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TORY CHIEF’S FIRM COST COUNCILS £470M – COMPANY ADVISED LOCAL AUTHORITIES STRICKEN BY ICELANDIC BANKING CRISIS (UK)

Posted by Gilmour Poincaree on January 19, 2009

Monday, 19 January 2009

by by Martin Hickman

PUBLISHED BY ‘THE INDEPENDENT’ (UK)

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘THE INDEPENDENT’ (UK)

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Posted in BANKING SYSTEMS, CENTRAL BANKS, CORRUPTION, CRIMINAL ACTIVITIES, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, FINANCIAL SCAMS, FINANCIAL SERVICES INDUSTRIES, FRAUD, ICELAND, INDUSTRIES, INTERNATIONAL, JUDICIARY SYSTEMS, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, THE FLOW OF INVESTMENTS, UNITED KINGDOM | 1 Comment »

INNOVATION IS KEY (Iceland)

Posted by Gilmour Poincaree on December 12, 2008

12/12/2008 – 11:00

ESA

PUBLISHED BY ‘ICELAND REVIEW’

Last week I wrote that if I were the boss of Iceland I would bet my money, or rather the nation’s money, on innovation rather than large-scale labor-intensive industries, such as aluminum smelting, which some people seem to think is the solution to all of our problems—never mind the fact that the world market price of aluminum is plummeting.

However, there are plenty of creative, ambitious and hard-working Icelanders out there who share my opinion that it would be a mistake to rely too heavily on only a few industries. They would rather see Iceland become a platform for a host of companies of different genres and they are working towards making that happen. Like me, they believe innovation is key to the reconstruction of Iceland’s economy.

Such companies are known as sprotafyrirtaeki in Icelandic, literally “sprout companies,” but more commonly referred to as start-ups or starters. The term is not new in Iceland and has become somewhat of a fad in recent years.

Business magazine Frjáls verslun published a list of 100 starters to watch right before the collapse of the economy, and shortly thereafter Björk stepped forward and presented innovative companies she had been working with.

So the problem is not that we don’t have innovation, the problem lies with the government, which doesn’t seem to realize the potential in start-ups. Instead of giving young and promising companies the support they need to thrive, which with time can become valuable sources of income for the economy as a whole, the government searches for easy short-term solutions. Or so it seems.

The Icelandic media is stepping up by reporting on initiatives aimed at encouraging innovation and there appears to be a lot going on in that field.

The Iceland Academy of the Arts, Reykjavík University and Bifröst University are cooperating on three projects aimed at encouraging innovation and education, among them an interactive online starter development center entitled “I Am Innovation” where people will be able to share their business ideas and seek partners.

There are also umbrella organizations for innovation, such as Klak Innovation Center, whose purpose it is to enhance the growth of start-up IT companies.

I wanted to find out if and to what extent the government is supporting Klak’s important initiative and asked the innovation center’s CEO Eythór Ívar Jónsson, who is also an associate professor in entrepreneurship at Copenhagen Business School.

Jónsson said the government’s support to Klak has not been at all sufficient. He explained that although Klak and the companies supported by the center operate within the private sector, it is important to receive funding from the government for the first three years of their existence, often referred to as “death valley.”

During the first three years companies are spending but not earning money and during that period investors avoid them like the plague. During that period many promising companies give up, in many cases because of lack of funds. Therefore the government should step in.

Such support is not thought of as charity. Jónsson explained that the government has to adopt a different attitude towards innovation and realize that investing in starters is beneficial for the national economy.

Many of these companies (it is too optimistic to believe that every company will survive) will flourish and deliver profits for the state treasury. It will take time, though, five to ten years, and the government wants to see money flowing in right now.

For this reason the government was reluctant to support innovation before the crisis hit and now there is no money. Or is there? It is all a question of prioritizing, Jónsson stated.

Had he really made an effort talking to the appropriate ministries, I wondered. At that, Jónsson laughed, saying that he had spent eight months arguing with the Ministry of Industry. People seem positive and eager but then nothing happens. However, Jónsson is hopeful that Minister of Industry Össur Skarphédinsson will soon start lobbying for innovation for real.

After all, the Ministry of Industry does operate the Innovation Center Iceland which recently launched Torgid, “The Square,” a trade center offering facilities to young promising companies to work on their business ideas. Thirteen companies are operating there already.

Skarphédinsson himself discusses Torgid on his blog while referring to himself as the “Minister for Sprout Affairs,” describing how his ministry has been flooded lately with innovative ideas from people who are determined to turn this crisis around and transform it into a business opportunity.

“That’s how adversity often creates new opportunities that didn’t exist before and creates an environment which enforces and fabricates new business opportunities in the form of mini sprouts,” the minister writes. “We don’t mess around in the Ministry of Industry. If we see a good idea we’ll make it happen in an instant.”

So is this a sign that times are about to change? I certainly hope so.

In my last column I wondered whether any Icelanders would respond. Many foreign readers did and had some excellent ideas at that, but not a single native.

That leads me to conclude that despite the fact that icelandreview.com is among the 20 most popular websites in Iceland, week after week, after Eve Online the most popular English-language Icelandic website and a regular source of information for foreign media outlets, it goes unnoticed by most Icelanders.

Therefore, I’m going to bring the website, and this particular column, to the attention of the “Minister for Sprout Affairs,” and see whether he would like to contribute to the discussion on the international platform that this website represents.

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘ICELAND REVIEW’

Posted in ALUMINUM, BANKING SYSTEMS, CENTRAL BANKS, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, ENERGY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, ICELAND, INDUSTRIAL PRODUCTION, INDUSTRIES, INTERNATIONAL, METALS, METALS INDUSTRY, NATIONAL WORK FORCES, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, THE FLOW OF INVESTMENTS, THE WORK MARKET, THE WORKERS | Leave a Comment »

ICELAND INCREASES TARIFFS ON WINE, TOBACCO AND OIL

Posted by Gilmour Poincaree on December 12, 2008

12/12/2008 – 11:59

PUBLISHED BY ‘ICELAND REVIEW’

Iceland’s Althingi parliament accepted new laws yesterday on increasing the tariffs on alcohol, tobacco, oil and automobiles by 12.5 percent as well as introducing a tax on driven kilometers and an excise tax on vehicles and fuel.

According to the budget bill, the aforementioned tariffs were going to increase by 11.5 percent next year, but now the increase is 12.5 percent and takes effect already today. The state treasury will as a consequence have an additional income of more than ISK 3.5 billion (USD 30 million, EUR 23 million) in 2009, Morgunbladid reports.

The State Alcohol and Tobacco Company of Iceland (ÁTVR) said the price of tobacco will increase immediately, but it will take some time before the price of alcoholic beverages increases.

Minister of Finance Árni M. Mathiesen said at Althingi yesterday that the state tariffs on these products had depreciated with the development of the consumer price index and that the current increase is meant to counter that development.

Minister for Foreign Affairs Ingibjörg Sólrún Gísladóttir explained that the purpose with the new laws is to protect those who have the lowest wages. Child benefits and interest relief will remain unchanged, she said, and personal exemption will increase by ISK 2,000 (USD 17.25, EUR 12.99) next year, Fréttabladid reports.

However, the tariffs will also influence indexation and increase loans. “It is obvious that this will go straight into our loans. It is a very controversial path to take because it will also have an impact on the highly indebted state treasury, no less than households. I doubt that the state treasury will benefit from this in the end,” President of the Confederation of Labor (ASÍ) Gylfi Arnbjörnsson told Morgunbladid.

Runólfur Ólafsson, managing director of the Icelandic Automobile Association (FÍB), is equally critical of the new laws; expenses for average-sized cars will increase by ISK 20,000 (USD 172, EUR 130) per year because of them.

The price of gasoline and diesel oil will also increase considerably, by ISK 7.70 and 6.40 (USD 0.07 and 0.06, EUR 0.05 and 0.04) per liter respectively, and Ólafsson said it is not good at all that the state is going to take advantage of the recent decrease in the price of fuel in such a way.

Arnbjörnsson told Fréttabladid that the government only plans to increase benefits to senior citizens and the disabled by 9.6 percent, but not in consistency with indexation. The benefits of these groups are indexed and should thus increase every month, he said.

“They are planning to take four billions [ISK 4 billion = USD 34 million, EUR 26 million] from the poorest people. It is so incredibly unjust that we cannot agree to it,” Arnbjörnsson said.

Minister for Social Affairs Jóhanna Sigurdardóttir said Arnbjörnsson is wrong in his assumptions.

“We added two billions to the social security system compared to what was estimated in the budget bill. Next year pension benefits will be higher than ever compared to the lowest salaries of ASÍ,” Sigurdardóttir explained.

Click here to read about other recent measures taken by the government.

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘ICELAND REVIEW’

Posted in ALCOHOLIC BEVERAGES, AUTOMOTIVE INDUSTRY, COMMERCE, COMMERCIAL PROTECTIONISM, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, ENERGY, ENERGY INDUSTRIES, FINANCIAL CRISIS 2008/2009, FUELS, GASOLINE, ICELAND, INDUSTRIAL PRODUCTION, INDUSTRIES, INTERNATIONAL, NATIONAL WORK FORCES, RECESSION, STATE TARIFFS, THE WORK MARKET, THE WORKERS, TOBACCO | Leave a Comment »

REDESIGNING CAPITALISM

Posted by Gilmour Poincaree on December 10, 2008

Monday, December 8th, 2008, 10:21 am ET

by Michel Rocard

PUBLISHED BY ‘THE JORDAN TIMES’

When the heads of state of the world’s 20 largest economies come together on short notice, as they just did in Washington, D.C., it is clear how serious the current global crisis is. They did not decide much, except to call for improved monitoring and regulation of financial flows. More importantly, they committed themselves to launching a lasting process to reform the world’s financial system.

Of course, those who dreamed of a Bretton Woods II were disappointed. But the original Bretton Woods framework was not built in a day; indeed, the 1944 conference was preceded by two and-a-half years of preparatory negotiations, which is probably the minimum needed to decide such weighty issues. The recent G-20 summit occurred with virtually no real preliminary work.

Three tasks must now be addressed. First, a floor must be put under the international financial system in order to stop its collapse. Second, new regulations are needed once the system revives, because if it remains the same way, it will only produce new crises. Finding the right mix will not be easy. For 25 years, the world has experienced a huge financial crisis every five years, each seemingly with its own cause.

The third task is to focus on real economic activity, end the recession, sustain growth, and, above all, reform the capitalist system to make it be less dependent on finance. Long-term investments, not short-term profits, and productive work, rather than paper gains, need to be supported.

The first task is already being tackled. But, although the United States and some European countries have gone a long way toward restoring the lending capacity of banks, that may not be enough. After all, if the economy is to grow again, banks need borrowers, but the recession has led entrepreneurs to cut their investments.

The second task remains open. Disagreements about how to re-regulate the financial markets are deep, owing to countless taboos and the huge interests at stake. Moreover, there can be no comprehensive agreement that does not take into account the relationship between finance and the real economy.

The essential problem in addressing the third task is to find out precisely what is going on in the real economy. Some states (Iceland and Hungary) are clearly bankrupt. Some merely face a hazardous financial situation (Denmark, Spain, and others). Their financial crisis is the main reason for their weakness.

All of these problems are so difficult to resolve because they have been festering for so long. It is now increasingly evident that today’s crisis has its roots in February 1971, when US president Richard Nixon decided to break the link between the dollar and gold. Until that point, America’s pledge to maintain the gold standard was the basis for the global fixed-exchange-rate system, which was the heart of the Bretton Woods framework.

During the 27 years that it lasted, huge growth in international trade, supported by non-volatile pricing, was the norm, and large financial crises were absent.

Since then, the international financial system has been highly volatile. The era of floating exchange rates that followed the end of the gold standard required the development of products that could protect international trade from price volatility. This opened the way to options, selling and buying on credit, and derivatives of all kinds.

These innovations were considered technical successes. Prices were (mostly) stabilised, but with a slow, if continuous, rising trend. The market for these financial products grew over 30 years to the point that they delivered huge opportunities for immediate gain, which provided a strong incentive for market participants to play with them more and more.

During this time, capitalism – smooth and successful between 1945-1975 (sustained high growth, low unemployment, and no financial crises) – weakened. Through pension funds, investment funds, and arbitrage (or hedge) funds, shareholders became well organised and seized power in developed countries’ firms. Under their pressure, more and more processes were “outsourced”.

In real terms, wages no longer rose (indeed, the average real wage has been stagnant for 25 years in the US), and a growing share of manpower (currently around 15 per cent) was without steady employment.

Everywhere, the share of wages and incomes began to fall as a proportion of GDP. As a result, consumption weakened, unsteady employment grew, and unemployment stopped declining.

Under such circumstances, the upper middle classes in developed countries increasingly came to look for capital gains instead of improving their living standards through productive work. This promoted inequality, and led to the under-regulated financial system’s seizure of power over the entire economy, destabilising the real economy by fatally weakening its capacity to react to external shocks.

Today’s crisis marks the end of economic growth fuelled only by credit. But untying the knot that an overweening financial sector has drawn around the economy will take time. Indeed, there is still no consensus that this needs to be done. Yet the G-20 has opened the way to discussion of these fundamental issues.

Today’s recession will be a long one, but it will compel everybody to consider its root causes.

(*) – The writer, former prime minister of France and leader of the Socialist Party, is a member of the European Parliament.

©Project Syndicate, 2008. www.project-syndicate.org

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘THE JORDAN TIMES’

Posted in BANKING SYSTEMS, CENTRAL BANKS, ECONOMIC CONJUNCTURE, ECONOMY, ECONOMY - USA, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, G20, HUNGARY, ICELAND, INTERNATIONAL, MACROECONOMY, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, SPAIN, THE FLOW OF INVESTMENTS, THE LAST DAYS OF GEORGE WALKER BUSH - 2008/Jan. 2009, THE WORK MARKET, THE WORKERS, USA | Leave a Comment »

OCDE ESPERA RECESSÃO PARA EUA E EUROPA EM 2009

Posted by Gilmour Poincaree on November 25, 2008

Plantão – Publicada em 25/11/2008 às 13h01m

por Juliana Cardoso – Valor Online

SÃO PAULO – A Organização para a Cooperação e Desenvolvimento Econômico (OCDE) espera recessão em vários países no próximo ano, como Estados Unidos e Japão. Acredita que a desaceleração econômica deverá ser mais severa em economias mais vulneráveis a crises financeiras ou às fortes quedas de preços das casas, como Hungria, Islândia, Irlanda, Luxemburgo, Turquia e Reino Unido. Também avalia que o desaquecimento global afetará as principais economias emergentes, como Brasil, China, Rússia e Índia, mas o efeito será mais limitado.

Nos Estados Unidos, conforme o relatório da OCDE, o Produto Interno Bruto (PIB) deve declinar 0,9% em 2009 antes de apresentar crescimento de 1,6% em 2010. Na zona do euro, o PIB deve ter contração de 0,6% no próximo calendário e expandir-se 1,2% um ano depois. A economia japonesa declinará 0,1% em 2009, mas deverá registrar avanço de 0,6% em 2010.

No levantamento Perspectivas Econômicas, a organização prevê que o números de desempregados nos países pertencentes à OCDE deve crescer em cerca de 8 milhões de pessoas nos próximos dois anos uma vez que a recessão mais séria desde o início dos anos de 1980 afeta a atividade econômica.

O contingente de desempregados pode alcançar 42 milhões de pessoas em 2010 em comparação aos 34 milhões registrados atualmente. A atividade econômica nos integrantes da OCDE deve ceder 0,4% em média em 2009 antes de crescer 1,5% no ano seguinte.

“As incertezas envolvendo as projeções são excepcionalmente altas”, declarou o economista-chefe da OCDE, Klaus Schmidt-Hebbel. “Muito depende de de como ocorrerá a superação da crise financeira, o principal motor da desaceleração”, acrescentou.

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘PORTAL G1’ (Brasil)

Posted in BANKING SYSTEMS, BRASIL, CHINA, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, HUNGARY, ICELAND, INDIA, INTERNATIONAL, IRELAND, JAPAN, LUXEMBOURG, ORGANIZATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT (OECD), RECESSION, RUSSIA, THE FLOW OF INVESTMENTS, THE WORK MARKET, TURKEY, UNITED KINGDOM, USA | Leave a Comment »