.com/DG012/%3Futm_source%3DGoogle%26utm_medium%3Dcpc%26utm_te rm%3Dwww.independent.ie%26utm_content%3DDollar-Crash%26utm_campaign%3DCN-Recession-Terms%26utm_nooverride%3D1%26acp%3DDG012)
"Shocking" 2013 Horoscope (http://www.googleadservices.com/pagead/aclk?sa=L&ai=CXAHeObLnUL0l6_zaBY_8gLAE_frJ_AL9-uT7PcCNtwEQAiDgw6kIKAVQ6_rtkAdgye68iZCkoBGgAaXSwew DyAEBqQJC1gFs-v-wPqgDAaoEywFP0CnLGqOEbXI8Wn0rv8Xzl_mNF6_6u1ZcXcoaQ AY96jjVqUwcwTmyI6vcIpgwvu14OgA4TcklWXC0g8oAXyzpNc3 8twtcfs52YUOzNNNVskiD1h8YBik9VUTAJK252KKNRgL5g6N-_SnDWpF4s8eoXQrH2_7kCpefO3dOWrQW6hA2GgKXF9PgLA3304 OZRPNxK8N6qMW98a5nzy1cn0nfAaXinHnul0t4cmHJlIJTqP5w Y6ASrxveA148Wb05hAV_5Cvgi7hJbSwIo4gGAYAHw62-Ew&num=2&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_009Bq6P4_HWC0E1t8dvYTDgXj9Fw&client=ca-pub-9024837700129787&adurl=http://premiumastrology.com/pro/landing_pages/ses/index.php%3Fga_campaign%3Dnumerology%2B(content)%2 6ga_adgroup%3Dnumerology%2Bcalculator%26ga_keyword %3Dwww.independent.ie%26ga_creative%3D1)%2Benter%2 Byour%2Bname%2Band%2Bbirthdate)1) Enter Your Name and Birthdate 2) Receive by Email a Free Reading!
PremiumAstrology.com/FreeReading (http://www.googleadservices.com/pagead/aclk?sa=L&ai=CXAHeObLnUL0l6_zaBY_8gLAE_frJ_AL9-uT7PcCNtwEQAiDgw6kIKAVQ6_rtkAdgye68iZCkoBGgAaXSwew DyAEBqQJC1gFs-v-wPqgDAaoEywFP0CnLGqOEbXI8Wn0rv8Xzl_mNF6_6u1ZcXcoaQ AY96jjVqUwcwTmyI6vcIpgwvu14OgA4TcklWXC0g8oAXyzpNc3 8twtcfs52YUOzNNNVskiD1h8YBik9VUTAJK252KKNRgL5g6N-_SnDWpF4s8eoXQrH2_7kCpefO3dOWrQW6hA2GgKXF9PgLA3304 OZRPNxK8N6qMW98a5nzy1cn0nfAaXinHnul0t4cmHJlIJTqP5w Y6ASrxveA148Wb05hAV_5Cvgi7hJbSwIo4gGAYAHw62-Ew&num=2&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_009Bq6P4_HWC0E1t8dvYTDgXj9Fw&client=ca-pub-9024837700129787&adurl=http://premiumastrology.com/pro/landing_pages/ses/index.php%3Fga_campaign%3Dnumerology%2B(content)%2 6ga_adgroup%3Dnumerology%2Bcalculator%26ga_keyword %3Dwww.independent.ie%26ga_creative%3D1)%2Benter%2 Byour%2Bname%2Band%2Bbirthdate)
Buy Silver for Under 3.00 (http://www.googleadservices.com/pagead/aclk?sa=L&ai=Cs7uVObLnUL0l6_zaBY_8gLAEpuW-xgKe58i_OsCNtwEQAyDgw6kIKAVQgbGHzgJgye68iZCkoBGgAd 6Cov0DyAEBqAMBqgTRAU_QWZx-o4VtcjxafSu_xfOX-Y0Xr_q7VlxdyhpABj3qONWpTBzBObIjq9wimDC-7Xg6ADhNySVZcLSDygBfLOk1zfy3C1x-znZhQ7M001WySIPWHxgGKT1VRMAkrbnYoo1GAvmDo379KcNakX izx6hdCsfb_uQKl587d05atBbqEDYaApcX0-AsDffTg5lE83Erw3qoxb3xrmfPLVyfSd8BpeKcee63SmXOPMvw qTCDhnUHi1SqY9vsqJFdVTrHBX_GK-DPrUzuw9i3__TTj4bAiAYBgAeK_d0C&num=3&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_0dvEmOoml3qOCeR8O0C9oye84b1A&client=ca-pub-9024837700129787&adurl=http://signup.dailywealth.com/X350NB18)The Best Way to Buy Silver Coins Without Huge Markups. New Report.
www.DailyWealth.com/Silver (http://www.googleadservices.com/pagead/aclk?sa=L&ai=Cs7uVObLnUL0l6_zaBY_8gLAEpuW-xgKe58i_OsCNtwEQAyDgw6kIKAVQgbGHzgJgye68iZCkoBGgAd 6Cov0DyAEBqAMBqgTRAU_QWZx-o4VtcjxafSu_xfOX-Y0Xr_q7VlxdyhpABj3qONWpTBzBObIjq9wimDC-7Xg6ADhNySVZcLSDygBfLOk1zfy3C1x-znZhQ7M001WySIPWHxgGKT1VRMAkrbnYoo1GAvmDo379KcNakX izx6hdCsfb_uQKl587d05atBbqEDYaApcX0-AsDffTg5lE83Erw3qoxb3xrmfPLVyfSd8BpeKcee63SmXOPMvw qTCDhnUHi1SqY9vsqJFdVTrHBX_GK-DPrUzuw9i3__TTj4bAiAYBgAeK_d0C&num=3&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_0dvEmOoml3qOCeR8O0C9oye84b1A&client=ca-pub-9024837700129787&adurl=http://signup.dailywealth.com/X350NB18)
Critical Warning Number 6 (http://www.googleadservices.com/pagead/aclk?sa=L&ai=CxeX7ObLnUL0l6_zaBY_8gLAE6-eLswPj_sOxSLPk2LwIEAQg4MOpCCgFUKLY1tL4_____wFgye68 iZCkoBGgAbn71O4DyAEBqQJC1gFs-v-wPqgDAaoEywFP0GmLQ6OCbXI8Wn0rv8Xzl_mNF6_6u1ZcXcoaQ AY96jjVqUwcwTmyI6vcIpgwvu14OgA4TcklWXC0g8oAXyzpNc3 8twtcfs52YUOzNNNVskiD1h8YBik9VUTAJK252KKNRgL5g6N-_SnDWpF4s8eoXQrH2_7kCpefO3dOWrQW6hA2GgKXF9PgLA3304 OZRPNxK8N6qMW98a5nzy1cn0nfAaXinHnul0t4cmHJlIJTqP5w Y6ASrxveA148Wb05hAV_5Cvgi7hJMV5wpYgGAYAHr4SrEQ&num=4&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_1dbiy1rLl6QdDPX_oAu7urMwLoiA&client=ca-pub-9024837700129787&adurl=http://www.profitconfidential.com/signup/index_ca.php%3Fsb%3DGADN3)Something big will happen in America in the next 180 days
www.ProfitConfidential.com (http://www.googleadservices.com/pagead/aclk?sa=L&ai=CxeX7ObLnUL0l6_zaBY_8gLAE6-eLswPj_sOxSLPk2LwIEAQg4MOpCCgFUKLY1tL4_____wFgye68 iZCkoBGgAbn71O4DyAEBqQJC1gFs-v-wPqgDAaoEywFP0GmLQ6OCbXI8Wn0rv8Xzl_mNF6_6u1ZcXcoaQ AY96jjVqUwcwTmyI6vcIpgwvu14OgA4TcklWXC0g8oAXyzpNc3 8twtcfs52YUOzNNNVskiD1h8YBik9VUTAJK252KKNRgL5g6N-_SnDWpF4s8eoXQrH2_7kCpefO3dOWrQW6hA2GgKXF9PgLA3304 OZRPNxK8N6qMW98a5nzy1cn0nfAaXinHnul0t4cmHJlIJTqP5w Y6ASrxveA148Wb05hAV_5Cvgi7hJMV5wpYgGAYAHr4SrEQ&num=4&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_1dbiy1rLl6QdDPX_oAu7urMwLoiA&client=ca-pub-9024837700129787&adurl=http://www.profitconfidential.com/signup/index_ca.php%3Fsb%3DGADN3)
Gas Ranges: Prices (http://www.googleadservices.com/pagead/aclk?sa=L&ai=CfYBhObLnUL0l6_zaBY_8gLAEk-nd9gGLgPmFIZvMypVaEAUg4MOpCCgFUOGZnN74_____wFgye68 iZCkoBGgAfXhsfgDyAEBqAMBqgTUAU_QWdBKo4NtcjxafSu_xf OX-Y0Xr_q7VlxdyhpABj3qONWpTBzBObIjq9wimDC-7Xg6ADhNySVZcLSDygBfLOk1zfy3C1x-znZhQ7M001WySIPWHxgGKT1VRMAkrbnYoo1GAvmDo379KcNakX izx6hdCsfb_uQKl587d05atBbqEDYaApcX0-AsDffTg5lE83Erw3qoxb3xrmfPLVyfSd8BpeKcee6_SvaSizHf BKhDbf2jS78l2zUHOzmzvpfGGH_D3uOJWE-KNtuXH_JxyBIjU4qWiAYBgAfznc4H&num=5&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_1yUw8SP6z3neAYnFvBn155bBwGYg&client=ca-pub-9024837700129787&adurl=http://www.nextag.com/goto.jsp%3Fp%3D355200%26search%3Dgas%2520ranges%26 crid%3D1%26gg_aid%3D8769668803%26gg_site%3Dwww.ind ependent.ie%26t%3Dag%253D2319702643)We Have 14,500+ Major Appliances. Get the Best Value for Gas Ranges!
www.nextag.com (http://www.googleadservices.com/pagead/aclk?sa=L&ai=CfYBhObLnUL0l6_zaBY_8gLAEk-nd9gGLgPmFIZvMypVaEAUg4MOpCCgFUOGZnN74_____wFgye68 iZCkoBGgAfXhsfgDyAEBqAMBqgTUAU_QWdBKo4NtcjxafSu_xf OX-Y0Xr_q7VlxdyhpABj3qONWpTBzBObIjq9wimDC-7Xg6ADhNySVZcLSDygBfLOk1zfy3C1x-znZhQ7M001WySIPWHxgGKT1VRMAkrbnYoo1GAvmDo379KcNakX izx6hdCsfb_uQKl587d05atBbqEDYaApcX0-AsDffTg5lE83Erw3qoxb3xrmfPLVyfSd8BpeKcee6_SvaSizHf BKhDbf2jS78l2zUHOzmzvpfGGH_D3uOJWE-KNtuXH_JxyBIjU4qWiAYBgAfznc4H&num=5&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_1yUw8SP6z3neAYnFvBn155bBwGYg&client=ca-pub-9024837700129787&adurl=http://www.nextag.com/goto.jsp%3Fp%3D355200%26search%3Dgas%2520ranges%26 crid%3D1%26gg_aid%3D8769668803%26gg_site%3Dwww.ind ependent.ie%26t%3Dag%253D2319702643)
Ads by Google (http://www.google.com/url?ct=abg&q=https://www.google.com/adsense/support/bin/request.py%3Ftrunc%3D1%26contact%3Dabg_afc%26url%3 Dhttp://www.independent.ie/business/irish/dan-white-the-economic-return-of-iceland-has-proved-that-the-joke-was-on-us-3327164.html%26gl%3DUS%26hl%3Den%26client%3Dca-pub-9024837700129787%26hideleadgen%3D1%26ai0%3DClqtqOb LnUL0l6_zaBY_8gLAE46T33gKD3dr0O8CNtwEQASDgw6kIKAVQ xqSB5QVgye68iZCkoBGgAZ3U-PwDyAEBqAMBqgTMAU_QGd36up5USo7pbk6_xarQ_ocWuu-wXF1W0EAHCoIxuFXAUBzFc6cj89wiwXe553kvFTNHyC5DKvOPg E1IKvMyxuq3Vxpl1Wx6BPgx3BboV4LLDlBfNTAdDMYorLjapoc IXe6SonnhaoFT2jy5waFQBc2Su-0YycI5aldJtV-zDD8PW84L3qhrCPPdy8NS4S9pwjnww-PvrmbKK1udU5kdvONw--1-oPDRoSIbJpNDbeaNS78H9TUHrMpYvznAtInHC-CLWK_IWFMpG4gGAYAHy6uHAw%26ai1%3DCXAHeObLnUL0l6_za BY_8gLAE_frJ_AL9-uT7PcCNtwEQAiDgw6kIKAVQ6_rtkAdgye68iZCkoBGgAaXSwew DyAEBqQJC1gFs-v-wPqgDAaoEywFP0CnLGqOEbXI8Wn0rv8Xzl_mNF6_6u1ZcXcoaQ AY96jjVqUwcwTmyI6vcIpgwvu14OgA4TcklWXC0g8oAXyzpNc3 8twtcfs52YUOzNNNVskiD1h8YBik9VUTAJK252KKNRgL5g6N-_SnDWpF4s8eoXQrH2_7kCpefO3dOWrQW6hA2GgKXF9PgLA3304 OZRPNxK8N6qMW98a5nzy1cn0nfAaXinHnul0t4cmHJlIJTqP5w Y6ASrxveA148Wb05hAV_5Cvgi7hJbSwIo4gGAYAHw62-Ew%26ai2%3DCs7uVObLnUL0l6_zaBY_8gLAEpuW-xgKe58i_OsCNtwEQAyDgw6kIKAVQgbGHzgJgye68iZCkoBGgAd 6Cov0DyAEBqAMBqgTRAU_QWZx-o4VtcjxafSu_xfOX-Y0Xr_q7VlxdyhpABj3qONWpTBzBObIjq9wimDC-7Xg6ADhNySVZcLSDygBfLOk1zfy3C1x-znZhQ7M001WySIPWHxgGKT1VRMAkrbnYoo1GAvmDo379KcNakX izx6hdCsfb_uQKl587d05atBbqEDYaApcX0-AsDffTg5lE83Erw3qoxb3xrmfPLVyfSd8BpeKcee63SmXOPMvw qTCDhnUHi1SqY9vsqJFdVTrHBX_GK-DPrUzuw9i3__TTj4bAiAYBgAeK_d0C%26ai3%3DCxeX7ObLnUL 0l6_zaBY_8gLAE6-eLswPj_sOxSLPk2LwIEAQg4MOpCCgFUKLY1tL4_____wFgye68 iZCkoBGgAbn71O4DyAEBqQJC1gFs-v-wPqgDAaoEywFP0GmLQ6OCbXI8Wn0rv8Xzl_mNF6_6u1ZcXcoaQ AY96jjVqUwcwTmyI6vcIpgwvu14OgA4TcklWXC0g8oAXyzpNc3 8twtcfs52YUOzNNNVskiD1h8YBik9VUTAJK252KKNRgL5g6N-_SnDWpF4s8eoXQrH2_7kCpefO3dOWrQW6hA2GgKXF9PgLA3304 OZRPNxK8N6qMW98a5nzy1cn0nfAaXinHnul0t4cmHJlIJTqP5w Y6ASrxveA148Wb05hAV_5Cvgi7hJMV5wpYgGAYAHr4SrEQ&usg=AFQjCNHdIP3DRAqRWL5g83_c5hhriGd2Qw)
By Dan White
Sunday December 16 2012
WAY back in the autumn of 2008, the joke in financial circles was that the only difference between Ireland and Iceland (http://searchtopics.independent.ie/topic/Iceland) was a letter and six months. Now, with the Icelandic banks preparing to issue foreign currency bonds once again, it turns out that the joke was on us.
Remember when the Icelandics did the unthinkable and, unlike Ireland, told bank creditors to take a hike? They also imposed capital controls and allowed the value of their currency to fall – the Icelandic krona has lost almost half of its value against the euro over the past five years.
The "experts" queued up to assure us that these latter-day Vikings would be severely punished for their impertinence. While no one forecast that a hole would open up in the North Atlantic and swallow Iceland (http://searchtopics.independent.ie/topic/Iceland) whole, some of the predictions came pretty darned close.
Meanwhile, we in Ireland did what we were told and repaid over €70bn of bank bonds at par. By doing so, even at the cost of bankrupting the State, the "experts" assured us that we would retain the confidence of the markets. Now, four years later, it is clear that, not for the first time, the "experts" have got it wrong. Catastrophically and utterly wrong.
Since putting the taxpayer on the hook for the banks' debts, the domestic economy has shrunk by almost a quarter in nominal or cash terms. And any real recovery is still a long way off. The documents along with this month's Budget reveal that the Department of Finance (http://searchtopics.independent.ie/topic/Department_of_Finance_(Ireland)) is expecting Irish GNP, basically the domestic economy, to grow by 1.4 per cent in 2012 and 0.9 per cent next year. Other forecasters are taking a far more pessimistic view.
Way out in the North Atlantic, things have turned out rather differently. Economic growth is expected to be 3.1 per cent this year and 2.2 per cent in 2013. But surely after stitching up its bank creditors – the Icelandic banking default cost $85bn, a massive amount for a country with a population of 320,000 people – the country remains persona non grata with the international financial markets. Having been so badly bitten once, the markets must be twice or even thrice shy of Iceland.
Not so. The Icelandic treasury successfully flogged $1bn of 10-year bonds to investors in May. These bonds were initially priced to yield a spread of 407 basis points (4.07 per cent) over comparable US treasuries, a margin which has since narrowed to 296 basis points.
In the financial markets, as elsewhere in life, eaten bread is soon forgotten. Would-be investors in Icelandic bonds focus most of their attention, not on what happened in the past, but on what is likely to happen in the future.
What these investors see is that, by burning the bank bondholders rather than taking these debts on to the national balance sheet, the Icelandic sovereign is in a far stronger position to repay any future debts.
Compare this to the Irish situation. By being good boys did we retain the confidence of the markets? No we didn't. We too were locked out of the markets and were bounced into accepting an EU (http://searchtopics.independent.ie/topic/European_Union)/IMF (http://searchtopics.independent.ie/topic/International_Monetary_Fund) bailout in November 2010. Far from doing better than the Icelandics, we have ended up with the worst of all possible worlds. We are still stuck with the banks' legacy debts and, a few carefully choreographed fund raisings by the NTMA notwithstanding, the State remains largely reliant on official lenders to fund its activities. This is because investors can see that, with the debts of the Irish State likely to exceed €200bn – the equivalent of more than 150 per cent of GNP – by the end of 2013, there is no way the Irish sovereign can repay existing borrowings let alone any new loans it may seek to raise.
Now, as if to add insult to injury, the Icelandic banks are preparing a return to the markets. Unlike Ireland, Iceland immediately nationalised its bust banks in the autumn of 2008 but refused to assume responsibility for their liabilities. The cleaned-up Icelandic banks are now getting ready to issue foreign currency bonds, the proceeds of which will be used to help finance the thriving, export-driven Icelandic economy.
When we look at what has happened in Iceland, the proposed deal on legacy Irish bank debt tastes like very thin gruel indeed. Once again the Irish Government is talking up the chances of such a deal following last week's apparent agreement by EU finance ministers on a new eurozone banking supervision regime. The latest "deadline" for such a deal is supposedly the end of March 2013. Given that several previous "deadlines" have come and gone, don't hold your breath.
Maybe, instead of being the good boys it's time we followed the Icelandic example and indulged in some Viking-style plunder and pillage.
- Dan White
Dan White: The economic return of Iceland has proved that the joke was on us
PRINT (http://www.independent.ie/business/irish/dan-white-the-economic-return-of-iceland-has-proved-that-the-joke-was-on-us-3327164.html?service=Print)
EMAIL (http://www.independent.ie/business/irish/dan-white-the-economic-return-of-iceland-has-proved-that-the-joke-was-on-us-3327164.html?action=Email)
NORMAL (http://www.independent.ie/business/irish/dan-white-the-economic-return-of-iceland-has-proved-that-the-joke-was-on-us-3327164.html#font-normal)
LARGE (http://www.independent.ie/business/irish/dan-white-the-economic-return-of-iceland-has-proved-that-the-joke-was-on-us-3327164.html#font-large)
EXTRA LARGE (http://www.independent.ie/business/irish/dan-white-the-economic-return-of-iceland-has-proved-that-the-joke-was-on-us-3327164.html#font-xlarge)
12.5K 4916 2480
Also in Irish
ISEQ soars to four-year high on signs economy is recovering (http://www.independent.ie/business/irish/iseq-soars-to-fouryear-high-on-signs-economy-is-recovering-3342926.html)
Curistan declared bankrupt (http://www.independent.ie/business/irish/curistan-declared-bankrupt-3342927.html)
UPC swings to €5m profit as upgrade yields dividends (http://www.independent.ie/business/irish/upc-swings-to-5m-profit-as-upgrade-yields-dividends-3342936.html)
Irish-owned firms create nearly 4,000 more jobs than they shed (http://www.independent.ie/business/irish/irishowned-firms-create-nearly-4000-more-jobs-than-they-shed-3342226.html)
Going from basketcase to top of the class (http://www.independent.ie/business/irish/going-from-basketcase-to-top-of-the-class-3342931.html)
Irish Home (http://www.independent.ie/business/irish/)
1 oz US Govt Gold Coins (http://www.googleadservices.com/pagead/aclk?sa=L&ai=ClqtqObLnUL0l6_zaBY_8gLAE46T33gKD3dr0O8CNtwEQAS Dgw6kIKAVQxqSB5QVgye68iZCkoBGgAZ3U-PwDyAEBqAMBqgTMAU_QGd36up5USo7pbk6_xarQ_ocWuu-wXF1W0EAHCoIxuFXAUBzFc6cj89wiwXe553kvFTNHyC5DKvOPg E1IKvMyxuq3Vxpl1Wx6BPgx3BboV4LLDlBfNTAdDMYorLjapoc IXe6SonnhaoFT2jy5waFQBc2Su-0YycI5aldJtV-zDD8PW84L3qhrCPPdy8NS4S9pwjnww-PvrmbKK1udU5kdvONw--1-oPDRoSIbJpNDbeaNS78H9TUHrMpYvznAtInHC-CLWK_IWFMpG4gGAYAHy6uHAw&num=1&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_2RHRDFpVGpM8Hk-nPOQKD5HXNqZA&client=ca-pub-9024837700129787&adurl=http://Media.usmoneyreserve.com/DG012/%3Futm_source%3DGoogle%26utm_medium%3Dcpc%26utm_te rm%3Dwww.independent.ie%26utm_content%3DDollar-Crash%26utm_campaign%3DCN-Recession-Terms%26utm_nooverride%3D1%26acp%3DDG012)Markup Free! Buy US Gov't Gold At Cost. First-Come, First-Served.
USMoneyReserve.com (http://www.googleadservices.com/pagead/aclk?sa=L&ai=ClqtqObLnUL0l6_zaBY_8gLAE46T33gKD3dr0O8CNtwEQAS Dgw6kIKAVQxqSB5QVgye68iZCkoBGgAZ3U-PwDyAEBqAMBqgTMAU_QGd36up5USo7pbk6_xarQ_ocWuu-wXF1W0EAHCoIxuFXAUBzFc6cj89wiwXe553kvFTNHyC5DKvOPg E1IKvMyxuq3Vxpl1Wx6BPgx3BboV4LLDlBfNTAdDMYorLjapoc IXe6SonnhaoFT2jy5waFQBc2Su-0YycI5aldJtV-zDD8PW84L3qhrCPPdy8NS4S9pwjnww-PvrmbKK1udU5kdvONw--1-oPDRoSIbJpNDbeaNS78H9TUHrMpYvznAtInHC-CLWK_IWFMpG4gGAYAHy6uHAw&num=1&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_2RHRDFpVGpM8Hk-nPOQKD5HXNqZA&client=ca-pub-9024837700129787&adurl=http://Media.usmoneyreserve.com/DG012/%3Futm_source%3DGoogle%26utm_medium%3Dcpc%26utm_te rm%3Dwww.independent.ie%26utm_content%3DDollar-Crash%26utm_campaign%3DCN-Recession-Terms%26utm_nooverride%3D1%26acp%3DDG012)
"Shocking" 2013 Horoscope (http://www.googleadservices.com/pagead/aclk?sa=L&ai=CXAHeObLnUL0l6_zaBY_8gLAE_frJ_AL9-uT7PcCNtwEQAiDgw6kIKAVQ6_rtkAdgye68iZCkoBGgAaXSwew DyAEBqQJC1gFs-v-wPqgDAaoEywFP0CnLGqOEbXI8Wn0rv8Xzl_mNF6_6u1ZcXcoaQ AY96jjVqUwcwTmyI6vcIpgwvu14OgA4TcklWXC0g8oAXyzpNc3 8twtcfs52YUOzNNNVskiD1h8YBik9VUTAJK252KKNRgL5g6N-_SnDWpF4s8eoXQrH2_7kCpefO3dOWrQW6hA2GgKXF9PgLA3304 OZRPNxK8N6qMW98a5nzy1cn0nfAaXinHnul0t4cmHJlIJTqP5w Y6ASrxveA148Wb05hAV_5Cvgi7hJbSwIo4gGAYAHw62-Ew&num=2&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_009Bq6P4_HWC0E1t8dvYTDgXj9Fw&client=ca-pub-9024837700129787&adurl=http://premiumastrology.com/pro/landing_pages/ses/index.php%3Fga_campaign%3Dnumerology%2B(content)%2 6ga_adgroup%3Dnumerology%2Bcalculator%26ga_keyword %3Dwww.independent.ie%26ga_creative%3D1)%2Benter%2 Byour%2Bname%2Band%2Bbirthdate)1) Enter Your Name and Birthdate 2) Receive by Email a Free Reading!
PremiumAstrology.com/FreeReading (http://www.googleadservices.com/pagead/aclk?sa=L&ai=CXAHeObLnUL0l6_zaBY_8gLAE_frJ_AL9-uT7PcCNtwEQAiDgw6kIKAVQ6_rtkAdgye68iZCkoBGgAaXSwew DyAEBqQJC1gFs-v-wPqgDAaoEywFP0CnLGqOEbXI8Wn0rv8Xzl_mNF6_6u1ZcXcoaQ AY96jjVqUwcwTmyI6vcIpgwvu14OgA4TcklWXC0g8oAXyzpNc3 8twtcfs52YUOzNNNVskiD1h8YBik9VUTAJK252KKNRgL5g6N-_SnDWpF4s8eoXQrH2_7kCpefO3dOWrQW6hA2GgKXF9PgLA3304 OZRPNxK8N6qMW98a5nzy1cn0nfAaXinHnul0t4cmHJlIJTqP5w Y6ASrxveA148Wb05hAV_5Cvgi7hJbSwIo4gGAYAHw62-Ew&num=2&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_009Bq6P4_HWC0E1t8dvYTDgXj9Fw&client=ca-pub-9024837700129787&adurl=http://premiumastrology.com/pro/landing_pages/ses/index.php%3Fga_campaign%3Dnumerology%2B(content)%2 6ga_adgroup%3Dnumerology%2Bcalculator%26ga_keyword %3Dwww.independent.ie%26ga_creative%3D1)%2Benter%2 Byour%2Bname%2Band%2Bbirthdate)
Buy Silver for Under 3.00 (http://www.googleadservices.com/pagead/aclk?sa=L&ai=Cs7uVObLnUL0l6_zaBY_8gLAEpuW-xgKe58i_OsCNtwEQAyDgw6kIKAVQgbGHzgJgye68iZCkoBGgAd 6Cov0DyAEBqAMBqgTRAU_QWZx-o4VtcjxafSu_xfOX-Y0Xr_q7VlxdyhpABj3qONWpTBzBObIjq9wimDC-7Xg6ADhNySVZcLSDygBfLOk1zfy3C1x-znZhQ7M001WySIPWHxgGKT1VRMAkrbnYoo1GAvmDo379KcNakX izx6hdCsfb_uQKl587d05atBbqEDYaApcX0-AsDffTg5lE83Erw3qoxb3xrmfPLVyfSd8BpeKcee63SmXOPMvw qTCDhnUHi1SqY9vsqJFdVTrHBX_GK-DPrUzuw9i3__TTj4bAiAYBgAeK_d0C&num=3&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_0dvEmOoml3qOCeR8O0C9oye84b1A&client=ca-pub-9024837700129787&adurl=http://signup.dailywealth.com/X350NB18)The Best Way to Buy Silver Coins Without Huge Markups. New Report.
www.DailyWealth.com/Silver (http://www.googleadservices.com/pagead/aclk?sa=L&ai=Cs7uVObLnUL0l6_zaBY_8gLAEpuW-xgKe58i_OsCNtwEQAyDgw6kIKAVQgbGHzgJgye68iZCkoBGgAd 6Cov0DyAEBqAMBqgTRAU_QWZx-o4VtcjxafSu_xfOX-Y0Xr_q7VlxdyhpABj3qONWpTBzBObIjq9wimDC-7Xg6ADhNySVZcLSDygBfLOk1zfy3C1x-znZhQ7M001WySIPWHxgGKT1VRMAkrbnYoo1GAvmDo379KcNakX izx6hdCsfb_uQKl587d05atBbqEDYaApcX0-AsDffTg5lE83Erw3qoxb3xrmfPLVyfSd8BpeKcee63SmXOPMvw qTCDhnUHi1SqY9vsqJFdVTrHBX_GK-DPrUzuw9i3__TTj4bAiAYBgAeK_d0C&num=3&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_0dvEmOoml3qOCeR8O0C9oye84b1A&client=ca-pub-9024837700129787&adurl=http://signup.dailywealth.com/X350NB18)
Critical Warning Number 6 (http://www.googleadservices.com/pagead/aclk?sa=L&ai=CxeX7ObLnUL0l6_zaBY_8gLAE6-eLswPj_sOxSLPk2LwIEAQg4MOpCCgFUKLY1tL4_____wFgye68 iZCkoBGgAbn71O4DyAEBqQJC1gFs-v-wPqgDAaoEywFP0GmLQ6OCbXI8Wn0rv8Xzl_mNF6_6u1ZcXcoaQ AY96jjVqUwcwTmyI6vcIpgwvu14OgA4TcklWXC0g8oAXyzpNc3 8twtcfs52YUOzNNNVskiD1h8YBik9VUTAJK252KKNRgL5g6N-_SnDWpF4s8eoXQrH2_7kCpefO3dOWrQW6hA2GgKXF9PgLA3304 OZRPNxK8N6qMW98a5nzy1cn0nfAaXinHnul0t4cmHJlIJTqP5w Y6ASrxveA148Wb05hAV_5Cvgi7hJMV5wpYgGAYAHr4SrEQ&num=4&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_1dbiy1rLl6QdDPX_oAu7urMwLoiA&client=ca-pub-9024837700129787&adurl=http://www.profitconfidential.com/signup/index_ca.php%3Fsb%3DGADN3)Something big will happen in America in the next 180 days
www.ProfitConfidential.com (http://www.googleadservices.com/pagead/aclk?sa=L&ai=CxeX7ObLnUL0l6_zaBY_8gLAE6-eLswPj_sOxSLPk2LwIEAQg4MOpCCgFUKLY1tL4_____wFgye68 iZCkoBGgAbn71O4DyAEBqQJC1gFs-v-wPqgDAaoEywFP0GmLQ6OCbXI8Wn0rv8Xzl_mNF6_6u1ZcXcoaQ AY96jjVqUwcwTmyI6vcIpgwvu14OgA4TcklWXC0g8oAXyzpNc3 8twtcfs52YUOzNNNVskiD1h8YBik9VUTAJK252KKNRgL5g6N-_SnDWpF4s8eoXQrH2_7kCpefO3dOWrQW6hA2GgKXF9PgLA3304 OZRPNxK8N6qMW98a5nzy1cn0nfAaXinHnul0t4cmHJlIJTqP5w Y6ASrxveA148Wb05hAV_5Cvgi7hJMV5wpYgGAYAHr4SrEQ&num=4&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_1dbiy1rLl6QdDPX_oAu7urMwLoiA&client=ca-pub-9024837700129787&adurl=http://www.profitconfidential.com/signup/index_ca.php%3Fsb%3DGADN3)
Gas Ranges: Prices (http://www.googleadservices.com/pagead/aclk?sa=L&ai=CfYBhObLnUL0l6_zaBY_8gLAEk-nd9gGLgPmFIZvMypVaEAUg4MOpCCgFUOGZnN74_____wFgye68 iZCkoBGgAfXhsfgDyAEBqAMBqgTUAU_QWdBKo4NtcjxafSu_xf OX-Y0Xr_q7VlxdyhpABj3qONWpTBzBObIjq9wimDC-7Xg6ADhNySVZcLSDygBfLOk1zfy3C1x-znZhQ7M001WySIPWHxgGKT1VRMAkrbnYoo1GAvmDo379KcNakX izx6hdCsfb_uQKl587d05atBbqEDYaApcX0-AsDffTg5lE83Erw3qoxb3xrmfPLVyfSd8BpeKcee6_SvaSizHf BKhDbf2jS78l2zUHOzmzvpfGGH_D3uOJWE-KNtuXH_JxyBIjU4qWiAYBgAfznc4H&num=5&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_1yUw8SP6z3neAYnFvBn155bBwGYg&client=ca-pub-9024837700129787&adurl=http://www.nextag.com/goto.jsp%3Fp%3D355200%26search%3Dgas%2520ranges%26 crid%3D1%26gg_aid%3D8769668803%26gg_site%3Dwww.ind ependent.ie%26t%3Dag%253D2319702643)We Have 14,500+ Major Appliances. Get the Best Value for Gas Ranges!
www.nextag.com (http://www.googleadservices.com/pagead/aclk?sa=L&ai=CfYBhObLnUL0l6_zaBY_8gLAEk-nd9gGLgPmFIZvMypVaEAUg4MOpCCgFUOGZnN74_____wFgye68 iZCkoBGgAfXhsfgDyAEBqAMBqgTUAU_QWdBKo4NtcjxafSu_xf OX-Y0Xr_q7VlxdyhpABj3qONWpTBzBObIjq9wimDC-7Xg6ADhNySVZcLSDygBfLOk1zfy3C1x-znZhQ7M001WySIPWHxgGKT1VRMAkrbnYoo1GAvmDo379KcNakX izx6hdCsfb_uQKl587d05atBbqEDYaApcX0-AsDffTg5lE83Erw3qoxb3xrmfPLVyfSd8BpeKcee6_SvaSizHf BKhDbf2jS78l2zUHOzmzvpfGGH_D3uOJWE-KNtuXH_JxyBIjU4qWiAYBgAfznc4H&num=5&cid=5GjBUa7pjJJLYT0LMiIxqnmx&sig=AOD64_1yUw8SP6z3neAYnFvBn155bBwGYg&client=ca-pub-9024837700129787&adurl=http://www.nextag.com/goto.jsp%3Fp%3D355200%26search%3Dgas%2520ranges%26 crid%3D1%26gg_aid%3D8769668803%26gg_site%3Dwww.ind ependent.ie%26t%3Dag%253D2319702643)
Ads by Google (http://www.google.com/url?ct=abg&q=https://www.google.com/adsense/support/bin/request.py%3Ftrunc%3D1%26contact%3Dabg_afc%26url%3 Dhttp://www.independent.ie/business/irish/dan-white-the-economic-return-of-iceland-has-proved-that-the-joke-was-on-us-3327164.html%26gl%3DUS%26hl%3Den%26client%3Dca-pub-9024837700129787%26hideleadgen%3D1%26ai0%3DClqtqOb LnUL0l6_zaBY_8gLAE46T33gKD3dr0O8CNtwEQASDgw6kIKAVQ xqSB5QVgye68iZCkoBGgAZ3U-PwDyAEBqAMBqgTMAU_QGd36up5USo7pbk6_xarQ_ocWuu-wXF1W0EAHCoIxuFXAUBzFc6cj89wiwXe553kvFTNHyC5DKvOPg E1IKvMyxuq3Vxpl1Wx6BPgx3BboV4LLDlBfNTAdDMYorLjapoc IXe6SonnhaoFT2jy5waFQBc2Su-0YycI5aldJtV-zDD8PW84L3qhrCPPdy8NS4S9pwjnww-PvrmbKK1udU5kdvONw--1-oPDRoSIbJpNDbeaNS78H9TUHrMpYvznAtInHC-CLWK_IWFMpG4gGAYAHy6uHAw%26ai1%3DCXAHeObLnUL0l6_za BY_8gLAE_frJ_AL9-uT7PcCNtwEQAiDgw6kIKAVQ6_rtkAdgye68iZCkoBGgAaXSwew DyAEBqQJC1gFs-v-wPqgDAaoEywFP0CnLGqOEbXI8Wn0rv8Xzl_mNF6_6u1ZcXcoaQ AY96jjVqUwcwTmyI6vcIpgwvu14OgA4TcklWXC0g8oAXyzpNc3 8twtcfs52YUOzNNNVskiD1h8YBik9VUTAJK252KKNRgL5g6N-_SnDWpF4s8eoXQrH2_7kCpefO3dOWrQW6hA2GgKXF9PgLA3304 OZRPNxK8N6qMW98a5nzy1cn0nfAaXinHnul0t4cmHJlIJTqP5w Y6ASrxveA148Wb05hAV_5Cvgi7hJbSwIo4gGAYAHw62-Ew%26ai2%3DCs7uVObLnUL0l6_zaBY_8gLAEpuW-xgKe58i_OsCNtwEQAyDgw6kIKAVQgbGHzgJgye68iZCkoBGgAd 6Cov0DyAEBqAMBqgTRAU_QWZx-o4VtcjxafSu_xfOX-Y0Xr_q7VlxdyhpABj3qONWpTBzBObIjq9wimDC-7Xg6ADhNySVZcLSDygBfLOk1zfy3C1x-znZhQ7M001WySIPWHxgGKT1VRMAkrbnYoo1GAvmDo379KcNakX izx6hdCsfb_uQKl587d05atBbqEDYaApcX0-AsDffTg5lE83Erw3qoxb3xrmfPLVyfSd8BpeKcee63SmXOPMvw qTCDhnUHi1SqY9vsqJFdVTrHBX_GK-DPrUzuw9i3__TTj4bAiAYBgAeK_d0C%26ai3%3DCxeX7ObLnUL 0l6_zaBY_8gLAE6-eLswPj_sOxSLPk2LwIEAQg4MOpCCgFUKLY1tL4_____wFgye68 iZCkoBGgAbn71O4DyAEBqQJC1gFs-v-wPqgDAaoEywFP0GmLQ6OCbXI8Wn0rv8Xzl_mNF6_6u1ZcXcoaQ AY96jjVqUwcwTmyI6vcIpgwvu14OgA4TcklWXC0g8oAXyzpNc3 8twtcfs52YUOzNNNVskiD1h8YBik9VUTAJK252KKNRgL5g6N-_SnDWpF4s8eoXQrH2_7kCpefO3dOWrQW6hA2GgKXF9PgLA3304 OZRPNxK8N6qMW98a5nzy1cn0nfAaXinHnul0t4cmHJlIJTqP5w Y6ASrxveA148Wb05hAV_5Cvgi7hJMV5wpYgGAYAHr4SrEQ&usg=AFQjCNHdIP3DRAqRWL5g83_c5hhriGd2Qw)
By Dan White
Sunday December 16 2012
WAY back in the autumn of 2008, the joke in financial circles was that the only difference between Ireland and Iceland (http://searchtopics.independent.ie/topic/Iceland) was a letter and six months. Now, with the Icelandic banks preparing to issue foreign currency bonds once again, it turns out that the joke was on us.
Remember when the Icelandics did the unthinkable and, unlike Ireland, told bank creditors to take a hike? They also imposed capital controls and allowed the value of their currency to fall – the Icelandic krona has lost almost half of its value against the euro over the past five years.
The "experts" queued up to assure us that these latter-day Vikings would be severely punished for their impertinence. While no one forecast that a hole would open up in the North Atlantic and swallow Iceland (http://searchtopics.independent.ie/topic/Iceland) whole, some of the predictions came pretty darned close.
Meanwhile, we in Ireland did what we were told and repaid over €70bn of bank bonds at par. By doing so, even at the cost of bankrupting the State, the "experts" assured us that we would retain the confidence of the markets. Now, four years later, it is clear that, not for the first time, the "experts" have got it wrong. Catastrophically and utterly wrong.
Since putting the taxpayer on the hook for the banks' debts, the domestic economy has shrunk by almost a quarter in nominal or cash terms. And any real recovery is still a long way off. The documents along with this month's Budget reveal that the Department of Finance (http://searchtopics.independent.ie/topic/Department_of_Finance_(Ireland)) is expecting Irish GNP, basically the domestic economy, to grow by 1.4 per cent in 2012 and 0.9 per cent next year. Other forecasters are taking a far more pessimistic view.
Way out in the North Atlantic, things have turned out rather differently. Economic growth is expected to be 3.1 per cent this year and 2.2 per cent in 2013. But surely after stitching up its bank creditors – the Icelandic banking default cost $85bn, a massive amount for a country with a population of 320,000 people – the country remains persona non grata with the international financial markets. Having been so badly bitten once, the markets must be twice or even thrice shy of Iceland.
Not so. The Icelandic treasury successfully flogged $1bn of 10-year bonds to investors in May. These bonds were initially priced to yield a spread of 407 basis points (4.07 per cent) over comparable US treasuries, a margin which has since narrowed to 296 basis points.
In the financial markets, as elsewhere in life, eaten bread is soon forgotten. Would-be investors in Icelandic bonds focus most of their attention, not on what happened in the past, but on what is likely to happen in the future.
What these investors see is that, by burning the bank bondholders rather than taking these debts on to the national balance sheet, the Icelandic sovereign is in a far stronger position to repay any future debts.
Compare this to the Irish situation. By being good boys did we retain the confidence of the markets? No we didn't. We too were locked out of the markets and were bounced into accepting an EU (http://searchtopics.independent.ie/topic/European_Union)/IMF (http://searchtopics.independent.ie/topic/International_Monetary_Fund) bailout in November 2010. Far from doing better than the Icelandics, we have ended up with the worst of all possible worlds. We are still stuck with the banks' legacy debts and, a few carefully choreographed fund raisings by the NTMA notwithstanding, the State remains largely reliant on official lenders to fund its activities. This is because investors can see that, with the debts of the Irish State likely to exceed €200bn – the equivalent of more than 150 per cent of GNP – by the end of 2013, there is no way the Irish sovereign can repay existing borrowings let alone any new loans it may seek to raise.
Now, as if to add insult to injury, the Icelandic banks are preparing a return to the markets. Unlike Ireland, Iceland immediately nationalised its bust banks in the autumn of 2008 but refused to assume responsibility for their liabilities. The cleaned-up Icelandic banks are now getting ready to issue foreign currency bonds, the proceeds of which will be used to help finance the thriving, export-driven Icelandic economy.
When we look at what has happened in Iceland, the proposed deal on legacy Irish bank debt tastes like very thin gruel indeed. Once again the Irish Government is talking up the chances of such a deal following last week's apparent agreement by EU finance ministers on a new eurozone banking supervision regime. The latest "deadline" for such a deal is supposedly the end of March 2013. Given that several previous "deadlines" have come and gone, don't hold your breath.
Maybe, instead of being the good boys it's time we followed the Icelandic example and indulged in some Viking-style plunder and pillage.
- Dan White