How To Escape The Purgatory Of Minimum Wage/Part-Time Jobs
Submitted by Tyler Durden on 03/17/2016 12:00 -0400 ZeroHedge.com
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
In the age of automation, what's scarce are problem-solving skills.
Readers responded positively to my recent essay on the emerging economy and jobs: A Teachable Moment: to the Young Person Who Complained About Her Job/Pay at Yelp and Was Promptly Fired
Many young people are stuck in the purgatory of minimum wage and/or part-time jobs: that raises the question: how do you get out of minimum-wage purgatory?
The conventional answer is, "get another college degree." Perhaps this once had some value, but this now yields rapidly diminishing returns due to supply and demand: everyone else seeking an escape from low-wage/part-time purgatory is pursuing the same strategy, so there is an oversupply of over-credentialed job seekers.
As I point out in my book on jobs and careers in the new economy, Get a Job, Build a Real Career and Defy a Bewildering Economy, issuing 500,000 MBAs does not automatically create jobs for all those graduates: credentials don't create jobs.
What creates jobs are opportunities to earn high profits via developing profitable skills. Not all businesses are highly profitable; low-margin businesses don't make enough profit to pay high wages.
Take a high-skill person and put them in a low-margin setting such as fast-food prep (very fast-paced and hard work), and their labor can only generate a limited value for the employer.
Value and profits flow to what's scarce. Low-skill labor is not scarce--it's abundant, hence the low wages paid for low-skill work. Workers with credentials are no longer scarce, with the exception of physicians and nurses and a few categories of advanced degrees such as computer science.
What's scarce are opportunities to earn big profits. Those who have never started a business or operated a business always assume a busy restaurant (for example) is very profitable--but this is not necessarily true. A restaurant with high rent, high labor costs and high overhead expenses could be losing money even if it's filled with customers every night.
Not only is it not easy to earn a profit, it's getting harder by the day. Rents are soaring, permits and fees are soaring, regulationary compliance costs more, taxes are higher, minimum wages are rising and competition in most sectors that aren't protected by the government is fierce.
Employees have to generate a substantial profit for their employers, or the employer will go under. Even large corporations that report big profits are slashing payrolls, trimming bonuses and benefits, and demanding more free labor (though they don't call it that) from remaining employees. Executives who fail to top profit estimates are sacked.
What's scarce and what's abundant? Answering these questions helps us understand the economy and why high wages and profits flow to what's scarce.
If there's only one grocery store in town, access to fresh food is scarce, and that store can charge a premium. If there is only one plumber in town, the plumber can charge a premium equal to the travel time that would have to be paid to plumbers in other towns.
In the age of automation, what's scarce are problem-solving skills. Software and robotics are good with set situations and routines, but not so good at responding to unique situations. If someone wants a high-wage job in a profitable sector, one avenue is to become a better problem-solver.
The best way to become a better problem solver is to start a small enterprise yourself, because the entrepreneur--even the smallest scale entrepreneur selling on Etsy or perfominng some service in the community--must solve a wide range of problems on a daily basis.
Another way is to volunteer for organizations that are woefully understaffed. A beginner will be given responsibilities in these settings that would never be given to him/her in a government or corporate setting.
The more you take on, the faster you learn because you fail often and fail fast. Problem-solving is largely intuitive and a function of experience and networking with those who can help solve the problem.
This is the basis of the eight essential skills I recommend everyone acquire if they want to exit low-wage purgatory.
Largest U.S. Coal Producer Skips Interest Payment, Warns Of Bankruptcy; Stock Crashes
Submitted by Tyler Durden on 03/16/2016 07:54 -0400 ZeroHedge.com
One of the more impressive short squeezes in recent history took place in the first two weeks of March, when the stock of distressed Peabody Energy, the largest U.S. coal producer which employs 8,300 workers, exploded higher from just $2.50 per share at the start of the month to a whopping $6.50 just last week.
Many scratched their heads at this move as nothing fundamental had changed in the company's deteriorating operations, and its bonds are among the most distressed issues trading currently (with upcoming interest payments as we profiled last night).
Alas Peabody missed its narrow window to sell stock, and things were promptly normalized this morning, when the stock crashed back to earth plunging by nearly 40% back to $2.50 in the pre-market, wiping out all recent gains, after Peabody announced in its just filed 10-K, reported that it may have to join its peers Arch Coal and Alpha Natural in 11 bankruptcy protection, after it delayed $71 million in interest payment due on March 15.
As caught first by Bloomberg, Peabody’s auditor said there’s uncertainty about the company’s ability to keep running as a “going concern,” a 10-K filing with the U.S. Securities and Exchange Commission shows. More importantly, the company reported it will exercise the 30-day grace period on a $21.1 million semi-annual interest payment due March 15 for 6.5 percent senior notes maturing September 2020, and a $50 million payment for the same date on 10 percent notes due March 2022.
Here is the relevant section:
As a result of operating losses and negative cash flows from operations and our election to exercise a 30-day grace period with respect to certain interest payments, together with other factors, including the possibility that a covenant default or other event of default could cause certain of our indebtedness to become immediately due and payable (after the expiration of any applicable grace period), we may not have sufficient liquidity to sustain operations and to continue as a going concern.
We incurred a substantial loss from operations and had negative cash flows from operating activities for the year ended December 31, 2015. Our current operating plan indicates that we will continue to incur losses from operations and generate negative cash flows from operating activities. These projections and certain liquidity risks raise substantial doubt about whether we will meet our obligations as they become due within one year after the date of issuance of this report. We have also elected to exercise the 30-day grace period with respect to a $21.1 million semi-annual interest payment due March 15, 2016 on the 6.50% Senior Notes due September 2020 and a $50.0 million semi-annual interest payment due March 15, 2016 on the 10.00% Senior Secured Second Lien Notes due March 2022, as provided for in the indentures governing these notes. Failure to pay these interest amounts on March 15, 2016 is not immediately an event of default under the indentures governing these notes, but would become an event of default if the payment is not made within 30 days of such date. As a result of these factors, as well as the continued uncertainty around global coal fundamentals, the stagnated economic growth of certain major coal-importing nations, and the potential for significant additional regulatory requirements imposed on coal producers, among others, there exists substantial doubt whether we will be able to continue as a going concern.
The company also said that in February 2016 it borrowed approximately $945 million under the 2013 Revolver, the maximum amount available, for general corporate purposes. The company's lender banks will surely be excited that they are about to see another $1 billion in secured loans promptly impaired in one month when BTU has no choice but to file for bankruptcy.
Peabody, which flagged bankruptcy risk under the "risk factors" section of a regulatory filing on Wednesday, said it skipped a $71.1 million interest payment on its senior notes, kicking off a 30-day grace period. The company also raised "substantial doubt" about its ability to remain a going concern.
Peabody's lenders are pushing the company to restructure its debt through bankruptcy but the company has also been pursuing bond exchanges. As Reuters calculates, as of Dec. 31, the company had a total debt of $6.3 billion and cash and cash equivalents of $261.3 million.
As we reported last night when looking at the 100+ bonds trading at 30 cents or less with interest payments due in the next 6 months, the eye of the hurricane is about to shift away and the dire situation facing U.S. energy companies is about to be revealed when one after another after another company follows in Peabody's footsteps and elects to not make upcoming bond payments, ushering in a tidal wave of defaults which we expect will hit U.S. capital markets around late spring, early summer.
Why Negative Rates Can't Stop the Coming Depression
Submitted by Tyler Durden on 03/11/2016 19:00 -0500
Submitted by Bill Bonner via InternationalMan.com,
Are you ready to pay to save?
Agora founder Bill Bonner explains why “negative interest rates” are spreading around the world…and could soon come to the U.S.
Like Doug Casey, Bill believes the worst is yet to come.
Bill says the coming financial collapse will be worse than the market crashes in 1987, 2000, and 2008. But this time, he says, it will affect everything from your portfolio...to your bank account...to the cash in your wallet.
About $7 trillion of sovereign bonds now yield less than nothing. Lenders give their money to governments…who swear up and down, no fingers crossed, that they’ll give them back less money sometime in the future.
Is that weird or what?
Into the Unknown
At least one reader didn’t think it was so odd. “You pay someone to store your boat or even to park your car,” he declared. “Why not pay someone to look out for your money?”
Ah…we thought he had a point. But then, we realized that the borrower isn’t looking out for your money; he’s taking it…and using it as he sees fit.
It is as though you gave a valet the keys to your car. Then he drove it to Vegas or sold it on eBay.
A borrower takes your money and uses it. He doesn’t just store it for you; that is what safe deposit boxes are for.
When you deposit your money in a bank, it’s the same thing. You are making a loan to the bank. The bank doesn’t store your money in a safe on your behalf; it uses it to balance its books.
If something goes wrong and you want your money back, you can just get in line behind the other creditors.
The future is always unknown. The bird in the bush could fly away. Or someone else could get him.
So, when you lend money, you need a little something to compensate you for the risk that the bird might get away.
A New Level of Absurdity
That’s why bonds pay income – to compensate you for that uncertainty.
Inflation, defaults, depression, war, and revolution all raise bond yields because all increase the odds that you won’t get your money back.
That’s why countries with much uncertainty – such as Venezuela – have higher interest rates than countries, such as Switzerland, where the future is probably going to be a lot like the past.
Venezuelan 10-year government bonds yield 11%. The Swiss 10-year government bond yields negative 0.3%.
The interest you earn on a bond is there to compensate you for the risk that you won’t get your money back. Or that the money you do get back when the bond matures will have less purchasing power than the money you used to buy the bond in the first place.
You never know. Maybe the company or government that issued the bond will go broke. Or maybe the Fed will cause hyperinflation. In that case, even if you get your money back, it won’t buy much.
With interest rates at zero, lenders must believe that the future carries neither risk. The bird in the bush isn’t going anywhere; they’re sure of it.
As unlikely as that is, negative interest rates take the absurdity to a new level.
A person who lends at a negative rate must believe that the future is more certain than the present.
In other words, he believes there will always be MORE birds in the bush.
The logic of lowering rates below zero is so boneheaded that only a PhD could believe it.
Economic growth rates are falling toward zero. And at zero, it normally doesn’t make sense for the business community – as a whole – to borrow. The growth it expects will be less than the interest it will have to pay.
That’s a big problem…
Because the Fed only has direct control over the roughly 20% of the overall money supply. This takes the form of cash in circulation and bank reserves. The other roughly 80% of the money supply comes from bank lending.
If people don’t borrow, money doesn’t appear. And if money doesn’t appear – or worse, if it disappears – people have less of it. They stop spending…the slowdown gets worse…prices fall…and pretty soon, you have a depression on your hands.
How to prevent it?
If you believe the myth that the feds can create real demand for bank lending by dropping interest below economic growth rates, then you, too, might believe in NIRP.
It’s all relative, you see. It’s like standing on a train platform. The train next to you backs up…and you feel you’re moving ahead.
Negative interest rates are like backing up. They give borrowers the illusion of forward motion…even if the economy is standing still.
Or something like that.
Yes My Fellow Americans, Congress Really Did Steal Your Social Security
In March, 2008 Senator Jim DeMint (R-SC) attempted in vain to keep Congress from plundering the Social Security Trust Fund.
DeMint to Force Vote to “Stop the Raid” on Social SecurityCongress Raided $2 Trillion in Last 20 Years for Wasteful Washington Spending
Today, U.S. Senator Jim DeMint (R-South Carolina) announced he will force a vote during the budget resolution on an amendment that would allow Congress to “Stop the Raid” on Social Security surpluses. “It’s time for politicians to stop stealing from our seniors to secretly finance trillions in wasteful Washington spending,” said Senator DeMint. “Congress has been raiding the entire Social Security surplus every year to pay for bridges to nowhere, teapot museums, and bloated government agencies. Politicians in Congress are using Enron-styled accounting, but if this were done in the private sector they’d be sent to jail.
It is time to stop spending the Social Security surplus on other government programs and begin saving it for this generation and the next.”
Every year, Congress raids the entire Social Security surplus to pay for wasteful earmarks and other government programs. In the last 20 years, Congress has already raided two trillion dollars from Social Security, including interest. Without Senator DeMint’s “Stop the Raid” amendment, the Social Security Administration estimates that Congress will raid an additional $452 billion from Social Security between 2009 and 2013, which including interest would exceed $1 trillion.
“There is nothing but stacks of IOU’s in the Social Security trust fund because Congress has spent all of the money and will continue to spend it if we don’t take immediate action. Because of this raid by politicians, Social Security will not be able to pay promised benefits to seniors in less than 10 years.”
Fast forward to 2012 and the outright theft of the Social Security Trust Fund is now estimated at $2.5 trillion.
And that's the bitter truth folks. The Social Security Trust Fund has been nothing but a slush fund for Congress Critters since its inception. Congress stole the money, left a big pile of worthless IOU's and spent the money on wars, pork, corporate welfare and other slop. It was a relatively easy heist to accomplish because for decades the SS tax far exceeded the cash outlays to SS recipients. Now, Congress is in an absolute panic because the SS Trust Fund is fully plundered and the SS taxes collected are not sufficient to pay the benefits. In recent years the government has been using general revenues to cover annual shortfalls in the $30-70 billion range and that number will only explode as the Baby Boomers retire.
Many Congress Critters are rich to extremely rich. They have their money stashed away in protected trust funds. How would they feel if the American people raided their trust funds, squandered their money and left a pile of worthless IOU's? But Congress Critters do to ordinary Americans what we are not allowed to do to them. For us mere working stiff mortals, stealing is a crime but Congress Critters routinely steal from the poor and middle class with impunity. Apparently, it's not against the law for Congress to plunder the retirement money of American citizens!
Moreover, Congress Critters have a pension plan that has been dubbed the “Golden Fleece Retirement” because “Congressional pension benefits are 2-3 times more generous than what a similarly-salaried executive could expect to receive upon retiring from the private sector”, according to the National Taxpayers Union. Congressional pensions are so generous that they can collect $5 million or more in benefits. These same Congress Critters who generally average millions in public pension benefits and who are already rich or exceedingly financially comfortable to begin with have no moral qualms whatsoever when it comes to robbing ordinary working stiffs of their Social Security checks.
There are other problems that differentiate the SS nightmare of today from the days when real surpluses accrued in the system. In 1950 there were 16 workers supporting every retiree on SS. These days there are under 3 workers to support every SS collecting retiree. Then, there is Medicare, another substantial entitlement that was never adequately funded but that's an entirely separate issue.
Financial pundit Karl Denninger took the SS issue to new heights when he wrote a piece titled Here Come the Lies (Social Security) and said:
“..a black male has a life expectancy (as of 2007, at birth) of 68.8 years. A white woman has a life expectancy of 81 years.
So a black man could be expected to live 3.8 years post-retirement at 65. A white woman, 16 years. Put another way, if a white woman and a black man have exactly the same earnings history in their lifetime, the white woman will receive 4.21 times the Social Security "income" as will the black man.
(Incidentally, if you're a native-American man you're in worse shape than the black man - the only ethnic group that is.)
Those who want to talk about Social Security's purposes never want to discuss this little bit of rather intentional and institutionalized racism.”
SS is not only broke but also racist! But it's even worse. SS is strictly a wage earners tax and trust fund babies and folks with unearned income are exempt from the tax. The current SS tax is 12.4% and the Medicare Tax is 2.9%. The government tells folks that 6.2% of the SS tax and 1.45% of Medicare tax is paid by the employer. It's all paid by the worker because it's a payroll/labor expense and if the tax was abolished, workers would get an immediate 7.65% pay raise.
For many workers, the SS tax is the highest tax they pay. But many working class Americans also pay federal income taxes, state income taxes, sales taxes, property taxes, gas taxes and a slew of other direct and indirect taxes. That tax code is such an inequitable disaster that Warren Buffet, one of the richest men on the planet, paid an effective federal tax rate of 17.4% while his secretary paid a federal income tax rate of 35.8%, here (and she doesn't make anywhere near the money that her famous boss earns). The year John Kerry ran for president, his very wealthy Heinz ketchup heiress wife paid an effective federal tax rate of about 12% on unearned income of over $5 million.
Several other astute economists and pundits have chirped in the SS mess. Economist Walter Williams took on the issue in a piece titled What Handouts to Cut.
According to the Census, around 80 percent of Americans 65 and older own their own homes compared to 43 percent under 35. Twenty-three million households, or 37 percent of all homeowners, own their homes free and clear, and most of these are seniors aged 65 and older. According to the Federal Reserve Board's 2007 "Survey of Consumer Finances," the median net worth of people 65 and over is $232,000, those under 35 years have a net worth of $12,000 and for those 35–44, it's $87,000.
For good reason, older people have accumulated more wealth than younger people; the primary reason is that they've had more time to do it. There is no logical case that can be made for using the tax system to force Americans with less wealth to subsidize those with more wealth. But it's not clear who is subsidizing whom. Consider an elderly widow, say 70-years-old, with a modest retirement income of $18,000 living in a $300,000 house that's fully paid for. She might receive local property tax forgiveness, medical and prescription drug subsidies and other federal, state and local subsidies based upon her age and income….. Only 50 percent of young people vote, but up to 70 percent of seniors vote.
Williams raises perfectly valid issues and he also got a ton of hate mail for the crime of speaking the truth. In fact, depending on medical issues and how long a person lives, a SS/Medicare recipient will collect 3-5 times what they paid into the system and what they get comes off of the backs of the young and economically struggling. America is facing a horror wherein the young will be forced into acute impoverishment just to support the old. The fact that our economy doesn’t offer much in the way of economic prospects for the young to earn and build wealth, America as a nation will collapse under the weight of such financial burdens.
Financial guru John Hussman caught a lot of attention when he recommended “Drop the rate substantially, but include all income – wage and non-wage. Three-quarters of Americans pay more in payroll taxes than in income taxes. By reducing the wedge between the hourly amount earned by employees and the hourly cost paid by employers, this strategy would create immediate incentives for employment. Moreover, it would raise more revenue because at present, even Warren Buffett only pays Social Security taxes on the first $106,800 of income.”
Hussman’s solution would work wonders for raising SS revenues, help the economy recover and put more disposable income into the hands of ordinary Americans. However, so long as the thieving and grubby fingers of Congress Critters insist on pilfering SS, there are no reforms that will ever work to render it financially sound and/or solvent.
4 solutions for fixing Social security
1. Mean test the system and get the wealthy off of welfare.
2. Everybody pays a low fixed percentage right off the top and before any deductions.
3. Abolish the fraudulent system of employer contributions.
3. Ban Congress from touching Social Security - it's not there money.
Personally, I totally support the American people filing a class action suit against every Congress Critter who voted to steal their Social Security and to go after their trust funds and fat pensions. Why not? That would constitute an event of mass social justice. Why shouldn't the people have a legal claim on those who literally stole from them?
However, the best possible retirement system is for Americans to have control over their own money to build their own retirement nest egg, a nest egg that they outright own and isn’t subject to government plunder. Many financial planners and organizations have calculated how much one would receive in pension benefits if the same amount of money a person is forced to dump into SS was invested in private retirement accounts, here. The government doesn’t want anybody to know that if a person prudently invested their retirement saving in privately owned and controlled investment accounts, they would have retirement checks that are 2-3 times what they get from Social Security.
Then again, in the age of thieving Banksters Gone Wild and thieving Government Gone Wild, the American people sure as heck don't have much in the way of honest options. No matter what we do, the probability of being 'Corzined' is quite high, here.
Life on the government plantation is sheer hell.
A Brexit paradise: How Iceland's 'Project Fear' backfired
Nordic island once described as a giant hedge fund is thriving having settled its own 'Europe question'
Thordur Oskarsson is in the departure lounge of Heathrow airport heading for Aberdeen.
Iceland’s ambassador to the UK is off to formally open Scotland’s second and Britain’s sixth direct air route to Reykjavik. Aberdeen will become the 60th and perhaps most improbable global destination offering round-trip travel to and from the Icelandic capital when it launches this week.
The four-weekly flights from Icelandair are evidence of the country’s new boom.
Eight years on and one $4.6bn bail-out later, the Nordic isle with a population smaller than Croydon, has cast off the demons of its banking meltdown.
An explosion in tourism is a large part of Iceland’s nascent bust to boom tale. More than 1.5m foreign visitors landed at the sleek Keflavik airport outside the capital in 2015 - five times Iceland’s entire population.
Inspired By Iceland: national tourism campaign aims to ensure a meaningful experience more than 1 million visitors
Visitor numbers have tripled in just four years. It’s a sudden burst in popularity which has surprised the ostensibly “boring” fishing nation once famously described by an IMF official as more “like a hedge fund” than a nation state.
“Iceland is now cool," says Ásgeir Jónsson, an economist at the University of Iceland.
“We never thought people would want to come here in the winter because it’s dark and harsh, but every hotel in Reykjavík has been full in February.
“Even Beyonce and Jay-Z holiday in Iceland now."
Hotels in the capital are having to turn away bookings for the summer season. Airbnb, a popular home-sharing alternative, boasts more than 3,500 apartments in a city of just 120,000 residents.
The film crew of Hollywood blockbuster series Fast & Furious will descend on the island later this year, and have reportedly hired out Iceland's entire rental car fleet.
It's all given rise to a searing construction blitz as hotels and homes spring up to accommodate waves of new visitors arriving from countries ranging from the US to China.
When Project Fear lost
Iceland has reinvented itself from the days of casino capitalism.
Relative to the size of its banking sector, the country’s 2008 financial collapse was the worst any economy has suffered in modern history.
Its trio of "New Viking’ banks, who accounted for 90pc of its entire financial sector, crumbled in the space of days.
The economy was left saddled with debt of 850pc of GDP, or £224,000 owed by every Icelandic man, woman and child.
As pro-Brexit campaigners decry the “Project Fear” tactics deployed in the UK’s referendum debate, Iceland witnessed something more akin to “Project Apocalypse” in the aftermath of the crash.
Where Britons are warned of the potentially cataclysmic implications of a UK exit from the European Union, Icelanders were sold a tale of perma-doom that would plague the island until it became a member of the bloc.
It was in the wake of this turmoil that Iceland formally launched its bid to become a full member state of the European Union in July 2009.
Lumbered with a currency that lost 60pc of its value, draconian capital controls and mass austerity, the rationale for membership was simple: as part of the EU’s supranational institutions and monetary union, Iceland would finally have shelter from the market speculators that bought the country to its knees.
Krona to Dollar $Krona's crash stabilised after Iceland resorted to capital controls20002010200520150.0050.00750.010.01250.0150.0175
2009 also marked the euro’s first decade in existence. With financial calamity having descended on British and American shores, Brussels pronounced monetary union an unmitigated success.
In commemoration of its 10th anniversary, the European Commission released a 53-page report excoriating an entire body of mainly US economic literature which had prematurely “doomed the single currency to collapse”.
“The euro is one of the most exciting experiments in monetary history,” declared the authors.
It was amid this triumphalism that Iceland’s then left-leaning government began accession talks.
Sigmundur Gunnlaugsson, Iceland’s current prime minister, says the membership debate was dominated by fears over Iceland’s very survival.
“Without membership we were doomed," says Gunnlaugsson, who became Iceland’s youngest prime minister aged just 38 in 2013.
"There was never any discussion about the ideals and nature of the European Union or whether that was something Icelanders wanted to be part of," he says. “The application was simply presented as an economic necessity with claims that as soon as we applied, we would improve our credibility internationally and the euro would be the solution to all our problems."
But Iceland’s Project Fear failed.
Free to operate an independent monetary policy and allow its currency to slide, Iceland was soon brought back from the precipice. Its export sector - dominated by fisheries and energy - quickly began to thrive.
With the currency acting a natural shock absorber for the economy, wages remained steady and unemployment bottomed out at around 9pc.
Growth has since averaged 2.6pc over the past six years, and will exceed 3pc in 2016, according to the IMF. The jobless rate is also a far cry from the 25pc seen in the worst parts of southern Europe, at just 2pc.
Not being a member of the euro “proved indispensable in our quick recovery”, says Gunnlaugsson.
“There is hardly any doubt that if we would have been members of the EU and the euro at the time, the country would have been bankrupted and put in an economic position more resembling that of Greece than what we see in Iceland today.”
Sigmundur Gunnlaugsson, left, leader of Iceland's Progressive party and Prime Minister
This fantastic reversal of fortunes has all but eliminated any lingering case for EU membership. Gunnlaugsson’s centre-right coalition government formally withdrew from the accession process last year and public appetite for restarting talks has dwindled.
Polls carried out in the wake of the move - which was not put before a referendum - show an overwhelming 70pc of Icelanders are happy to remain out of the EU.
Settling the 'Europe question'
Instead, Iceland is one of the three countries who make up the European Economic Area (EEA).
Along with Norway and Lichtenstein, since 1994 Iceland has been granted full access to the EU’s internal market, in a model often dubbed as the “pay but no say” alternative facing the UK.
Also part of the Schengen passport-free area, Iceland does not pay directly into the EU’s budget but stumped up around €30m to the EEA’s joint grant scheme between 2009-14, a 3pc contribution, dwarfed by Norway’s near 96pc.
What are the alternatives if Britain leaves the EU? Play! 01:42
Meanwhile, Reykjavik transposes 18pc of all the EU’s directives, regulations, and decisions, into national law in return for securing the EU’s four freedoms - goods, movement, capital and people.
But unlike its larger, more problematic neighbor Norway - which periodically stalls on implementing Brussels' initiatives - or the Swiss, wracked by immigration fears, Iceland seems to have struck a happy medium with the EU.
Icelanders have settled their “Europe question”.“For Iceland, the EEA Agreement is the best of both worlds," says foreign minister Gunnar Sveinsson.“We have chosen a way that fits Iceland as a small European export-driven economy,” he says.
Despite having one of the smallest civil services in Europe, Icelanders have proven to be reliably compliant partners.
Of the the 761 single market directives listed on the European Commission’s surveillance watchdog, Iceland shows a sea of green on everything from veterinary issues to the directive on “solvents used in the production of foodstuffs and food ingredients”.
The list itself is enough to make even a hardened europhile bristle.
Prime minister Gunnlaugsson says compliance has proven to be “quite a burden and even plain annoying at times, but all the stuff that really matters is still under our control”.
Chief among them is fisheries. Exempt from the EU’s common agricultural and fisheries policies, Iceland has managed to protect its sacrosanct fishing industry from the reach of Brussels quotas.
Accounting for 40pc of all export earnings and making up 6pc of the country’s entire economic output, fishing has been instrumental in helping the country get back on its feet in the aftermath of the crash. As a result, even Iceland’s hardened eurosceptics show little agitation at the country’s current settlement.“I am happy with the relationship,” says Guthlaugur Thor Thordarson, a eurosceptic MP and former Icelandic health minister.“Compared to the alternative, which is being a full member, there is no doubt we are in a better and stronger position."
Iceland has also managed to achieve the holy grail for many pro-Brexit campaigners: a free trade deal with China.
In 2013, Reykjavik became the first European nation to conclude a trade agreement with the Asian giant.
“We have a free trade deal with China and a free trade deal with the Faroe Islands - some of the biggest and smallest economies in the world," says Thordarson, a vocal advocate for Brexit who has urged the UK to take part in an EEA-like arrangement.
“Come on in: the water’s lovely," he wrote in the pages of this newspaper last summer.
For a nation the same size as the US state of Kentucky, many Icelanders seem baffled at the suggestion Britain cannot go it alone.
One of the deterrents used by Remain campaigners is that the UK’s European partners would quickly turn vengeful in a post-Brexit world - making the prospect of striking up 27 potential bilateral trade agreements all but an impossibility.
But Thordarson is dismissive of the scaremongering.“The EU has enormous problems and they would be piling plenty more on their public if they decided it was time to get even with Britain," he says.“It would mean German or Dutch politicians turning to their workers and industry and telling them they have to suffer because we are getting even with Britain after they voted to leave. That would have serious economic consequences for the entire economy of the EU.”
Yet for all the apparent benign neglect towards the EU, Iceland hardly finds itself in constant harmony with Brussels.
Periodically, a rule or regulation comes along that threatens to derail the Nordic nation’s crash-prone economy.
Chief among them is a bank deposit directive that would require the state to guarantee up to €100,000 of customer deposits, up from its current level of €20,000.
The regulation strikes at the heart of Iceland’s past banking misdemeanours.
In a country still dominated by three big banks, critics say the measure would plunge the economy back to the days of moral hazard, when Iceland’s banking system bloated to 10 times the size of the economy.
Crucially, any insurance law would have prevented the government from liquidating banks as it did back in 2008 to extricate itself from crisis. Back then, the state’s coffers were insufficient to cover the collapse, forcing it into an international bail-out. The government now argues that its rainy day deposit fund is all but dry.
But in reality, Iceland will have little choice but to eventually submit. Campaigners have tried to kick the deposit scheme into the long grass but observers are not hopeful Reykjavik will win the fight.A bumper deposit insurance scheme could risk imperiling the country in another crisis, say critics Britain can tell similar tales of taking on the EU and losing in matters related to financial services - namely its fight to resist imposing Brussels’ banker bonus cap.Yet the EEA arrangement, for all its obvious benefits for a small, open trading nation like Iceland, affords the minnow almost no clout in shaping the course of EU laws.
It is one of the reasons Prime Minister David Cameron has fought to win safeguards against the eurozone forging ahead with reforms it deems antithetical to Britain’s financial interests.For Iceland however, a former vassal state of the Danes which only gained independence at the start of the 20th century, they seemed to have accepted their place in the continent’s patchwork of relationships.
And with the boom times back, prime minister Gunnlaugsson is staying sanguine about whatever may lie ahead.
“Iceland will be in a positions to weather its storm outside of the European Union,” he says.
The Birthing Of Trump's America: The Swindlers Vs. The Swindled
Submitted by Tyler Durden on 03/07/2016 20:10 -0500 ZeroHedge.com
Submitted by Howard Kunstler via Kunstler.com,
Beyond the Kubler-Ross maelstrom of denial, anger, depression, etc., besetting this spavined republic, lies the actual grief provoking it all — especially the shocking loss of national purpose embodied by the muppets and puppets onstage nightly vying to bring out the worst in us in an election season far from just silly. Judging from their demeanor in the so-called debates, the candidates seem not only sick of their opponents but of themselves, a fitting outcome perhaps in a nation that hates what it has become.
The moment that got me in Sunday night’s Democratic boasting contest, hosted by CNN, was Hillary crowing about the great achievement of Obamacare — getting thirty million uninsured Americans on some kind of health plan! The part she left out, of course, is that most of those plans have deductible ceilings in the multiple thousands of dollars, guaranteeing that the policy holder goes bankrupt if he/she seeks medical help. Who does she think she’s fooling, anyway? This sort of arrant lying is what drives millions into the camp of Trump.
Even valiant old Bernie muffs every opportunity to explain the death-grip that Wall Street crony politics has on this land: the US Department of Justice did nothing under six-plus years of Attorney General Eric Holder to prosecute criminal misconduct in banking. And then President Obama, who is ultimately responsible, did absolutely nothing to prompt that Attorney General into action or replace him with somebody who would act. Obama’s lame excuse back in the days when informed people were still wondering about this, was that the bankers had done nothing patently illegal enough to warrant investigation — a claim that was absurd on its face.
Obama didn’t do any better with the regulating agencies that are supposed to make criminal referrals to the Department of Justice, especially the Securities and Exchange Commission (SEC) charged with keeping financial markets honest. There was nothing that difficult about those criminal matters now fading in the nation’s memory: for instance, the bundled bonds (CDOs) of “non-performing” mortgages designed to pay off the issuers handsomely when they failed. A child of ten could have unpacked the Goldman Sachs Timberwolf bond caper. Eventually Goldman and others were slapped with mere fines that could be (and were) written off as the cost of doing business. What a difference it would have made if Lloyd Blankfein and a few hundred other bank executives were personally held accountable and sent to cool their heels in federal prison.
As the politicians are fond of saying, make no mistake: this was Barack Obama’s failure to act. Likewise, regarding the Citizens United Supreme Court’s decision that equated arrant corporate bribery of public officials with “free speech;” Mr. Obama (a constitutional lawyer by training) had a range of remedies at his disposal, foremostly working with the then-majority Democratic congressional leadership to legislate a new and clearer definition of so-far-alleged corporate “personhood,” its duties, obligations, and responsibilities to the public interest — and its limits! Not only did Mr. Obama fail to act then, but nobody in his own party even coughed into his-or-her sleeve when he so failed. And now, of course, nobody remembers any of that.
The effects of all this fundamental dishonesty have thundered through our national life to the degree that American society is now divided into the swindlers and the swindled, loosing the monster of collective Id known as Trump on the public. This is what comes of attempting to divorce truth from reality, which has been the principal business of American life for several decades now. When truth and reality become de-linked, a society literally doesn’t know what it is doing. With that goes the collective sense of purpose, replaced with bromides and platitudes such as Trump’s “make America great again,” and Hillary’s “In America, every family should feel like they belong.”
Unbeknownst to the cable news hustlers, events are in the driver’s seat, not the personalities of the puppets and muppets in the spotlight. Come July, there may not be anything that could be called the Republican Party. And Hillary is the first leading contender for the highest office with a possible indictment looming over her. Yes, it’s really there percolating on the FBI’s front burner. Even if the machinery of justice trips over itself again on that, imagine how the questions behind it will color the final battle for the general election. We also fail to appreciate how, if there is just a little more trouble in banking and financial markets before November 8, we can’t even be certain of holding the general election.