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Lessons World Must Learn from Iceland Tackling its Financial Crisis

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Iceland Bank Protests
Photo by Jed
People around the world are awakening, understanding their rights and realizing their powers, and so we are seeing a number of protests around the world against their government. The way people are heading to establish a more advanced level of democracy, our mainstream media still stays back, not so democratic. 
When there were protests in Middle East, all the news media were active in covering the events, but when we saw protests in Iceland, Greece and now in Turkey, the media did not show that activeness. Since it is the fight for an advance level of democracy which demands for even more rights to the citizen, other governments are scared that this could encourage their own citizen as well.

Today what Turkey is demanding is an example of advance democratic rights and participation in development. Now people are able to tell their government what they want in their city and what not. Eventually government should work for their citizen and make them happy, but in Turkey government wants to make a shopping mall at the place of the Gezi park against the will of its citizen. People who were protecting the park launched a strong protest. However, government did not understand the demands of the people and instead started using force, tear gas, and in fact they declared that  every protester will be treated by the police as a terrorist. Read More

What Iceland has done is so unorthodox for the management gurus around the world with textbook knowledge. It has gone against the belief of total capitalism, which is considered as the only successful way for an economy to burgeon by some. In 1991 when communist socialist economy fell down in Soviet Union, the capitalist world cherished. But today we are seeing that even capitalism is not the fool proof solution. Almost all the countries in Europe today are facing the similar problems: bankruptcy, austerity, etc. and the government should learn from what Iceland did.
In 2008 Iceland experienced third largest financial meltdown ever in the history. Iceland’s bank defaulted on $85billion. Icesave, an online savings bank operating in Iceland, the UK and Netherlands went bankrupt. The UK and Netherlands governments stepped in and bailed out their citizen who had their savings in the Icelandic bank. In total both the government spent nearly £3.5billion which they asked Iceland government to compensate. The ratio of debt to income surged to 240%. Soon the people in Iceland realized that the faith which they had put in their government resulted into nothing. Iceland Government came up with the plan that every citizen of Iceland will contribute to the payment of the debt to the UK and Netherlands. In a country of some 317,000 people, each person had to pay nearly 21000 euros monthly for the next fifteen years at the interest rate of 5.5%.
The people went out to the streets to protest. They dressed in orange and made a line in front of the police. Protesters made annoying sounds with kitchen utensils and stood really close to the guards protecting the parliament building and started at their eyes.
The protests resulted into the resigning of the government, bankers were jailed and banks were nationalized! Out of some 500 candidates 25 people were chosen without any political affiliation to remodel the constitution from the scratch replacing the old one which is said to be similar to the Dutch constitution. 1500 people were invited to participate in the assembly out of which 1200 were selected at random and 300 were representatives of companies, institutions etc. They belonged to all age groups from 18 to 88 spanning all six constituencies in Iceland. The new government decided that no one should stay in the parliament longer than eight years. 
Iceland’s new challenge was compensating Britain and Netherlands for the money which they had used to bail out their citizen having accounts in Icelandic bank. It followed a referendum two times in Iceland which rejected the repayment plan both the times. Dissatisfied UK and Netherlands government approached the European court suing Iceland. 
The success came to Iceland this year in January when European court cleared the Icelandic government closing the case in the favour of Iceland. The ruling halted the attempts made by the UK and Netherlands to get all their money back from Icelandic government. It was the victory for Icelandic people because they believed in any case, it was fundamentally unfair because the UK and Dutch governments had awarded compensation to their citizen far in excess of the levels required by European legislation.
As the new system in Iceland took over, the debt exceeding 110% of the home values was forgiven. The country eased the debt burden for over 25% of the population. The orthodox management experts were amused by what Iceland was doing, as it was going the unconventional way. It was actually helping its own people instead of banks like how other capitalist economies do. Critiques warned that Iceland is doing a big mistake, and their claims got solidified when in 2009 Iceland’s economy shrank by 6.7%. However as the time passed by and the government became stable, in 2010 its economy saw a rise in 2.9% and in 2011 it further experienced expansion by 2.4%.
Today Iceland is doing better than the rest of the European Union. It came out in the conclusion that helping your citizen and making them happy really works. Iceland doesn’t want to tie itself to Euro or join European Union now where governments cut to the people and give to the banks. In fact Iceland nationalized their banks. Iceland says if we were tied to Euro we would just have to succumb to the laws of Germany and France. Membership in the European Union imposes a lot of regulations, budgetary costs, and financial oversight that even the UK is considering the leaving option. 
In Summary Iceland took the following revolutionary steps
  1. Resignation of the government, imprisoning the responsible parties
  2. Nationalization of the banks.
  3. Referendum rejecting the repayment plan.
  4. Appointing common people to rewrite the constitution. 
Such a revolutionary change has changed the scenario in Iceland. The country’s economic situation was worse than Greece, but today its economy is stronger than any other European country which has seen financial crisis in the recent years. 
The country is now implementing Participatory Democracy in Reykjavik as a model city where people decide where the development funds should go. The capital city of Reykjavik has also launched a direct democracy platform, where any citizen can drop few suggestions in a community forum about the things they want to be done in the city. The city council choses top five suggestions and process them in a month before taking the next five. Iceland is considering this system to be implemented in parliament as well. 
Now the thing is what we can learn from Iceland tackling the financial bubble bursts. There is a lot to learn from Iceland for other countries in the world. Greece, which is undergoing a financial crisis and Turkey and Cyprus which are considering to join European Union must try something that should help their citizen first and then the banks or the demands of the EU. Turkish government, which is in a standstill due to #OccupyGezi protests, should understand that the people want the Gezi Park and it can’t force a museum or a shopping mall against the will of their own citizen. Instead of listening to the people the government is using tear gas against their own people which is banned in conventional warfare.
Similarly India, which is known for upholding human rights in the world the government treated the protesters who were doing yoga by caning and making them run away. Several massive protests in India against corruption and for bringing back the black money stashed in foreign countries failed and the government which now is facing multiple corruption charges is still enjoying its power as no one can shake their position even an inch. People must rise and governments must take lessons.

During all these events which happened in Iceland, international media’s role was negligible. Media should be more democratic, open and uncontrolled. Paid media showed us everything from Libya, but nothing from Iceland. Since what people did in Iceland can shake many corrupt governments around the world.

Control Your Money or Your Money Will Control You Change your attitude toward debt. Every time you use credit for a purchase think,”Debt is slavery; I am making myself a slave.– unknown

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Sanskar Shrivastava is the founder of international students' journal, The World Reporter. Passionate about dynamic occurrence in geopolitics, Sanskar has been studying and analyzing geopolitcal events from early life. At present, Sanskar is a student at the Russian Centre of Science and Culture and will be moving to Duke University.

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Europe

Navigating legal matters in Spain

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Starting or expanding your business or investments into a new country can be daunting. The task of understanding and complying with legal obligations and tax commitments can be very difficult, especially when regulations are not in your first language, or you have little experience of the country you are expanding into.

Doing business in Spain can be incredibly rewarding, but it can be tough. Legal bureaucracy runs through every aspect of day to day life, and the smallest mistake can have far reaching consequences for your business. This is why you will need to decide carefully when choosing Legal services in Spain. You need the very best multilingual experts, that can advise and guide you through each task with professionalism and care. You need to look for a partner who can help establish and grow your business.

A one-stop shop for legal services

A business needs to be able to have absolute trust in their legal service provider and will not want to be working with multiple companies for different specialisms. Being compliant with the law is already hard enough without navigating through four or five different law firms.

This is why choosing a one-stop shop for legal services is the best options, especially if you are new to conducting business in Spain. By choosing someone who can advise on everything, you can be sure that you will not suffer the consequences of something being missed. Afterall, whether it is finance, tax, employment law or any other legal formality, you cannot manage each one in isolation, they are all key parts of running your business successfully.

Not only that you want a partner, who can help grow your business and maximise opportunities to do so. One that understands the complexity of the issues your business may face, and can give a sincere and honest opinion.

Get the formalities covered and spend more time doing what you do best

Nobody likes to spend their time struggling with paperwork,but it is a necessary evil with any business. By choosing an expert in legal services in Spain to cover the formalities, you can spend more time doing what you do best and running your business.

Whether it is registering your business successfully, trademarks and patent registration, opening of bank accounts, or managing the hiring and possible expatriation and visa applications of employees, by hiring an expert you can leave all these worries in very capable hands.

The only certainties in life are death and taxes

Tax is always tricky to manage. Not just ensuring you pay what is due, but also being able to make the right business choices that means you do not pay too much. Every business knows it needs specialists to advise  and assist with tax planning, VAT returns, financing and raising funds and mergers and acquisitions. But when starting out in a completely new country you need local experts who know the rules inside and out.

The last thing any business needs is an unexpected tax bill causing chaos with cash flow, especially in the early days.

There is always the challenge of day to day accounting and payroll to consider also. That is why using a service that not only understands the legalities but can actually manage your bookkeeping, payroll and invoicing for you will be worth its weight in gold.

Expert help with all aspects of law when you need it

No matter what area of law you need support with, a good legal service should be able to provide assistance with any aspect. You have the usual corporate law, with things like contract management, corporate compliance, bylaws and shareholder agreements, insolvency. But also commercial and employment law. You will likely also need assistance with real estate law and sometimes even more personal issues that family law and your own residency.

A good service will make it easy for you. They should look to gather a complete understanding of how your business operates. This should include detailed information gathering and design a plan on how to ensure compliance for your review and approval.

They will likely speak to many areas of the business to get a feel for business context and aims in order to properly assess where the business is now, and what recommended strategy should be deployed.

Communication with you and the key stakeholders of your business is paramount. On delivering the agreed actions for you there should be regular updates on progress and important decisions that are needed and clear reporting at the end of the review and delivery. This will give you the reassurance you need that the service is being delivered to suit your exact business model and concerns, leaving you safe and compliant.

One thing is for sure – do not try to go it alone, it could prove disastrous for your business and jeopardise your success. If you want to avoid costly mistakes, find a legal services partner you can trust, can provide a holistic service and is expert in all aspects of running and managing a business. The investment will prove its worth over and over.

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Brexit: Three Logistics Concerns for Businesses

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After the vote on 23rd June 2016, for many businesses, it seemed there was ample time to prepare for Brexit. However, the UK is now one year away from leaving the EU and naturally, many business owners are becoming increasingly concerned about its impact.

A recent study showed that 94% of UK SMEs feel that the government is failing to listen to their Brexit concerns. There are also fears that HMRC’s new customs system will not be ready by the Brexit deadline.

For businesses, it is clear that there remains a lot of uncertainty about Brexit, including what trades deals may be formed and how they will affect British businesses. This is particularly true for logistics, where these three concerns are growing.

Cost Implications

For many companies, their number one concern is cost. In order to offset, businesses facing an increase in operating and logistics costs may have to pass this onto their customers, resulting in higher product prices – this is especially worrying for logistics companies like Tuffnells. This could result in a lower sales volume, making a dent in their bottom line.

This additional spend could come from several areas, including:

  • Taxes and tariffs: after leaving the single market, exporting or importing goods may be subject to new charges and restrictions, which could result in higher logistics costs
  • Fuel: The exchange rate of the pound dropped after the Brexit vote and it could fluctuate further after the deadline, resulting in increased fuel and transport prices

Business Systems

Coming out of the EU’s single market – where British businesses currently trade tax-free – presents more issues than cost alone. This includes implementing new business systems.

While HMRC are putting their own customs systems in place, businesses also face the same challenge. Staff will require training on new tariffs and customs, logistics procedures will have to be revised, and businesses will have to find systems and methods to deal with these new processes. All of this will eat into business hours and cost companies further money.

Border Controls

The introduction of new border controls will have several affects on British businesses, including cost, delays and further administrative processes. But leaving the EU will limit companies in another way: freedom of movement.

Pre-Brexit, EU workers had the freedom to move and work in any member state, but this will no longer apply to the UK. This means hiring workers from within the EU could be more difficult, time-consuming and expensive. With many British companies hiring migrant drivers to cover the UK shortage, this could severely impact transport.

The announcement of Brexit brought about uncertainty among UK businesses. Unfortunately, only speculation is possible until all trade deals have been announced and Brexit takes effect in 2019. However, if businesses prepare in these areas, it could help to minimise impact.

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The Future of the UK Used Car Market

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It is an intriguing time in the UK auto market in 2018 with a range of political, economic and social factors influencing the industry. New car sales continue to fall for the 11th consecutive month with diesel taking the brunt of the slide. It is thought that this decline is due to the uncertainty over the Government’s clean air plans (including the 2040 ban on petrol and diesel), but also the economic climate and uncertainty over Brexit.

Sale of AFVs

Although new car sales continue to fall overall, there is evidence that the 2040 ban is influencing consumers with the sales of alternatively-fuelled vehicles (AFVs) rising steadily over the last 11 months, including a 7.2% rise in February compared to last year. Although this is unable to offset the free-falling diesel sector, it does show that motorists are beginning to prepare for the green car revolution. Motorists are also aware that there are many incentives for making the switch, plus there is now a wide range of excellent electric cars on the market.

Used Car Market

So, what does all this mean for used car dealerships? Sales have managed to maintain stability amidst the turbulence in the industry with a drop of just 1.1% in 2017 compared to 2016. This was largely thanks to the sale of used electric cars, which saw an increase of a staggering 77.1% in 2017. Hybrids were also up 22.2%. This goes to show that motorists are preparing for the future and still have the need to change automobiles, with the used car market being a much safer place to do this as it is a much smaller investment.

The Future

It is easy to see reputable used car dealerships like Shelbourne Motors performing well in 2018 and beyond as more and more second-hand electric cars become available. An increasing number of cities are imposing their own bans ahead of the 2040 ban, plus it is expected that there will be more clarity on the ban and the electric vehicle infrastructure will continue to grow. Additionally, the landscape of a post-Brexit UK will be clearer soon and this could encourage motorists to shop in the used car market.

The future of the used car market in the UK looks healthy despite the fact that there has been a great deal of uncertainty in the UK over the past year. Provided that dealerships are able to provide motorists with a range of second-hand electric automobiles, it is easy to see motorists opting to buy used as opposed to new as this can allow for big savings which is important in the current economic climate. The green car revolution is fully underway and this is what has managed to keep the used car market afloat during a challenging period.

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