ICELAND (2)
Some two years ago, Iceland's voters decided in a referendum not to compensate British and Dutch depositors in Icesave, an offshore internet bank that offered high deposit rates until it crashed and burned. Icelandic depositors were compensated, foreigners could go hang.
At the time, I didn't think that this was such a good move, not least because the U.K. and Holland would be taking Iceland to the EFTA Court, and the consensus was that they would win. In part because the Icelandic Government's decision to nationalise Icesave's parent, but do nothing for the foreigners, was discriminatory, a key taboo in both EFTA and E.U. law.
Somewhat surprisingly, however, the Court has now decided in favour of Iceland, a judgment which can not be appealed. This has two consequences. The first, a big short-term boost for Iceland, is that it gets out of paying some Euro4 billion, which presumably has raised cheers in Rejkjavik. The second, whose main ramifications are for the longer term, is that it shows just how difficult it is to regulate international financial institutions, particularly those that are in trouble. European politicians wishing to strengthen E.U.-wide bank supervision will use this judgment to bolster their case.
Walter Blotscher
Wednesday, 30 January 2013
Tuesday, 29 January 2013
HOME COURT ADVANTAGE
The Danes think that they are pretty good at handball; and indeed they are. The men's team are the current European champions, probably the hardest tournament to win, and won silver in the World Championships two years ago in Malmø. True, they had a disappointing Olympics, losing to Sweden when they should have won. But expectations were high on Sunday when they again reached the final of the World Championships, this time in Spain, after cruising through the previous rounds. One reason was the fact that their opponents were the host nation, whom Denmark had beaten five times in a row since 2007 in major tournaments. If ever there was a time for Denmark to win the World Championships for the first time, then this was it.
They lost. And not just lost, but got absolutely and comprehensively stuffed. It was 18-10 to Spain at half-time and 29-12 after 45 minutes, by which time the contest was over. The end result of 35-19 was the biggest difference ever in a world final, and only one goal short of Denmark's biggest ever defeat in any competition. Losing by almost two goals to one is the sort of thing Great Britain handball might expect to suffer, but not Denmark.
How did it happen? Watching the match as a fairly neutral observer, I put it down to that often underrated factor, namely playing on home turf. The Spanish were up for it, to put it mildly. As in Serbia, an even lowlier handball nation that made the final of the European Championships in Belgrade last year, the crowd were partisan, and very loud. Denmark were simply blown away.
There is now a lot of navel gazing going on over here. National pride has been dented, something must be done. As it happens, next year's European Championships will take place in Denmark. If the crowd get behind them, then the Danes should win.
Walter Blotscher
The Danes think that they are pretty good at handball; and indeed they are. The men's team are the current European champions, probably the hardest tournament to win, and won silver in the World Championships two years ago in Malmø. True, they had a disappointing Olympics, losing to Sweden when they should have won. But expectations were high on Sunday when they again reached the final of the World Championships, this time in Spain, after cruising through the previous rounds. One reason was the fact that their opponents were the host nation, whom Denmark had beaten five times in a row since 2007 in major tournaments. If ever there was a time for Denmark to win the World Championships for the first time, then this was it.
They lost. And not just lost, but got absolutely and comprehensively stuffed. It was 18-10 to Spain at half-time and 29-12 after 45 minutes, by which time the contest was over. The end result of 35-19 was the biggest difference ever in a world final, and only one goal short of Denmark's biggest ever defeat in any competition. Losing by almost two goals to one is the sort of thing Great Britain handball might expect to suffer, but not Denmark.
How did it happen? Watching the match as a fairly neutral observer, I put it down to that often underrated factor, namely playing on home turf. The Spanish were up for it, to put it mildly. As in Serbia, an even lowlier handball nation that made the final of the European Championships in Belgrade last year, the crowd were partisan, and very loud. Denmark were simply blown away.
There is now a lot of navel gazing going on over here. National pride has been dented, something must be done. As it happens, next year's European Championships will take place in Denmark. If the crowd get behind them, then the Danes should win.
Walter Blotscher
Monday, 28 January 2013
LEAVING HOME (6)
I put my daughter on the train to Copenhagen this morning. She is going off to India and Nepal for three and a half months. She will be writing a blog, There and Back Again; the link is below.
So all of my children have grown up and left home. One of my sons will be here for a while, but only until he finds a place to live in the city. And that will be that.
Walter Blotscher
I put my daughter on the train to Copenhagen this morning. She is going off to India and Nepal for three and a half months. She will be writing a blog, There and Back Again; the link is below.
So all of my children have grown up and left home. One of my sons will be here for a while, but only until he finds a place to live in the city. And that will be that.
Walter Blotscher
Sunday, 27 January 2013
PAYING FOR CRIME
As I said in an earlier post, living in a foreign country sometimes throws up surprises. I had always thought Denmark to be a fairly liberal sort of place; so it was a shock to find out about the following.
People convicted of a crime here have to reimburse the authorities for the cost of the prosecution. Not the direct expenses of the police or the public prosecutor, but those of pretty much everything else; defence lawyers (there is no concept of the Public Defender, who advises people who have no money), medical examinations, technical and financial investigations, and so on. Some of these can be very expensive. Apparently, this financial burden is one of the highest in Europe.
The job of collecting these monies has been given to the tax authorities. According to them, some 60,000 people owed some Kr.2 billion at the end of 2012.
What constitutes a crime varies from country to country and is decided by society as a whole (via its legislative representatives). As such, prosecuting a crime is the ultimate "public good"; society pays for such prosecution, and dictates possible fines and/or imprisonment, in order to show its collective disapproval of the behaviour in question. Against that background, forcing people to pay for the decision to give punishment as well as undergoing the punishment itself, strikes me as morally wrong.
More prosaically, it also strikes me as short-sighted in the extreme. Because one of the consequences is that people leaving prison after serving their sentence are often crippled by having to service a large debt; indeed, the greater the crime and the longer the sentence, the bigger the likely bill. A prisoner, having paid his or her debt to society and wishing to make a fresh start, is merely allowed the opportunity to start paying to the state. And at a time of their lives when they are least likely to have either assets or job prospects. Seen in that light, is it surprising that so many of them take up a life of crime again?
This was a disappointing discovery.
Walter Blotscher
As I said in an earlier post, living in a foreign country sometimes throws up surprises. I had always thought Denmark to be a fairly liberal sort of place; so it was a shock to find out about the following.
People convicted of a crime here have to reimburse the authorities for the cost of the prosecution. Not the direct expenses of the police or the public prosecutor, but those of pretty much everything else; defence lawyers (there is no concept of the Public Defender, who advises people who have no money), medical examinations, technical and financial investigations, and so on. Some of these can be very expensive. Apparently, this financial burden is one of the highest in Europe.
The job of collecting these monies has been given to the tax authorities. According to them, some 60,000 people owed some Kr.2 billion at the end of 2012.
What constitutes a crime varies from country to country and is decided by society as a whole (via its legislative representatives). As such, prosecuting a crime is the ultimate "public good"; society pays for such prosecution, and dictates possible fines and/or imprisonment, in order to show its collective disapproval of the behaviour in question. Against that background, forcing people to pay for the decision to give punishment as well as undergoing the punishment itself, strikes me as morally wrong.
More prosaically, it also strikes me as short-sighted in the extreme. Because one of the consequences is that people leaving prison after serving their sentence are often crippled by having to service a large debt; indeed, the greater the crime and the longer the sentence, the bigger the likely bill. A prisoner, having paid his or her debt to society and wishing to make a fresh start, is merely allowed the opportunity to start paying to the state. And at a time of their lives when they are least likely to have either assets or job prospects. Seen in that light, is it surprising that so many of them take up a life of crime again?
This was a disappointing discovery.
Walter Blotscher
Saturday, 26 January 2013
DANISH BANKS (4)
In an earlier post, I criticised the new strategic plan of Danske Bank, Denmark's largest. The essence of this seemed - to me, at least - to be to replace people with machines and the internet, which I didn't think would be good for customer relations. My son disagreed with me on this, but the Danish general public apparently agree; Danske Bank's popularity is in freefall at the moment.
Their latest move is not going to change that. Since 9 January, 131 of the bank's 186 branches in Denmark have stopped providing teller services. On Fünen, where I and roughly 500,000 other people live, there will only be four such branches that do; two in Odense, one in Svendborg and one in Nyborg. So, if I were a Danske Bank customer, I would have to travel at least 33km and then park before I could get (my own) cash out of a branch as opposed to an ATM. In other parts of the country - West Jutland, for instance - it would be twice as far. And when I got there, it would cost me kr.40 to do so, unless I had kr.750.000 in the bank (which most people don't).
A necessary change in order to return the bank to profitability, say its leaders. I have no problem with that idea in principle; the problem is that Danske Bank's catastrophic lack of profitability during the financial crisis - one estimate has put the cost of the past five years at more than kr.90 billion - had nothing to do with teller services in branches and everything with terrible investment decisions (in Ireland and elsewhere). Secondly, although my son is surely right in saying that internet banking is the way of the future, there are still many people, particularly older people, who don't like machines, don't know how to use computers, or wouldn't trust the internet to do financial transactions. What is particularly relevant is that these people tend to be savers, whose mortgages have been fully paid off, and who therefore tend to provide a cheap and stable mass of deposits, the bread and butter funding source of any bank. Alienating them, which Danske Bank has done in spades, doesn't strike me as very sensible.
It is undoubtedly the case that Denmark has too many banks, and that further consolidation is both necessary and likely (Sparekassen Lolland was taken over by Jyske Bank only yesterday, for instance). But the sector should be wary of emulating the British experience, where there are only a few, monster-size, institutions in which customers can't talk to a human, unless it is from a call centre in Bangalore. After all, every business needs customers, even a bank.
Walter Blotscher
In an earlier post, I criticised the new strategic plan of Danske Bank, Denmark's largest. The essence of this seemed - to me, at least - to be to replace people with machines and the internet, which I didn't think would be good for customer relations. My son disagreed with me on this, but the Danish general public apparently agree; Danske Bank's popularity is in freefall at the moment.
Their latest move is not going to change that. Since 9 January, 131 of the bank's 186 branches in Denmark have stopped providing teller services. On Fünen, where I and roughly 500,000 other people live, there will only be four such branches that do; two in Odense, one in Svendborg and one in Nyborg. So, if I were a Danske Bank customer, I would have to travel at least 33km and then park before I could get (my own) cash out of a branch as opposed to an ATM. In other parts of the country - West Jutland, for instance - it would be twice as far. And when I got there, it would cost me kr.40 to do so, unless I had kr.750.000 in the bank (which most people don't).
A necessary change in order to return the bank to profitability, say its leaders. I have no problem with that idea in principle; the problem is that Danske Bank's catastrophic lack of profitability during the financial crisis - one estimate has put the cost of the past five years at more than kr.90 billion - had nothing to do with teller services in branches and everything with terrible investment decisions (in Ireland and elsewhere). Secondly, although my son is surely right in saying that internet banking is the way of the future, there are still many people, particularly older people, who don't like machines, don't know how to use computers, or wouldn't trust the internet to do financial transactions. What is particularly relevant is that these people tend to be savers, whose mortgages have been fully paid off, and who therefore tend to provide a cheap and stable mass of deposits, the bread and butter funding source of any bank. Alienating them, which Danske Bank has done in spades, doesn't strike me as very sensible.
It is undoubtedly the case that Denmark has too many banks, and that further consolidation is both necessary and likely (Sparekassen Lolland was taken over by Jyske Bank only yesterday, for instance). But the sector should be wary of emulating the British experience, where there are only a few, monster-size, institutions in which customers can't talk to a human, unless it is from a call centre in Bangalore. After all, every business needs customers, even a bank.
Walter Blotscher
Friday, 25 January 2013
JAGTEN
Jagten ("the Hunt") is the film currently being shown at the local cinema. It's been a great critical success, with Mads Mikkelsen winning the best actor award at last year's Cannes festival. It's a very good film.
Mikkelsen plays Lukas, a divorced teacher in a small rural community, who gets assigned to help out in the kindergarten when the local secondary school closes. All the children love Lukas, who is the only male amongst the staff, and who engages in a lot of physical rough and tumble with them. One of the children, Clara, is the daughter of Lukas' best friend, and has a crush on him. When he gently rebuffs the heart she has made for him as a Christmas present, she tells the kindergarten leader that Lukas has exposed himself to her. The leader's repressed fantasies run wild, and soon Lukas is being accused of all sorts of indecencies against children, despite his having recently embarked on an affair with the kindergarten's Eastern European cleaner. In succession, he loses his job, is arrested by the police, and is shunned by the community.
Jagten refers to the deer hunts, which Lukas has done with his friends from the village since he was a boy. But it also refers to the witchhunt against him that becomes increasingly irrational and violent. With one exception, his hunting friends all disown him, he gets beaten up in the supermarket, his dog is killed. Even when the police case against him collapses - the children have all sworn to terrible things taking place in the cellar of his house, which doesn't have one - people are unwilling to believe his innocence. Only when Clara finally admits that she has made the whole thing up does it stop. Though the ending leaves that statement somewhat in doubt; do such things ever stop?
Not only is Jagten a very good film, but it is bringing in the punters. There were 75 paying customers in the cinema on a very cold Thursday evening. It bodes well for our refurbishment project later in the year.
Walter Blotscher
Jagten ("the Hunt") is the film currently being shown at the local cinema. It's been a great critical success, with Mads Mikkelsen winning the best actor award at last year's Cannes festival. It's a very good film.
Mikkelsen plays Lukas, a divorced teacher in a small rural community, who gets assigned to help out in the kindergarten when the local secondary school closes. All the children love Lukas, who is the only male amongst the staff, and who engages in a lot of physical rough and tumble with them. One of the children, Clara, is the daughter of Lukas' best friend, and has a crush on him. When he gently rebuffs the heart she has made for him as a Christmas present, she tells the kindergarten leader that Lukas has exposed himself to her. The leader's repressed fantasies run wild, and soon Lukas is being accused of all sorts of indecencies against children, despite his having recently embarked on an affair with the kindergarten's Eastern European cleaner. In succession, he loses his job, is arrested by the police, and is shunned by the community.
Jagten refers to the deer hunts, which Lukas has done with his friends from the village since he was a boy. But it also refers to the witchhunt against him that becomes increasingly irrational and violent. With one exception, his hunting friends all disown him, he gets beaten up in the supermarket, his dog is killed. Even when the police case against him collapses - the children have all sworn to terrible things taking place in the cellar of his house, which doesn't have one - people are unwilling to believe his innocence. Only when Clara finally admits that she has made the whole thing up does it stop. Though the ending leaves that statement somewhat in doubt; do such things ever stop?
Not only is Jagten a very good film, but it is bringing in the punters. There were 75 paying customers in the cinema on a very cold Thursday evening. It bodes well for our refurbishment project later in the year.
Walter Blotscher
Thursday, 24 January 2013
DISAPPOINTED EXPECTATIONS
Apple's share price has fallen by 30% since last September, and is still wobbly. Apparently, the revenue figures it has just released were "dismal".
Dismal? Hang on a minute. Revenues in the three months to the end of December 2012 were US$54.5 billion, up 18% from a year previously; net profit was US$13.1 billion. In these tough economic times, nearly all companies would die for revenue growth greater than zero; and die even more for a net margin of close to 25%. Let alone a cash pile of some US$137 billion.
But this is Apple. Although it sold 47.8 million iPhones in the quarter, up from 37 million in the same quarter the previous year, and 22.9 million iPads, up from 15.4 million, analysts were expecting even higher numbers.
Some people are never satisfied.
Update: the fall in Apple's share price over the past couple of days means that it has lost its ranking (to Exxon Mobil) as the world's most valuable traded company. At Friday's close Exxon Mobil was worth US$418 billion, Apple US$413 billion.
Walter Blotscher
Apple's share price has fallen by 30% since last September, and is still wobbly. Apparently, the revenue figures it has just released were "dismal".
Dismal? Hang on a minute. Revenues in the three months to the end of December 2012 were US$54.5 billion, up 18% from a year previously; net profit was US$13.1 billion. In these tough economic times, nearly all companies would die for revenue growth greater than zero; and die even more for a net margin of close to 25%. Let alone a cash pile of some US$137 billion.
But this is Apple. Although it sold 47.8 million iPhones in the quarter, up from 37 million in the same quarter the previous year, and 22.9 million iPads, up from 15.4 million, analysts were expecting even higher numbers.
Some people are never satisfied.
Update: the fall in Apple's share price over the past couple of days means that it has lost its ranking (to Exxon Mobil) as the world's most valuable traded company. At Friday's close Exxon Mobil was worth US$418 billion, Apple US$413 billion.
Walter Blotscher
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