Monday, 12 October 2009

Shopping At Iceland

As the financial implosion occurred around us, Gordon Brown manfully rallied around saving worthless banks and helping savers. As he battled to put fingers in the dyke, so to speak, another calamity came from Iceland.

As Iceland melted under its own financial follies, it was found that not only had many UK savers, who had been lured by excellent online savings rates at Icelandic banks, but also many UK Local Authorities had several £billion between them in accounts which were rapidly tending to zero. Brown, warrior-like, thrust an accusatory finger at them demanded the money back or he would sue. Iceland waved a frozen two fingers at him and asked with what shall they pay?

The country was on its knees, virtually bankrupt.

In fact, ministers in Iceland reckoned they could name just 6 individuals who had caused the financial disaster via vaulting ambition, one of whom, a Director at Kaupthing, is under investigation for fraud. Icelandic companies owned many UK High Street shops including Iceland itself and so the knock on effect could be huge. If only we could have named our individuals beyond Gordon Brown himself. The savers in Icelandic banks would have to wait a long while to get any of their money back.

Iceland looked inwardly for salvation. At least it could feed itself if it came to it. Then some bright spark came up with an idea. We have seen before small islands trying to capture specific markets - in Mauritius, for example, there are many high fashion factories for companies like Ralph Lauren, while in the Channel Islands they tried to use VAT loopholes to attract music download business having already attracted CD and DVD distribution. Sooner or later such opportunities dissipate as the world moves on or the HMRC closes the loophole. But Iceland has an ace card.

Today, Iceland produces all its own energy. It is limitless and freely available, all they pay for is harnessing. While Britain scrabbles around laying vast cables between here and Norway to get cheaper electricity, Iceland has plenty for itself and much more. By tapping into the vast heat reserves below its surface, Iceland has access to vast amounts of the most renewable energy of all - the centre of the earth. And it has another unique, lots of cool water surrounding it. This unique combination has opened a credible business opportunity that has powerful selling points. It has already started to build specialist, state of the art premises to house vast server farms. As data grows exponentially, Iceland's unique combination of hot and cold means it can both power the servers cheaply with no impact on the CO2 levels and cool them again as it takes almost the same energy to cool them as power them under normal circumstances.

Banks and companies like Google, who alone is rumoured to have over a million servers worldwide, are already expressing interest and vast fibre cables are being laid to handle the incredible bandwidths required to transport the data to and from the island. Iceland's location means it may not ideal for the kinds of speeds required for certain companies, but for the plain old internet, it is more than acceptable.

As Britain fire-sells puny assets in an attempt to make ends meet that looks like people begging to the homeless, Iceland has a future which is exciting and potentially unique. Of course, there are issues about housing so much IT real estate in one place - it is the terrorist's dream - but if all these can be overcome, Iceland will have an amazing future that makes our pathetic efforts look as they are. We spent all our money to save a few rich people - Iceland is using all its resources to tap into something that can make it rich and powerful.

Icelandic bankers may not be getting fat bonuses this year, but they can at least go home thinking of a future that is worth investing in. Our boys will be rich again this year as they convert rubbish, toxic debt into £billions of profit right in front of our eyes and so just delaying the obvious and the inevitable.

Guess who stands the best chance of a sustainable future?

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