Thursday, 14 April 2011

Iceland broke the rules and got away with it

Now Ireland and Portugal wish they too had got tough with the markets


* Aditya Chakrabortty
o The Guardian, Tuesday 12 April 2011


Remember Iceland? In the autumn of 2008, it became the first national casualty of the financial meltdown; the first rich country in more than three decades to take an IMF bailout. Commentators declared it the Icarus economy, which had finally come crashing back down to earth. It became both parable and laughing stock. What's the difference between Iceland and Ireland, joked traders – one letter and a few months.

You don't hear much about the insolvent island any more – apart from occasions such as this weekend, when Icelandic voters were asked to repay the £3.5bn owing on collapsed bank Icesave, and replied with a firm "Nei".

Unnoticed it may be, but Reykjavik now serves as a very different kind of parable, of how to minimise the misery of financial collapse by ignoring economic orthodoxy. And in those other broke European economies – from Dublin to Athens to Lisbon – politicians and voters are starting to pay attention. After its three biggest banks – 85% of the country's financial system – failed in the same week, Iceland did two remarkable things. First, it let the banks go under: foreign financiers who had lent to Reykjavik institutions at their own risk didn't get a single krona back. Second, officials imposed capital controls, making it harder for hot-money merchants to pull their cash out of the country.

These policies were not just controversial; they represented a two-fingered salute to the polite society of academics and policy-makers who normally lay down the laws on economic disaster management.

Compare Iceland's policies with those followed by another tiny country in the North Atlantic, which also has a banking industry much bigger than its national economy. When the credit crunch came to Dublin, the government decided to underwrite the entire banking industry – including tens of billions of euros of loans made by foreign investors. That landed the country with a debt worth something like €80,000 for every household – a debt that effectively bankrupted the country.

"A reverse Robin Hood – taking money from the poor and giving to the rich," is how Anne Sibert, a member of the Central Bank of Iceland's monetary policy committee, describes the Irish policy. But Dublin was merely following the old free-market tradition that rules governments should never break faith with financiers.

Yet looking at the two countries now, it's hard to say that Ireland has prospered out of being orthodox, or that Iceland has suffered an especially terrible punishment for not sticking to the Way of the Markets.

Indeed, the evidence seems to point the opposite way: Iceland has come through in better condition than anyone in 2008 dared hope. The worst of its recession is over, even though it's still too early to talk about sustained growth, and the unemployment rate (7.5%) is just over half that of Ireland (13.6%). Remarkably, after the krona lost more than half its face value, inflation is also coming down quite sharply. And without having to pay back foreign creditors, the government's finances are also in better shape. In Ireland, on the other hand, the government has just injected more money into its banking sector – the fifth time it has had to do so.

Now, this is a picture that needs more qualifications than a brain surgeon. For a start, you wouldn't wish Iceland's fate on any economy. Huge spending cuts are still to kick in, and a lot more pain is in store. Thor Gylfason, an economist at the University of Iceland, reckons it will take another seven to 10 years before his country recovers from one of the worst economic disasters in recent history. This will be a long, slow haul.

But landed with an almost unbearable burden, Iceland has made the load easier on itself – and it has done so by getting tough with foreign speculators who lent money to the country at their own risk. In Dublin, on the other hand, as Irish MP Stephen Donnelly puts it, "the entire Irish people were made collateral for the banking system" – and its economic performance has not been remarkably better. More than that, there is a basic point about fairness: in Ireland, keeping the markets on side was deemed to be more important than keeping people in jobs – in Iceland, the priorities have been reversed.

Donnelly says that the Icelandic example is beginning to attract interest in the Dáil and in the media. An Icelandic politician was recently interviewed by Vincent Browne, the Irish equivalent of Jeremy Paxman. In the bust countries of southern Europe they're also starting to take notice. Last week, on the day that Portugal finally admitted it would need a bailout from Brussels, I was talking to Joana Gorjão Henriques, a journalist from Lisbon. She told me that her contacts were pasting stories about Iceland on Facebook, and that newspaper columnists were using Iceland's case as an example that Portugal, Greece and Ireland should follow – make an allegiance and say to the EU that they won't pay the debt.

There are echoes here of the Asian financial crisis of the late 90s. Then Malaysia's prime minister Mahathir Mohamad brought in capital controls to shore up a battered financial system – and he was pilloried from Washington to Wall Street. Nobel laureates in economics predicted imminent catastrophe for Malaysia; the International Monetary Fund effectively told Mohamad off. But the year after, Malaysia began a strong economic recovery, and now the IMF issues papers on the usefulness of capital controls.

Iceland was a country wrecked by implementing free-market dogma crudely and quickly; it may yet became another such lesson of how an economy can ignore free-market dogma – and come out far better than its critics predicted.

Spin and the art of attack

Being an aggressive spinner is not about bowling flat and fast. Quite the opposite, and you only have to look at veteran bowlers operate in Twenty20 to see that

Aakash Chopra

April 14, 2011

Grounds are getting smaller, wickets flatter, bats thicker. And just to make it tougher for bowlers, the format of the game has got shorter. As if the rule book doesn't already favour batsmen, these "innovations" have stacked the odds against bowlers higher still. But while it has ostensibly become tougher for bowlers to succeed, good ones will always have their say.

Who are these "good bowlers", though? In the pre-Twenty20 era these were men who could simply bowl quick, for a batsman needed special skills to get on top of someone bowling at 145kph. It was widely believed that the shorter the format, the smaller the role of a spinner. In fact, the only way for a spinner to survive in Twenty20 was to bowl quick and flat, or so it was believed for the longest time.

But a look at the spinners in action in the current IPL is enough to tell you an entirely different story. Spinners who're bowling slower in the air are ruling the roost.

Is it only about bowling slow or it there more to it? Let's take a look at what's making these bowlers ever so successful.

A big heart
While fast bowlers are the stingy kind, who hate runs being scored off them, spinners are more often than not advised to be generous and to always be prepared to get hit. Bishan Bedi would tell his wards that a straight six is always hit off a good ball and one should never feel bad about it. Having a big heart doesn't mean that you should stop caring about getting hit; rather that you shouldn't chicken out and start bowling flatter.

Suraj Randiv could easily have bowled flatter when he was hit for two consecutive sixes by Manoj Tiwary in the first match, but he showed the heart to flight another delivery, and got the better of his opponent. You rarely see Daniel Vettori or Shane Warne take a step back whenever they come under the hammer. Instead of thinking of ways to restrict damage, they try to plot a dismissal.

Slow down the pace
Most young spinners don't realise that the quicker one bowls, the easier it gets for the batsman, who doesn't have to move his feet to get to the pitch of the ball and smother the spin. You can do fairly well while staying inside the crease, and small errors of judgement aren't fatal either, as long as you're playing straight.

The slower the delivery, the tougher it is to generate power to clear the fence, but there are no such issues if the bowler is sending down darts. In fact, even rotating the strike is a lot easier if the bowler is bowling quicker, for you need great hands to manoeuvre the slower delivery.

Yes, it is perhaps easier to find the blockhole if you're bowling quick, but you're not really going to get under the bat and bowl the batsman, since you don't have that sort of pace.

Also, if you bowl quick, the chances of getting turn off the surface (unless it is really abrasive) are minimal. You must flight the ball and bowl slow to allow the ball to grip the pitch and get purchase.

Attack the batsman
Mushtaq Ahmed tells young spinners that they need to have the attitude of fast bowlers to attack batsmen.

Attacking the batsman is often misinterpreted as bowling quick. That's what the fast men do; you hit them for a six and you're almost guaranteed a bouncer next ball. For a spinner, attacking has a different meaning - going slower and enticing the batsman.

Bowling slow must not be confused with giving the ball more air. The trajectory can still remain flat while bowling slow. Some batsmen are quick to put on their dancing shoes the moment the ball goes above eye level while standing in the stance, so it's important to keep the ball below their eye level and yet not bowl quick. Vettori does it with consummate ease and reaps rewards. He rarely bowls quick; he relies on changing the pace and length to deceive the batsman. And if the batsman is rooted to the crease and is reluctant to use his feet, you can flight the ball.

Add variety
The best way to not just survive but thrive as a spinner is to keep evolving.

Anil Kumble not only slowed down his pace but also added a googly to his armoury in the latter half of his career. Muttiah Muralitharan added another dimension to his bowling when he started bowling the doosra. Suraj Randiv stands tall at the crease and extracts a bit of extra bounce. Ravi Ashwin has mastered the carrom ball.

Instead of learning to undercut the ball (which is obviously a lot easier to develop), it's worth developing a doosra, a carrom ball or some other variety.

Young kids must understand that when you bowl flatter-faster deliveries, the ball behaves somewhat like a hard ball does on a concrete surface, skidding off the pitch. Slower balls, on the other hand, act like tennis balls, with far more bounce.

Up and coming spinners need to set their priorities right. They can either bend the front knee to reduce height while taking the arm away from the ear to bowl darts, or learn from the likes of Warne, Vettori, Murali and the like to succeed in all formats, provided the basics are right.