UK was responisible for Kaupthing collapse
This article posted by Follow the Tao, and written by two brilliant professors at London School of Economics, makes for very interesting reading. Aside for the predicable collapse of Iceland's banking system, it also states that the UK was responsible for the demise of Kaupthing.
http://www.voxeu.org/index.php?q=node/2498
"In addition, outrageous bullying behaviour by the UK authorities (who invoked the 2001 Anti-Terrorism, Crime and Security Act, passed after the September 11, 2001 terrorist attacks in the USA, to justify the freezing of the UK assets of the of Landsbanki and Kaupthing) probably precipitated the collapse of Kaupthing – the last Icelandic bank still standing at the time. The official excuse of the British government for its thuggish behaviour was that the Icelandic authorities had informed it that they would not honour Iceland’s deposit guarantees for the UK subsidiaries of its banks. Transcripts of the key conversation on the issue between British and Icelandic authorities suggest that, if the story of Pinocchio is anything to go by, a lot of people in HM Treasury today have noses that are rather longer than they used to be."
The guys who wrote this are no dimwits. Pity they can't be witnesses at the TSC meeting on Tuesday.
UK was responisible for Kaupthing collapse
Swiss - I posted the same article some weeks back and highlighted that they were researching in early 2008 having been commissioned by Landsbanki. They reported in April. In the following paragraph they state that it was known the Icelandic banks were at risk way back:
"This was clear in July 2008, as it was in April 2008 and in January 2008 when we first considered these issues. We are pretty sure this ought to have been clear in 2006, 2004 or 2000. The Icelandic banks’ business model and Iceland’s global banking ambitions were incompatible with its tiny size and minor-league currency, even if the banks did not have any fundamental insolvency problems."
So don't tell me that the FSC did not know that this problem existed even as they approved the takeover of the Derbyshire.
@Bill
You posted :-
This was clear in July 2008, as it was in April 2008 and in January 2008 when we first considered these issues. We are pretty sure this ought to have been clear in 2006, 2004 or 2000. The Icelandic banks’ business model and Iceland’s global banking ambitions were incompatible with its tiny size and minor-league currency, even if the banks did not have any fundamental insolvency problems."
Now, substitute "IoM" for "Iceland", and tell me that that isn't true also.
Global banking ambitions
No Cap'n, a key difference was/is the vulnerability of the krona, as the article makes clear. Speculative attacks on it were probably the main factor in their economic crash. If Iceland was in the eurozone none of this would have happened, although they probably wouldn't have had a massive financial industry if they were in the eurozone.
The UK is also mentioned as vulnerable - small currency/big financial industry...
@richiyeh
Yes, take your point, but let us look at GBP and it's demise for a moment.
The UK has also taken the same hit, and I'm not sure, particularly after reading todays news, that it's immunity from disaster is assured.
Next will be parity with the dollar (at least until the dollar crashes big style around mid year). UK has never been in a worse financial condition, and a little rock, second closest to the UK, sailing in the wake of the UK must be in a worse condition.
And see Willem Buiter's next
And see Willem Buiter's next predicton - massive collapse of the US dollar:
http://www.telegraph.co.uk/finance/4125947/Willem-Buiter-warns-of-massiv...
You read it first....
On one of CM's worshipful and informative posts.
Paul Myner - Financial Services Secretary, blaming IoM
Reply from Paul Myner
KSF IOM had deposits of £532 m with its sister KSF UK . The customer only has a debt claim against the bank . KSF IOM are aware of this . It could 've chosen to put its money elsewhere & to have diversified the deposits it made rather than making a single large deposit, which concentrated the credit risk to which it was exposed.
Thanks buddy. What comes around, goes around.
Seems the UK blames the FSC for giving the advice that they did.
Perhaps a hint in there to nail the Directors to the wall.
Paul Myner - Financial Services Secretary, blaming IoM
And this is what John Aspden is trying to wriggle out of with some BS about legitinate 'upstreaming' as well as his excuses of why its okay to have Cashen at the top of the FSC and KSF (IoM) simutaneously. Both hollow arguments. I think the UK is right and we should use this to get our message home to the IoM, the IoM (FSC) acted irresponsibly when they advised KSF IoM to put over 60% in one place, and knowing the potential problems that existed. Right now Mike Simpson is splitting up the recovered 140m amongst many different banks - its common sense with such large sums!
None of this though excuses the UK for the way they behaved, they knew that putting KSF UK into administration would effectively divert KSF (IoM) funds for their own use - they took advantage of the fact that the FSC did not do their job - and we are paying! IoM accuses HMG of manufacturing this situation but IoM carries grave responsibility for this mess - we have to ensure they make good.
UK was responsible for Kaupthing collapse
I actually printed the article you posted some weeks back Bill,so interesting it is.
Pity,I did not heed my friend's advice,who happens to be the Chief Country Officer of Societe Generale in Germany,who warned me as far back as July 2008,to get my money out of KSFIoM,because,they,Societe Generale,severed all agreements they had with Kaupthing HF,as far back as January 2008.
But,got in touch with a so called Senior Banking Advisor at KSFIoM,who sent me a convincing reply to my queries,and mentionned the "unfamous"Parental Guarantee;I,then decided to stay put.If only one could read into the future....
TSC meeting
Can the DAG representative at next weeks TSC meeting ask the question:-
When is the UK government going to return the money it stole from Kaupthing (IOM) in October 2008?