Sunday, 31 January 2010

New Data on TFSA vs RRSP and Canada's Rube Goldberg Tax System

Cartoonist Rube Goldberg was famous for his drawings of incredibly complex, convoluted machines. That's Canada's income tax system. A new paper from the CD Howe Institute Saver’s Choice: Comparing the Marginal Effective Tax Burdens on RRSPs and TFSAs (kudos to Don Cayo of the Vancouver Sun on whose blog I found the link) reveals the gory detail of the complexity created by the interaction of all the start and stop levels of tax credits, tax brackets, tax surcharges, rebates and clawbacks. The table they show for an Ontario taxpayer has no less than 33 income levels at which tax rates either go up or down. Contrary to popular belief, the tax you pay on your next dollar of income, the marginal rate, does NOT go up constantly and smoothly. It bounces up and down by more than 100% for very small rises in income. These tax items are not special rules for individuals in unique circumstances, it is what everyone faces.

What's more, and what is important for the average person trying to decide whether to put savings into a TFSA or an RRSP, as a result the better choice flip-flops back and forth between TFSA and RRSP. The answer varies by: Province, by income in retirement compared to during working life (the replacement rate) and by working life income level.

CD Howe's Findings
  • $20-30,000 or so working income, TFSA always is better and by a massive amount, the GIS clawback being the primary cause as TFSA withdrawals are not included as income for the calculation while RRSP withdrawals are included.
  • $35-45,000 or so working income, RRSP is better but not by nearly as much as the TFSA advantage in the bullet above
  • the boundary between TFSA and RRSP shifts higher as retirement income replacement is lower e.g. in Ontario, at 80% retirement replacement, the TFSA is better up to around $30,000 working income but at 60% replacement, the TFSA is better up to about $39,000
  • TFSA is better across most of the working life income spectrum for Alberta and Quebec and most income replacement levels
  • most surprising, TFSA is everywhere best for the highest income earners of $110,000+ even when their income replacement is only 60% - one would have thought they would end up in a much lower tax bracket and thus conform to the general principle that RRSP is best when your tax rate is less in retirement.
  • above low income levels, the advantage for TFSA or RRSP is not enormous (less than 10%+/- in marginal tax rate), except for huge spikes up or down in Ontario
  • a change of only a few thousand dollars in working income can shift the balance, sometimes drastically, from TFSA to RRSP or vice versa, especially in the band $35,000 up to about $80,000 in Ontario (which leads me to conclude that Ontario residents face the most uncertain, difficult and chaotic tax system as far as TFSA vs RRSP planning goes)
Ontario residents in the income range from $35,000 to about $90,000 probably need most to hedge their bets about where their retirement tax rate will end up and to contribute to both their TFSA and RRSP. At least both benefit from the powerful advantage of tax-protected compounded growth while funds are in the plan.

Unfortunately, CD Howe only looked at the numbers for Ontario, Alberta and Quebec, so taxpayers in other Provinces must be wondering where they stand. Don Cayo got preliminary data from CD Howe about BC, which he says is similar to Ontario.

The Federal government could do us a favour by expanding TFSA contribution room to make it equal to the RRSP, or make it a combined total that people can divide between the two as they choose.

Friday, 29 January 2010

McKinsey deflates another bubble

Those who think that now that the recession is over, everything is fine and happy days are here again might think a second thought after reading strategic consulting company McKinsey's The Looming Deleveraging Challenge (free registration required for access to the report). We Canadians might be especially over-confident given the minimal harm our banks suffered during the 2008 crisis.

Despite having the lowest total of public and private debt amongst the 14 countries studied, Canada still likely faces deleveraging in the household sector according to McKinsey. The BRIC (Brazil, Russia, India, China) countries are all much less constrained by debt. The USA, Spain and the UK are more likely to have deleveraging in more sectors than Canada.

McKinsey says deleveraging countries face prolonged belt tightening and lower economic growth for two to three years. Given Canada's strong economic ties to the USA and their even worse state, I'd guess we are in that boat. Ssssssss is the sound of the slow leak in the hope bubble.

The good news is that GDP growth, based on past examples McKinsey studied, likely resumes strongly after that. It will again be time to take a deep breath and start inflating a new bubble.

Live Online Investing Q&A with No Hype Author Gail Bebee

Gail Bebee, author of the investing book No Hype - The Straight Goods on Investing Your Money will answer investing questions online today January 29th from noon to 1pm on the Globe Investor website. It's a good book so she should provide sensible unbiased answers. Click here.

Thursday, 28 January 2010

Bank Shenanigans: Post-Dated and Stopped Cheques

Did you know that post-dated cheques and stopped cheques can cause you considerable grief?

Yesterday, I discovered that my (current) bank, the Bank of Montreal, had processed and withdrawn funds from my account despite the fact that the cheque I had written was post-dated for about a week later. When I called the customer service line expecting some sort of redress for what I perceived to be BMO's negligence, I was told that they would do nothing, that they had done nothing wrong or negligent in any way, since the bank is under no obligation to prevent funds from being withdrawn early. If sufficient funds are in the account, then it is paid no problem. What if sufficient funds are not in the account I asked, would there not be NSF charges incurred? The answer unfortunately seems to be yes, I would be on the hook. If a had a problem I should speak to the cheque recipient who had presented the cheque early. Conclusion: the date you write has no significance and is no protection. Post-dated cheques are not a reliable or trustworthy hassle-free method of managing bank account cash inflows and outflows.

A Google search uncovered this Canadian Payments Association FAQ on Cheques that confirms the optional, non-obligatory, one might say at the convenience of the banks, nature of the usual practice to tell the recipient that it is only to be presented on the due date. Note the red highlighted weasel words should and may.

Relevant quote:
" Under CPA Rules, a post-dated cheque is not eligible for clearing and therefore should not be deposited before the due date. However, given the large volume of cheques and the degree of automated processing, some post-dated items may inadvertently slip through. Under Rule A4, Section 6(b), a payment item may be returned through the clearing by a CPA member financial institution for the reason "post-dated" up to and including the day prior to the due date."

Even granting there might be some unstated necessity to exempt the banks from the legal responsibility for their incompetence in providing the service a post-dated cheque is intended to do, the symptomatic attitude "if we at the bank screw up, it's you the customer's problem to fix" is, shall we put it politely, annoying. Unfortunately, I see no solution but to either harass the bank if material losses like NSF charges occur, or not to write post-dated cheques at all.

Paying electronically is just as fraught with uncertainty and bank freedom. You must pay a couple of days in advance since the banks do not guarantee even then that the payment will occur instantaneously on the due date - BMO's blurb from the Agreements for Everyday Banking states its huge leeway in the section on automated services: this
"However, we may require up to five banking days:
- to process any deposit, including any transfer between Accounts;

- to act on bill payment instructions."
and on the website, BMO gives itself this liberty:
"For future-dated bill payments, please ensure you have sufficient funds in the account you have selected at least 1 business day prior to the payment date." i.e. they may withdraw the payment a day early as I have seen happen. Not very impressive in the computer age I'd say.

The other problem I came across while looking for information on the above. When you put a stop payment on a cheque, you are still exposed to it being cashed and having to pay anyway. The simple version explanation of how this can happen is in Before you write a cheque, take note of this little known law that appeared in the Vancouver Sun. A more complicated nuanced explanation is Lost and Stolen Cheques, Bank Drafts and Trust Cheques: Some Modest but Partial Solutions in the March 2009 Advocate. As the title of the article states, problems can arise from cheques that are lost or stolen. The basic though not perfect solution is to a) cross all cheques, that is, draw two parallel diagonal or vertical lines across the cheque; b) add the words, "for deposit only by payee - non negotiable"; c) add the words "not payable more than X days after date". Or they suggest using a wire transfer since that puts the bank on the hook.

I wish it were possible to get protection by adding the words "not payable before date" to counter the prematurely expectorated post-dated cheque but I guess the Bills of Exchange Act that created this reality seems not to have contemplated the value of enabling people to pay with certainty only on a due date and not before.

You also have to the crossing by hand since it seems there aren't any companies in Canada offering cheques pre-printed with the crossing done. Surely the banks and cheque printing companies know the advantages. Why don't they begin offering pre-crossed cheques? In the UK, such cheques are commonly available.

Friday, 22 January 2010

The Index Finger Moves on - Shrinking TSX and Declining Index Effect

The Shrinking TSX
Another ones bites the dust. As I noted last year, the TSX Composite Index has been shrinking for years. That seems to be continuing, though at a slower pace. When Enerflex Systems Income Fund (EFX.UN) leaves the index next week as the result of a buyout (see Standard & Poors press release) the TSX Composite will be down to 210 companies, a third fewer than a mere nine years ago. One would have thought equity markets should expand over time, not shrink.

When one considers that the largest US all-company index the Wilshire 5000 Total Market Index contains about 5000 companies, it is apparent how small and thin the Canadian market is. All the more reason to diversify outside Canada in my opinion.

The Shrinking Index Effect
The index effect is the excess returns or profits from trading on a stock that is being added to a major index, such as the TSX 60, the S&P 500 or the UK's FTSE 100. The addition of a stock to an index causes its price to rise unduly as indexers (and closet indexers) rush to buy it. A neat little 2008 paper by Aye Soe and Srikant Dash from Standard and Poors called The Shrinking Index Effect showed how the opportunity to make such profits has declined considerably to the point they think "... its days as a profitable trading strategy may be numbered". They looked at five different major indices, the above three plus Japan's Nikkei 225 and Germany's DAX 30.

The paper is a good brief primer on the various indices and how they are changed. It's interesting that the FTSE 100 and DAX 30 changes are quite mechanical and predictable while those of the TSX 60 and the S&P 500 are not.

Buyers of passive index funds, which automatically buy into index changes and have to pay the higher price that follows the announcement price pop, may take heart that they are being less taken advantage of. To quote the authors: "... hedge funds and proprietary trading desks have increased their market participation in index trades to exploit this opportunity. As with any arbitrage opportunity, increase in arbitrageur activity has diminished profits." Arbitragers are not the only factor at work but the net effect is the market becoming more efficient! The chart image below taken from the study shows the big decline - the upper vs the lower line at time ED (ED means the day the entry of a stock into the index takes effect) - in available trading profits from TSX 60 changes between 1998-2003 and 2003-2008.

Of course, the efficiency process is never finished. Srikant Dash and Berlinda Liu suggest in another paper at SSRN called Capturing the Index Effect via Options, that arbitragers can continue to make large excess profits (31% on average on the S&P 500) by trading options instead of the stock itself.

Wednesday, 20 January 2010

Retirement: A Second Career, aka the Sisyphus Solution

One of the positive alternatives to living at a much reduced standard of living in retirement is to start a second career. Now that might sound a lot like not actually retiring at all, but maybe it is in the mindset.

In the CFA's The Future of Life Cycle Saving and Investing: the Retirement Phase, Anna Rappaport says people thinking of retirement "... want work to fit around their lifestyle rather than making their lifestyle fit around work." In the same report, Alicia Munnell gives us a clue why: "According to psychologists, as we age, we have a tendency to “positivize” or to divest ourselves of people and situations that we no longer enjoy. When I’ve asked retirees in the past “Why did you retire?” they gave what sounded like the most frivolous reasons: “I sat in the middle seat,” “I was on the tarmac for two hours,” “I’m just not doing this anymore,” “I’m sick of it,” or “I got a new, young boss, and I can’t stand the guy, and I’m out of here.”
The tendency to positivize also applies to the work environment. Our tolerance for putting up with things we don’t like diminishes as we age."

Along comes the solution of a second career, in which you do something you like. Novel idea! Munnell says that happens a lot with second careers: "The Urban Institute recently studied the nature of these new jobs, or second careers, held by older workers and found that, although they paid less and provided less in the way of fringe benefits, people generally liked these new jobs much better. They experienced less stress, and they were closer to their homes; the second career had a lot of positive attributes."

The big financial benefit is that every dollar earned in a second career is a dollar less required to live on from savings and investments.

Of course, there is a catch. Working, especially doing fulfilling work, is good for your health and you will probably live longer as a result. Oops, now your savings have to last even longer, so you will have to work even longer and put off entering the ideal(?) but fatal state of being a couch potato. We could borrow from Albert Camus and call this the Sisyphus Solution - endless work that makes people happy.

Some resources on second careers:

Monday, 18 January 2010

Getting Older: 5BX, the Brain and Retirement Finances

5BX is the exercise program developed by the Royal Canadian Air Force in the 1950s. I've done it (mostly) on and off for all my life since my teens up to now in my 50s. I can no longer do my all-time highest chart level 5 step B+ (I would really like to know if anyone ever managed the bottom level of chart 6, let alone A+). It's not even close. I'm now down to the top of chart 2, which in relative terms is still pretty darn good since it is the prescribed fitness level for someone ten years younger than I am. My 5BX life history is very useful as definitive benchmark of my physical capacity and tells me in no uncertain terms that I ain't quite what I used to be.

Alas, our brains are similar to the rest of our bodies. Regular exercise (thinking, arguing, reading, working on puzzles, writing) surely helps it stay in optimal shape but decline there is nevertheless. It affects our judgment about finances too. In How Older People Behave, chapter 8 in The Future of Life Cycle Saving and Investing: the Retirement Phase from the CFA Institute, David Laibson describes the decline of cognitive function as we age and the result he found in one study - that the older people were, the higher interest rate they paid on home equity loans. This is not dementia or Alzheimers at work, he says. It is the slow natural brain decline from age.

Dementia adds to the scale of the financial challenge and it will get much worse - in Canada, the Alzheimer Society has just published the scary Rising Tide of Dementia, which predicts the prevalence of dementia will more than double over the next 30 years if nothing is done.

The problem with brain decline is that, unlike our physical capacity, it is more hidden and harder for a person to be self-aware. How can you step back in time to assess your old brain of 20 years ago compared to today? In today's retirement world of increasing variety and complexity of financial products, combined with a shift away from defined benefit pensions to plans and savings where people have to make their own decisions and when they are living much longer to boot, retirees look more exposed to high fees on opaque products or pushy fast-talking salespeople, not to mention scams and frauds. The inter-generational transfer of wealth will occur in a manner somewhat different than the inheritance route.

What can be done to minimize the possible harm? Laibson suggests helping people make the right choices by setting defaults and automating investments. He also suggest creating inexpensive and scalable trust structures so that when retirees pass over control of their finances as they are on average progressively forced to do by age, it will be to someone trustworthy.

Friday, 15 January 2010

Claymore PACC DRIP SWP - Beware of the Broker

One of the valuable features of Claymore Canada's ETFs is that the company offers investors three automatic programs, all on a voluntary basis without commissions or fees:
  • PACC - Pre-Authorized Chequing Contributions - owners of ETFs can make regular monthly, quarterly or annual purchases of additional units
  • DRIP - Dividend Re-Investment Plan - ETF distributions received are used to buy more units
  • SWP - Systematic Withdrawal Plan - ETF units held may be sold on a regular monthly, quarterly or annual schedule
However, there is a catch. The broker at which the ETF units are held must cooperate with Claymore to make it happen. Not all brokers do and some only participate in one or two of the programs. The PACC is the one with the most brokers missing. Unfortunately, it is also the case that the major bank brokers are least on board - none supports all three programs. To check your own broker, here is the list posted by Claymore of which broker supports what.

Thanks to Larry MacDonald at Canadian Business for asking the question that prompted me to look into this. You learn something every day.

Haiti Earthquake Relief Charities

Haitians need help in the most dire way. Along with governments, private charities are springing into action. The quickest and easiest way for the average person to help is to give money to those charities. Many charities are accepting donations that will be specifically directed to Haiti.

CanadianCapitalist has posted one list today with links to a few charities. He also references this bigger list on the CBC website, which unusually for the CBC, actually includes direct links to the charities' websites to make donations. The charity portal conveniently provides an extensive list of charities that are accepting Haiti-specific donations and a capability to make a donation on-line to any one of them (it does deduct a 3% fee from donations through its portal - which I think is reasonable as I discussed here).

Charities will differ, often substantially, in their effectiveness and efficiency in transforming our dollars to into help for victims. Some charities will help Haitians a lot more than others even when their mission sounds great. The best available source for hard information to assess this factor I've found so far is the Canada Revenue Agency Giving to Charity page which includes mandatory accounting returns from every registered charity in Canada. Find the Charity Information Return (the T3010) using the Search for a Charity tool.

Thursday, 14 January 2010

The Marshmallow Test, Commitment and Life Success

One of the keys to financial success is controlling desires for immediate gratification by saving instead of spending every penny that comes into our grasp. Such tendencies become visible early in life, it seems.

Long ago a researcher named Walter Mischel tested how well 4 year olds could resist the temptation of one marshmallow now instead of the reward of getting two scant minutes later. The hilarious Kids and the Marshmallow YouTube video re-enactment of the experiment shows how tough it is for kids to resist the urge to gobble up the marshmallow right away.

Some kids are naturally better at it than others. Mischel's and other studies reviewed (see pp 19-21) in the paper Commitment Contracts by Gharad Bryan, Dean Karlan and Scott Nelson of Yale University found that children who are better at deferring gratification are more successful later in life, being more able to concentrate, live with frustration, get higher SAT scores, use drugs less and be perceived to be more competent by parents and peers.

Having a tendency does not necessarily mean an inevitable fate. Humans are wonderfully adaptable and control measures can be put in place to counter such harmful tendencies. This quote from Commitment Contracts is encouraging: "Children were able to wait longer when their attention was shifted, when they could not see the reward, when they were in a cold state (when children were told to think about the abstract qualities of the marshmallow), rather than a hot state (when children were told to think of the taste) and when they were told to be task oriented rather than reward oriented. (Thinking about their aim, rather than what the rewards would be like)"

One direction for correcting and controlling the "I want it now" behaviour that harms not just children but adults too (think of the gap in savings for retirement) is, according to these authors, to put in place Commitments. Commitments can be either hard, with actual costs, or soft, with psychological costs. A hard example: you promise to lose 10kg by July 1st, and you pay someone if you don't achieve that. Soft commitment example: not having junk food in the house.

Dean Karlan believes enough in the principle of making a commitment as an effective way to modify behaviour to have co-founded a special website called StickK where anyone can make a formal Commitment. It seems to be for real. When you sign up, you are contracting to pay and they promise to enforce payment if you do not meet whatever goal it is you yourself define. One of the other co-founders, Ian Ayres, recounts in his book SuperCrunchers how his own successful hard commitment experiment to lose and keep off weight made him a believer too.

Wednesday, 13 January 2010

Investment Fraud - Phew, that was close! Time for Operant Conditioning?

I'm not sure whether to laugh or cry at the CBC news item today about the arrest of two men for an alleged investment fraud. The key part of the item: "The investments were held out to be for the development of an automated trading system that promised unusually high rates of return," the OPP said in a release. It added the investigation "revealed that the funds solicited were not used in the manner promised, thereby defrauding the investors of their money." I see, so it is only because they did not use the money for an automated trading system that it is illegal? Had they invented an automated trading system of whatever useless nature and lost all the investors' money, that would have been ok. Whew! That was a close one, otherwise they could have got away with it.

To prevent this from, in the classic phrase of our time, "ever happening again", we could consider using Skinner conditioning techniques in schools so that as soon as the words "high rates of return" are mentioned in any investment sales presentation, people immediately get violently ill and verbally abuse whoever utters the phrase. If it works for pigeons and dogs, surely it could do for humans.....

Monday, 11 January 2010

Example of Kaupthing: Market Efficiency at Work

One of the reasons I enjoyed Johnsson's book Why Iceland? so much is the insider view into what drove the failure of Icelandic banks in 2008. The machinations of savvy players show us how market efficiency works, how the search for excess profits or so-called alpha, and the attainment thereof, is actually the source of market efficiency.

Jonsson's story on page 63: The weak position of the Kaupthing bank relative to other banks was noticed first in 2005 by a trader named Herleif Havik at the Petroleum Fund of Norway. He began doing what he perceived to be a kind of low- or no-risk pair of trades, by selling Credit Default Swap (CDS) protection on Barclays bank while buying the same protection on Kaupthing. The reason was apparently that Barclays and Kauthing debt traded at the same premium. Havik figured that Iceland could not, in the event of a crisis, offer the same back-up to Kauthing as Britain could to Barclays. To do the buying and selling of CDS, it was not necessary to actually hold any of the debt and in fact, Jonsson says the PFN did not own any Kaupthing bonds. Havik's trades attracted attention and drove up CDS premiums on Kaupthing. Other financial players began to focus on Iceland. The weakness of the business model of the Icelandic banks had been noticed.

It was by detecting the mis-priced bonds of Kaupthing (aka market inefficiency) and exploiting it that the market forced an eventual and brutal return towards efficiency.

The incident leaves questions to ponder:
  • Was PFN, a state-controlled fund no less, and Havik somehow morally to blame for doing so, since the dénoument has left Icelanders suffering?
  • Is naked CDS trading bad or merely the equivalent of buying a put or a call? e.g. Bad - SEC chairman Maison Fleury; OK - Derivatives Dribble)
  • Was the pendulum swing the other way, all the way to bankruptcy of all the Icelandic banks, the only way back to efficiency, or was it too far?
Market inefficiency and mis-pricing after the event is much easier to tell than beforehand. One of my favorite quotes is "Half the money I spend on advertising is wasted; the trouble is I don't know which half." (attributed on Wikipedia to John Wanamaker) It is not necessary to assume that every security is correctly priced at every moment to believe in market efficiency, nor does one need to deny that significant chunks of securities like whole stock indexes are correctly priced at any one time. Market efficiency means fair pricing, neither systematically biased too high or too low. Only after fact do we find out which it was - high or low - and there may be a good lag before that happens.

Tuesday, 5 January 2010

Book Review: Why Iceland? by Asgeir Jonsson

Imagine every man, woman and child of Victoria, BC being faced with a sudden new debt of $18,000 to repay bank depositors in a foreign country. In addition, this is all through no fault of their own - the people now on the hook had nothing to do with creating the situation. That's what is facing the citizens of Iceland (whose population is about the same as Victoria's) these days as a result of the financial crash of 2008.

Why Iceland?, written by Icelander Asgeir Jonsson, examines how all this happened, how the rise and collapse of Iceland's banks in 2008 bankrupted the country. The title suggests the plaintive cry of an innocent and naive victim asking how such a calamity could come about. One might expect bitterness and incendiary language in the book. Not so however, as the author is also an economist. The approach seems more like morbid professional curiosity in trying to unravel what went wrong. He does so with little overt emotion and much fascinating detail.

Along the way, as they affect Iceland, one learns through Jonsson's succinct and clear explanations about currency swaps, Credit Default Swaps, Collateralized Debt Obligations, the carry trade, hedge funds, glacier bonds, repo funding, central banks, government interventions (or lack thereof) and consequences, credit ratings and agencies. The book is an intricate case study.

The detail is really the object lesson. Iceland did not go down because of one single error, one big villain or one event. It was a combination of many factors both local and global, mistakes at crucial moments that failed to prevent dire consequences of what had been building for some years. (There was even a small Canadian hand in the form of TD Bank whose London office merrily sold to the carry trade wagonloads of highly profitable glacier bonds denominated in Icelandic currency but sold outside Iceland.) A good summary might be the quote he includes from a 2008 Merrill Lynch credit report on Iceland: " ... rapid expansion, inexperienced, yet aggressive management, high dependency on external funding, high gearing to equity markets, connected party opacity. In other words: too fast, too young, too much, too short, too connected, too volatile."

With a little more of the human drama, this book could be made into a Hollywood movie (except of course for the heroic ending). The scene of the hedge fund managers coming to Iceland and mocking the executive of the Icelandic Central Bank as they detected weakness in Iceland's position is ready-made. Jonsson does include bits and pieces of personalities and their effects, though I would have welcomed more since I suspect such elements did influence the course of events more than is apparent in the book.

For Canadians the value of this book is the lessons and warnings. In the final chapter, Jonsson notes that the cost of bank bailout packages may yet become sovereign debt crises. He says some countries are especially at risk: a) small countries with, b) large, internationally exposed banking sectors, c) currency that is not a global reserve currency, and d) limited fiscal capacity. Jonsson asks whether even Britain itself could be in danger according to these criteria. Canada's banks escaped most of the 2008 financial havoc by their heavy reliance on stable domestic deposits so that is reassuring, as is the government's generally strong fiscal capacity, though it has been diminished by stimulus spending. However, Canadian complacency would be serious mistake.

The author does an excellent job keeping the story flowing and the tone light for what could easily have become too technical and dry. The author's position as chief economist at Kaupthing, one of the failed banks, seems not to have interfered with the presentation of a fair and unbiased account (bank executives get their share of blame).

For the individual investor and citizen, perhaps the biggest lesson from this book, is that the economic and investment landscape is highly complex, making it hard to know where things are going. Drastic bad things can and do happen, even to the surprise of highly motivated, smart, not-evil, though self-interested people. If you don't prepare for the worst, it may happen, even if it isn't your doing, and you may suffer the consequences.

Now many people are leaving Iceland, though Jonsson says Icelanders refuse to see themselves as victims. The acceptance of the 12,000 euro per person debt to reimburse Icesave depositors in the UK and Holland is being resisted within Iceland. The story isn't finished and the echoes of the crash will continue for a while yet.

A combination of an education and a good story, I highly recommend this book. My rating: 5 out of 5 stars.

Thank you to McGraw Hill for supplying a copy of the book for review..

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