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Season 3, Episode 24: The Lessons From Iceland’s Financial Collapse, From One Who Was There

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With Jared Bibler, Author of ‘Iceland’s Secret’

Jared Bibler joins the podcast to discuss his book ‘Iceland’s Secret’ and his experience living through that country’s financial collapse in 2008.

It was a very dark period in Iceland’s history, with individuals losing homes and savings and not being able to buy food. The author experienced this first-hand, initially as an asset manager and later working for regulators seeking to bring the responsible parties to justice.

The crisis in Iceland shocked the world but was quickly overshadowed by the collapse of Lehman Brothers in the U.S. Today it is largely forgotten outside of Iceland. But the author says his experience holds many lessons for the present day.

If nothing else, his experience holds lessons for those interested in hedging against a total collapse of capital markets and civil society.

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Not intended as investment advice.

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Transcript

Nathaniel E. Baker 0:36
Jared Bibler, author of the book Iceland’s secret, it’s out now and why Iceland? Well, many people may not know this, but Iceland was kind of the early adopter, or the first phase, one could say of the 2008 and 2009 financial crisis, it is now pretty much forgotten. But there was a run on the banks and you lived through that. And this book details your experience there while in Iceland. You had previously become an Icelandic citizen, right? So you were really there on the inside. And it’s a really entertaining read. And I don’t just say that I sometimes doing these interviews for disclosure. But this time, I know I mean it because it really is good. If you’re one of the former guests who’s sharing that does not apply to you. But anyway, the point here, I want to read this part of your book, and I want to ask you some stuff. But it just says the very it says the causes of the Icelandic financial crisis of 2006 to 2008 are hardly understood and barely discussed either inside or outside the country even today. That is a mistake. This is a crisis that has clear relevance for every country that practices market capitalism. And these days, that’s just about everybody. So let me ask you, what is the relevance today for this Icelandic crisis now, almost 15 years ago?

Jared Bibler 2:04
Well, first of all, thanks so much for having me on. And not to to get to that this crisis is often lumped in with the subprime us crisis, which is, which was the final trigger to trigger the the complete collapse of Iceland’s economy and very nearly the society very nearly, quote from the central bank, Governor of the of the day, in those days, we’re looking at 30 years of anarchie. Wow said and I think he was not far off the mark, a very smart politician. It gets lumped in with these other crises that happened in 2008. But the causes of it don’t really have anything to do with subprime loans or anything like this. These were this is kind of a almost cartoonish example of, of capitalism, like turned up to 11. The banks were, as it turns out, they grew from tiny one is called the agriculture bank, when it’s called the fisherman, you want to win services to fishermen of the Country, Country only had in those days 250,000 people. Today, it’s about 350. It’s growing fast, we have high birth rate. But these tiny banks serving a place probably the size of your neighborhood, were able to go first of all, to borrow on the world capital markets pretty easily. And embarked on a program starting in 98, when they were only even partially privatized, the government still own part of them, embarked on a program of massive share price buying massive share price manipulation, via the daily buying of their own shares. And they were able to for 10 years create a myth of success a myth of a rising market and on on the back of the share price. On the back of their share, buy, they were able to borrow 10x 20x on debt markets. And for a brief few years Iceland had this myth of this beautiful prosperity but in my mind, the whole thing was an illusion. And that’s and that’s one of the angles I would like people to see when they read the book. It’s a it’s a great cute story about a cute place has got funny characters so on. It’s kind of liars, poker of the North, if you will. But at the end, you will be left with maybe a bit of an unsettled feeling about whatever place you’re you’re sitting.

Nathaniel E. Baker 4:25
Wow, yeah, and it gets into this a little bit. But I mean, some of this stuff just sounds kind of like garden variety fraud. I mean, the, you detail it in the opening chapter of your book that you go through these trades that the who is buying the shares of these banks or three banks in Iceland that were floated on the exchange and find out that it was all being bought by insiders, literally all of it.

Jared Bibler 4:44
It was the bank’s own prop desk, in my case.

Nathaniel E. Baker 4:47
Yeah. Right. And so that’s one thing that where if you’re looking at specific prop desks are now outlawed by the Volcker act as as you know. So, so maybe not that specific, but what else can you tell us more, more generally about how these these things might be seen and felt today.

Jared Bibler 5:06
Well, the second piece of that, and what was a big mystery to me while I was doing the investigation is what happened, all the shares that they were buying. Each of these banks was huge. They were the size, roughly of Enron that collapse. So you can imagine three, Enron’s collapsing in a place the size of your neighborhood, or that was the main, the main float of the stock exchange to Yeah, they also made up most of the value of the exchange. And so what I couldn’t figure out when I was investigating this is where did the shares go, because the prop desk would be accumulating hundreds of millions of dollars worth of shares each quarter. But then when you look at the audited financials, they were not there, hmm, should have been sitting in treasury stock for the company. They weren’t there. So I actually didn’t believe my eyes. At first, I thought we were missing some trades and so on, what it turned out was that they were always on Enron style, they were unloading them at the end of the financial quarter. And the buyer would be some companies that you’ve never heard of, like hold investment group, or de sullo trading limited. And here’s where this kind of connects to the Pandora papers, which just came out, I think, 10 days ago, these were all offshore entities, usually. And they would they would buy in one trade. Two or $300 million worth of shares in this Icelandic bank. This would be an offshore entity that was newly created, maybe it was two weeks old. And so where do you think the offshore entity got the money to buy 200 million worth of shares? The bank’s loan book because banks make loans. Yeah. So effectively, they became.

Nathaniel E. Baker 6:43
So it was kind of like an internal Ponzi scheme.

Jared Bibler 6:47
And as long as they could keep that share price looking healthy, they could go and raise capital on the debt markets, which was much more than the size of the share price manipulation. So as long as I could trick with the share, the share price was key. If they could keep that where it was, then they could go and borrow huge amounts. And so I think there’s a metaphor here for our world. I mean, this is, as I said, this is taken to the wall. This is the extreme example. But it’s quite unsettling how this went on. And also the fact that I had to write this book for you to even know this story. But you didn’t know that there were three, Enron collapses, that was all 10 years of fraud behind it. Nobody wanted to talk about that,

Nathaniel E. Baker 7:31
But interestingly, one of the differences between Iceland and the US at least is that some of these individuals and actual individuals were brought to justice on this right by the by the regulators in Iceland, right? Yep. So that was not something that we did here.

Jared Bibler 7:47
That was a big part of my work. As I say in the book, I discovered that trading pattern early on in my I was hired by the regulator, just a few months after the collapse. And things were so desperate there. We were eating like horse meat sausages. And that was, that was a dark time, we didn’t have enough to eat, and supermarkets were going a little bit bare. And there were ads on TV telling people to try to spend their money on products from Icelanders to try to keep the economy I mean, it was just dark. And it was also winter in Iceland, which is very dark. But when I came to the regulator, I was lucky in that I got a tip on this trading pattern, start investigating. But very quickly, the people above me and the regulator wanted me to stop that investigation. So I had uncovered that at the biggest bank to prop traders were buying up many days 100% of the market volume, or 70 or 80% of the market volume on their own books. And when I took that to my boss with all the research done, she said, Great, let’s write it up and send to the prosecutor. And I said like, I do you mean to tell me that this 25 year old kid, you know, spent a billion because in the last year, this bank spent a billion and a quarter dollars buying its own shares in Iceland and Sweden. It’s like coming to tell me that, you know, this is like massive fraud, right? And I said, You mean to tell me that there’s one or two prop traders spent a billion of the bank’s money and like none of their bosses like and she’s like, okay, you have a weak Jared. And so I had to figure out how to get emails from the bank and read them and then then emails that showed the pattern, the pattern went all the way to the CEO and the chairman of the board. They never managing this process for years. So I think that so my goal was to make the biggest case I could country was really demanding and people were on the street every day in front of Parliament, banging pots and pans and starting fires and it was just very ugly. I wanted to try to To try to make the biggest case I could to, you know, to show that we could move forward from this. But there were a lot of there’s a lot of pressure to not. And then when I was only the beginning of this, then it went to the special prosecutor who was a new office. And he really also went hard and Went, went full steam and tried to go after the top people. So these were all these were all choices we made. And I think we only had the window to do that for a couple of years, because we had political will from the people demanding that. But as you see in the book by the end of 2011, me and my team has to shut down. So the window was closed. And even though we had only investigated maybe 510 percent of the of the crimes that we had started Wow, find Yeah,

Nathaniel E. Baker 10:47
yeah. Okay. All right. So So let’s talk about how this this worked. I mean, it sounds a little bit kind of almost bush League, at least by by his right eye present day standards. I mean, you would think that the high actors in finance have more sophisticated ways of covering their tracks, and but the use of these offshore accounts is something. And, you know, it’s interesting, I keep thinking about China. When when we talk about this, because there’s a lot of talk about capitalism on steroids. I mean, this is capitalism on steroids with like, testosterone injections, and all kinds of stuff. Right? Right. And who knows exactly what the companies they are doing, and what the stock exchanges are doing? Yep, there’s a lot of stuff. But maybe that’s a topic for another day. But I am curious, like what you think, again, how this could play out in the present day, maybe if it’s just an Iceland, or anywhere else.

Jared Bibler 11:48
I. So I’ve also been involved in regulation in a couple other places. And everything I’ve seen, unfortunately, points to this, maybe not as crazy and as bush legal in your words, as what happened in Iceland. But this type of corruption is fairly endemic in the markets of the world. And if you think about it, it makes sense. Because the, the incentive for someone who is for these prop traders in Iceland, let’s just take them as an example, or for the executives in Iceland, prop traders made a great salary, and all they had to do was just push the buy button every day. So they were happy. And the executives, they were paying themselves salaries and bonuses that had never been seen before. Nice. And on the other side, who is going to stop this, you have regulators who are paid much less, who are hoping to get a job at the same bank hoping to upgrade their role. So they’re not going to go too hard after this. And in no country that I know of, does a regulator get get it get a personal bonus for bringing in a big case? Right. So it’s complete, complete mismatch of incentives. And I think that and whether with no prosecutions for years in most countries, there’s I think, I think this type of thing is rampant.

Nathaniel E. Baker 13:09
Yeah, and it will probably take another crisis for us to realize just how rampant it is.

Jared Bibler 13:14
And I sat next, I think that next crisis will make 2008 look like a walk in the park. fortunate. That’s

Nathaniel E. Baker 13:20
that’s uh, that’s heartwarming. What Um, okay, so now what makes you say that?

Jared Bibler 13:26
I but I but look, everybody, like they say you have this, I can’t remember which, which which behavioral bias This is, but because I’ve been through the experience of losing everything, and I know how that feels. Not only could we not feed ourselves, but we couldn’t afford our house anymore, we had to hand the keys back. And most Icelanders did. So we lost our house, our pension funds, and Iceland had been invested in those in those banks. So those were wiped out. And our savings was either saved savings was in money market funds, which supported the buying of those shares. So it’s horrible to lose everything when you’re already in your mid 30s. Uh, you know, you will never recover that what, you know, the savings that you had early in life. So I’m probably biased to thinking this will happen again, and to seeing signs of it everywhere. And I hope I’m wrong. Really?

Nathaniel E. Baker 14:20
Yeah. I think confirmation bias might be the thing that you’re talking about. But but it doesn’t change the fact that yeah, these these issues are probably endemic. I mean, we do have some better regulations. I mentioned that the Volcker act. Yep. And again, in the US, at least it’s

Jared Bibler 14:36
I haven’t followed that that closely. But that wasn’t getting rolled out very quickly. The last I checked or that?

Nathaniel E. Baker 14:42
No, I’m sorry. I think it’s called the Volcker Rule. Dodd Frank is the act and Brian Volcker is part of that. The Volcker is the one that separates or this guy made all the banks spin off their profit desks,

Jared Bibler 14:54
but did they actually?

Nathaniel E. Baker 14:56
yeah, I think they did. They did as far as the big ones. The big Once in the US did this goes back to the early parts of the 2000 10s was when they were doing all that, and at the time, I was following it pretty closely. So I’m pretty sure they did. But yeah, wow. Okay, so and it is interesting how you experienced something that that nobody in the US at least I shouldn’t say nobody could have. But most Americans, you know, have only read about in books like yours, which is run on the banks, civil unrest. And literally having trouble putting food on the table to the point where you have to, you know, eat horse sausages. Yeah. Which from your description in the book sounds awful.

Jared Bibler 15:44
Yeah they’re not very good. But yeah, what was interesting, some of my friends just finished the book recently and they said, Oh, we didn’t realize how much you suffered in those years. And I think Iceland was a country that was starving for for centuries. And so it was interesting how people snapped into this survival thing and they knew how to do it and get through those few years but that was very dark. And a lot of people people like us ultimately moved away if you didn’t especially if you didn’t have kids yet. And you knew that it was just a no brainer to there was like a brain drain in 2013 1516 Yeah,

Nathaniel E. Baker 16:24
wow. Okay, but yet now Iceland has kind of is kind of on opiates kind of Okay, again, right? I mean,

Jared Bibler 16:30
well, it’s okay if you like, if you like to walk downtown in your town and every store selling t shirts and stuff puffins as a tourist it’s become like a Caribbean island where you know, cruise ships pull up dump off a bunch of low dollar tourists and it’s it makes me very sad to go there. I worked really hard to learn Icelandic and now I can’t even speak that language on the main shopping street of Reykjavik because even they’ve they’ve had to import people from other countries to work at the shops to handle you have 10 tourists per person per year. So the downtown, all the nice neighborhoods that become airbnbs pushing people out to the suburbs, which are not very nice. And it’s lost the soul. To my to my eye. I don’t like I love to go there. I miss living there. But when I go there, it’s always a bit hard. Hmm.

Nathaniel E. Baker 17:27
Wow. Okay. But I guess the point is that, you know, in the US we haven’t really seen anything like this. Yeah, depression we did. And it’s something that you do have to I mean, the chances aren’t zero that this type of thing happens regardless of confirmation bias or whatever. But that doesn’t necessarily mean they’re high. But this is the type of thing that you know, you have a whole prepper community you have people a lot of whom are banking on this for a very long time. So what kind of stuff Did you did you experience in this and one of the things I’m curious about is what like the currency collapse to right now the kroner so what would you guys do at the height of this thing for buying goods and

Jared Bibler 18:11
well, that’s why the supermarket shelf started to go dry. So just give you some some numbers. For a long time, it was about 80 to 90, ISK would buy you one euro and against the dollar it would be like 70 and as the crisis hit, there was one day where suddenly against the Euro It was 130. So it goes from 90 to 130 in a couple of days. And then within a few days after that it went to 342 the euro and then they just float what they do is they just freeze trading so you can’t buy euros anymore. You can’t buy dollars you can’t buy hard currency anymore. The only way to buy it would be to show a valid flight ticket that you’re going overseas and then you like Venezuela Yeah, now that’s how it was then you’re allowed to buy up to I think it was a couple $100 it’s not it wasn’t even that much. And I actually went out of the country during the crash about a week after because we were I was just like what are we gonna do and I actually was and there were no is nobody flying at this point because things were such chaos. I think I got a cheap ticket to France. mainly just go to the ATM every day for a few days and try to take out euros and but when I when I was leaving to go to France, I had my flight ticket. I went to every bank in the downtown I went to 10 bank branches and they they even had paper signs on the window like no euros So even with a ticket they’re just they were cleaned out. And that was that was that’s frightening. You know, to to not know how much the money in your wallet will buy the next morning

Nathaniel E. Baker 20:00
Yeah, that is interesting though but but the point here is sorry to kind of make things so

Jared Bibler 20:05
sure so bring me back.

Nathaniel E. Baker 20:07
But the point is like if you if you study these collapses of society and you know, it’s contrary investigated, like I said, you have to keep this stuff in mind a little bit, at least in the back of your mind. That is that is what happens is it does it does run on the banks and a run on it. Does the reader run on hard currency? I haven’t, from what I’ve read, which is admittedly not that much. It doesn’t seem like there’s been a move to physical gold and things like that. I would have heard of people exchanging jewelry and stuff, like during World War Two in Europe, for example. But still, that was that was to get hard currency. So the sound like hard currency is a pretty good disaster hedge, especially if it’s dollars or euros or francs, right?,

Jared Bibler 20:52
Yeah. I moved to the hard currency capital of the world, you know, I mean, all my investment decisions changed, including that I own gold. Now. I own silver.

Nathaniel E. Baker 21:04
You do?

Jared Bibler 21:05
Yeah. Yeah. I think when you live through that, yeah, it scars you.

Nathaniel E. Baker 21:09
Yeah, sure. Sure. Interesting. Wow.

Jared Bibler 21:12
It also means that I missed out on the bull market of the last 10 years. Right? Because I was just I had on trust this, you know, was, yeah, it’s quite, quite scarring. Yeah.

Nathaniel E. Baker 21:24
Which is interesting, which is another thing that didn’t really happen here. You have some people, it seems like the crises here, at least in my lifetime, we’ve all been so short lived, like we the late 90s. tech bubble. And that had an ugly landing. And for a couple years there, it seemed like tech stocks, were never going to happen again. And then you have Google IPO. I remember the Google IPO in 2004. And I was like, why are people buying this? This is dumb people learned? Well, Google seems is a solid company, unlike some of the dot coms are being propped up. But the point is, you know, 10 years later, now we have this. We did have another run in tech shares here, which some would say is over, some would say it’s not yet. It seems to be catching its breath a little bit. But people at least here don’t really have those. Haven’t really, I mean, some half, maybe, but you don’t really hear about them. I mean, all you see is that like, all this money going into risk assets, and dare I say kryptos, which is like the most risky of the risky things One would think because it’s not backed by anything. Right?

Jared Bibler 22:24
What do you thoughts on that? I agree with you there. And I think it’s also kind of ripe for fraud. This, this crypto world? Yeah. So it’s another Wild West. Okay, have you have you been following the tether? story? No. Okay,

Nathaniel E. Baker 22:44
what is that? I should know

Jared Bibler 22:46
One of the best reviews I have for the book so far is a journalist who’s a crypto a crypto, bro. So tether I’m not an expert. I was just reading about this because I’m curious. tether is a so called stable coin. Supposed to be back to one to one. So it’s something that is on the blockchain. But it’s supposed to be one tether is $1. Right? And this year, or recently, they’ve sold $69 billion worth of new tethers. And nobody knows if they actually are holding dollars behind those or not. And they can’t seem to find it. Where they’re holding the money. Yeah, that’s not very good. And so there’s actually different theories on what they’re doing. It seems like they invested some of it and evergrande just watching. Okay, they, they seem they seem to have given loans to Chinese property companies. That’s one thing. There’s a big Bloomberg piece on this from like last week. And the other thing they do is they use tethers to buy bitcoins and they like lever themselves up by so they’re holding bitcoins as collateral against the tethers that they issue. So they’re, they’re not just taking dollars in holding they’re, they’re issuing new tethers against Bitcoin and they’re hoping Bitcoin doesn’t go down too much.

Nathaniel E. Baker 24:11
Yeah, I mean, that sounds like a shell like a house of cards. It’s gonna come apart But yeah, so yeah, yeah. Okay, so physical currencies dollars euros Swiss francs, which you now have a lot seeing how you’re living in Zurich. Gold and Silver physical or ETFs

Jared Bibler 24:29
both. Like you have to be you have to be careful on the ETF somebody’s holding I think it’s something called pslv that’s a silver ETF that I think that’s Canadian based but they supposedly hold physical right and in in Switzerland, we have some ETFs that claim to hold physical one by one. Okay. Or, or 95% physical base, right. Okay. But but but some of the popular ETFs are not, and they’re holding just paper claims, or what’s called metallic, unallocated gold and silver.

Nathaniel E. Baker 24:58
I see you’re right, right. Yeah, we did. We had a whole show on this actually. Oh, yeah. Okay. Not a whole show. But But yeah, but um, that’s interesting.

Jared Bibler 25:05
What’s crazy about that is apparently, there’s 100, as there’s 100 ounces of unallocated gold for every physical ounce of gold. And in silver, it’s 500 to one.

Nathaniel E. Baker 25:16
What does that mean?

Jared Bibler 25:18
It means if you if you call your bank and say I want to buy silver, and they say, Oh, well, we’ll hold that for you. Then they say that they’re holding silver for you, what they’re holding is a claim on silver, which is unallocated meaning that there’s no serial number bar behind what they’re holding for you.

Nathaniel E. Baker 25:38
They’ll be they’ll just, they’ll just get it for you. If you if you’re big enough to demand it. They’ll get it for you. When you when you ask for the delivery of it when you ask for delivery. Yeah, yeah, that could be a problem. And if people actually do start to make a run for that, huh, all right, what else? Any, what are your thoughts on real estate? It sounds like I mean, that’s also something that was a big problem in the last crisis.

Jared Bibler 26:04
I think if you have if you have land in a in a desirable location, that’s never a bad thing, right? Yeah, I’m in Iceland. What happened to us? This is just the maybe a fun, fun story. Not not fun for us. But what happened to us with real estate is that in Iceland, the and this may have changed a bit, but I think it’s basically the same today, the loans that the mortgage you would get for a house, or an apartment purchase, is what’s called inflation linked.

Nathaniel E. Baker 26:32
Yeah, you go into this in the book. Yeah, go on. Okay.

Jared Bibler 26:35
So you may, you may have 20 30% equity in your house. And then you wake up one day, and the currencies collapse, inflation goes down through the roof, and then the, then you’re underwater on the mortgage, because the principal balance will, will tick up each month with inflation. Nice.

Nathaniel E. Baker 26:55
Yeah, that’s, that’s not great. Luckily, we don’t have that here. Do you know of any other countries that do?

Jared Bibler 27:01
No, Iceland? I think is the country that has embraced this craziness the most, they still have it now. Yeah, I think there’s some options that that you could have a non inflation linked to mortgage, but then in this case, I believe you could only get a five year mortgage and then you’d have to, you have to roll it, you know, at whatever the new interest rate is. Five years? Yeah. Wow. I’m not I haven’t bought I haven’t dealt with Icelandic property. And since 2012, that sounds I got it out. Okay. I’m not an expert on that. But, but they love this inflation indexing. And to my mind, it’s obviously just building inflation right into the, into the gears of the economy. Now, every corporate loan for a while every corporate and personal loan, even car loans. were either inflation linked or foreign currency, which is the same thing. Either. You’ve already had a hard currency or you inflation like domestic currency. Is it the same thing? Yeah. And so that’s just feeds. Yeah.

Nathaniel E. Baker 27:59
Wow. Okay. So anyway, it Yeah, there’s a lot of lessons here. I want to take a take a short break, and then come back and ask you some more questions about this. Some more questions about the book, some more questions about your views on current markets and what you’re doing. But let’s first take a break. If you aren’t a premium subscriber, do not touch the dial, because you will not get the break. We’ll be right back. Don’t go anywhere. Alright, Jared Butler, we’re back. And this is the segment of the show where we like to ask our guests a little bit more about themselves and how they came to their current station in life. Your book gets into this a little bit, I believe you hail from Boston, or at least, so But yeah, talk, talk us through this. And maybe you can get briefly into what brought you to Iceland. And the book goes into that as well. And how you are now in zero?

Jared Bibler 28:45
How much time do you have?

Nathaniel E. Baker 28:47
Well, you know, cliffsnotes version,

Jared Bibler 28:50
okay. I was born in Cambridge, Massachusetts, and I grew up in a very working class town near near Boston. When I tell people here, I’m from Boston, they say, Oh, so nice. But it was not nice that the windows of my elementary school were smashed and never fixed. And yeah, I was not great, not great. But somehow I got out of there. And I got into MIT, which was kind of a miracle in itself. And that was kind of set me up to maybe a different trajectory. In my career. I ended up on Wall Street, but but not not flashy Wall Street, Wall Street back office. So there was a small firm in Somerville, Massachusetts, still there called Galatea. And we were hired by one of the biggest Wall Street banks to build their global back office out. So our, the founder of our small firm had had come up with this grand unified theory of security settlement is it was beautiful and brilliant. And it was a model that worked in every market in the world. So I was rolling that out in Tokyo and in New York, and I saw the beginning of the mortgage boom, because One of the products that I was transitioning on to that system was, was mortgage backs, as they say in Brooklyn. And when they answer the I love this, when they answer the phone, they say mortgages I missed that. I actually the book, it got cut, but the book used to begin on Wall Street to begin with. My main client contact was a guy called the hammer. And everyone called him that and everybody feared him. And he had worked his way up from i don’t i think he may be finished high school, but he was a messenger. And he worked in those days, you could do that he worked his way up to head he was heading us. US Treasury settlements, all fed settling products. His team was moving like a trillion dollars a night. Yeah. So that was that was Yeah, that was really cool. But But exhausting. I was burned out, I did that for five years. We we turned we converted all these old systems into into our nice new system. I was really burned out. I had gone on Iceland and a vacation. And I stumbled into an opportunity there to do the same thing in Iceland, but with an Icelandic salary, which was like, almost almost a 50% pay cut. But with Icelandic hours, which was like super nice. I mean, you go in it’s different culture than America. You you go in and you work hard. Nobody’s like talking at the foosball table or not so much of that. You work and then you get up from your desk at four or five and you leave. And so that was that was when I moved there. That was a revolution. I was just planning to be there one year. And when I moved there, I just loved the life so much. They have swimming pools and every neighborhood of go in there and they’re open all year. It doesn’t

Nathaniel E. Baker 31:53
say I use them. Yeah. Wow. Okay. Yeah, because their winters are pretty harsh.

Jared Bibler 31:57
Yeah. And they’re geothermally heated. So you can sit outside in a hot tub after you swim, swim some laps, you can sit in a hot tub after work, and everybody does this nice. It’s really nice. And so that those were wonderful years, and that was that was the boom. So I experienced the Icelandic craziness. I wasn’t that much a part of it. But then later, I got hired as an asset manager by the Icelandic banks. Actually, that is in the book. And and then I was shocked by by the some of the things we were doing with customer money. I ultimately resigned there. And it was the last six months of that, that credit crisis winter, I didn’t have a job. And my fiance was was was keeping the household together with her new job, we didn’t have a lot. And we didn’t even add we didn’t have access to our state, you know, even to the money that we had in the bank. Yeah, so then I was hired by the regulator. And I started these huge investigations of the crisis in April 2009.

Nathaniel E. Baker 32:59
And that took you used to mention during 2011 2012, that whole thing was ended. private company.

Jared Bibler 33:04
Yeah, 2011 it just because I didn’t even get a team to help me until 2010. I did the first year, year and a half of investigations solo, more or less. And then we got I got like five or six people on my team, which was really nice. And then I was like, Okay, now we can go now we have five years of work to get this done. And within another year, it was like, okay, we’ve done enough of that. It’s time to look to the future. Yeah. And then I worked briefly for the special prosecutor in Iceland. But since many of his cases had come from me, I was really conflicted. I couldn’t work on anything, basically. So then we decided to move to Switzerland and try to have a better life.

Nathaniel E. Baker 33:49
And what prompted that, I mean, yeah, why switch on devolve? I guess other than hard money?

Jared Bibler 33:54
mountains. Okay. I like to ski and paraglide. And so it was it was like it was the obvious choice. Nice. Yeah. So

Nathaniel E. Baker 34:05
you’ve been there since when?

Jared Bibler 34:07
I’ve been here since 2012.

Nathaniel E. Baker 34:09
Oh, wow. So a good a good stretch.

Jared Bibler 34:10
Yeah.

Nathaniel E. Baker 34:11
And now what do you how you’ve been spending your days since since then? Other than writing a book, I guess,

Jared Bibler 34:14
writing the book was was it was a good 24 month project. And now I’m, I have my own small consulting company. I’ve been advising on investigations. And also on also on and this. This is funny, I don’t know if you know about this in America, but there’s this new sustainable finance world. Oh, yes. She’s Sure. Yeah. Yeah. So there’s a lot of overlap, I think in the in the financial fraud and in this greenwashing idea, hmm. Did you see the news about dw? Is that Deutsche

Nathaniel E. Baker 34:49
Bank? Yes, yes, yes, that’s not surprising

Jared Bibler 34:53
right. Yeah. So so I’ve been I’ve been getting hired on a lot of sustainable finance gigs. And I will I may soon be going into one of the Swiss banks as an internal person on anti fight anti financial crime.

Nathaniel E. Baker 35:08
No, Wow, geez

Jared Bibler 35:10
I was also, I was also one of the I had a brief stint at the Swiss Stock Exchange, I was in charge of my market surveillance and enforcement for the exchange here. Hmm. But I, I feel maybe I was a little too. Too hardcore. I didn’t last very long there.

Nathaniel E. Baker 35:31
Okay. Yeah. So, I mean, that kind of begs the question. You know, what areas you think you mentioned? ESG? If there’s any others that you think could be, we talked about kryptos. Before, that could be ripe, rife with fraud, or, you know, I guess potential proving grounds for for this type of stuff. Yeah,

Jared Bibler 35:52
that this is not a secret. But here in the Swiss stock market, at least when I was there, and this was true. Before I was there. We were sending about one insider case per week, to the authorities. So to the to the finma into the insider trading, insider trading is big, especially on I was thinking I was thinking about doing like an academic paper on this. It’s big, because it usually makes economic sense to do it. Or when it makes economics, do it, people do it. Not just for it, I’m thinking in terms of m&a type situation. So So I saw a scenario where a small ish company, and it’s especially in for more thinly thinly traded companies, it’s easy to do, someone invested seemingly $5 million over several months, and got the value of the shares up by 30%. And then they made a shares for shares off or for a competitor in a merger. And based on its intricate, okay, yeah, and well, but if you thought you weren’t gonna get caught, you might, I mean, I might do the same, right? I wouldn’t, I don’t think I would do it. But, but that person saved maybe 40 or 50 million in the merger? Sure, sure. We did some, you know, so who wouldn’t take that, and especially if you know, and, you know, the thing that I learned, I was quite naive. When I started the market, market surveillance job. There’s no again, back to incentives. If If a market London or Frankfurt or here or New York, if a market would get super clean would really go after everything. People companies are going to start listing elsewhere. So there’s kind of no percentage in that it’s great to have certain number of cases and press releases. But underneath the markets are pretty dirty. And there’s not much incentive to clean that up.

Nathaniel E. Baker 38:01
Yeah, yeah. Yeah. Although, I mean, if the US were to do it, we’re really to lead with that stuff. Then give you a US.

Jared Bibler 38:11
I mean, the US is the home of the biggest tax havens in the world for exam. Getting back to that topic. You know, you have the President’s home state is Delaware. That’s everybody. The Economist wrote about this 10 years ago how this was the world’s biggest tax haven. So I don’t see much coming out of there. You know, I

Nathaniel E. Baker 38:27
guess I was talking more about securities regulation. But yeah, but Well, that’s a whole nother thing. And

Jared Bibler 38:31
but but on that, on the, on the security side, like the SEC puts out a lot of press releases. But if you look at if you dig into the details of the cases, they’re often quite small potato, tiny, I’ve done $20,000 insight. I said, like, come on, man. Like in Iceland, by the way, any insider case below half a million dollars. We definitely did not have the resources for post prices. And even the ones over over that amount. The bigger cases. We probably had 20 or 30. And when the team got taken apart, most of those

Nathaniel E. Baker 39:08
were just cheese. Yeah. Wow. Yeah. Jim Rickards, you may you may know him, or I’ve heard the name. Yep. Yep. Yeah. I mean, he said, and others have said this, too, that there is basically insider trading is rampant and always has been. Yep. And that if if especially if you look at m&a, like there are just so many people that are in the know, yes, we have lawyers, bankers, okay. Yeah, they have, you know, they’re all sworn to MBAs and stuff. But you know, it doesn’t take much to tell somebody somewhere tip somebody off and you know, so that’s which is why you see all these all these bids happening, which is why you have things like expert networks, right? I mean, not only but yeah, so and then biopharma as these trials, you think the results would kind of be out there a little bit. Oh, that seems a little bit For whatever reason, those don’t move as much as m&a deals like in m&a deals, you can almost always trace it earlier to when it was announced. Right? Yeah. So something’s going on there. Yeah.

Jared Bibler 40:11
When we when I was doing surveillance, you can often see the big trades that Yeah, for Yeah, there’s so obvious that Yeah, there was one where there was a deal and the stock price jumped, or no, I think it was bad news. I think this was not a merger. This was the other thing you’d see is when there’s bad or good news, right? Sure, sure. And there was a I think it was a case of bad news. And someone had dumped 50,000 shares the day before, through a through a broker, who had never traded that share, you know, so these things are easy to find. And they should be easy to prosecute.

Nathaniel E. Baker 40:53
But right, I guess it all depends where you want to start? And if you see it, like yeah, like you said, like the cases they do bring are relatively small potatoes. So you’d left Iceland, obviously, about eight or nine years ago. And but what what you’ve seen, like you said, you’re still in touch with a lot of people in Iceland, and you still go there and your wife is from there. Right? So what is how is that country changed in the last since since you were there during the crisis?

Jared Bibler 41:21
Well, we talked about the terrorist explosions, and that’s probably the main thing. But what really frightens me is that nothing has changed. In terms of the business landscape. So I, there’s been a bunch of big news pieces about me and about this book in the last few weeks. And it’s caused some controversy publicly. And then I’ve gotten a lot of private support. people calling me and one person who I worked with very closely for about three years, he called me two days ago, and he said, I love your book. And I’m so glad you told this story. Nobody had told that before. And he said, Jared, I’m afraid that we’re back in 2006 or so again, he said, we have a lot of new listings on the market, I believe all three of the banks, the same banks, by the way, they changed their names, it’s like Spinal Tap, change their names, and another back on the market again. And he said, I don’t know who’s buying or investing in these shares, who’s creating the volume, he said, I won’t put my own money in this market. By the way, he works now in a in one of the banks compliance. He said, I won’t put my own money into this market. But of course, by law, his pension fund that he’s legally mandated to be in has to be. And so that, that really scares me.

Nathaniel E. Baker 42:47
That’s pretty terrifying. So they haven’t put any safeguards in place. Like, they must have separated the prop desks, at least, like the Volcker type thing that we talked about.

Jared Bibler 42:56
I should know that answer. And I don’t However, what I can tell you that the thing that scares me the most is that, like I said, I, we built up a two investigation teams post crisis, and they got up to 17 people. And these were great. We had our pick of the best people in the country. And I would submit that these were some of the best teams at this type of investigation in the world, at least at that time. We were fantastic once we got going. And that was all taken apart in 2011. And they did, they did nothing to create an enforcement capability at the regulator. Since Okay, so I mean, every country, almost every country has an enforcement. Yeah, part of the reason that’s important is at the regulator, you have people who are calling the same bank every day to get info. And you don’t want that person to then be prosecuting or investigating a case against somebody, they need to keep a good, good relationship. They need to be able to toss something suspicious over the wall to their colleague to pick up. And so us has this Germany has it. UK switch, everybody has this. Iceland’s still does not have it. And that is that’s the most frightening to me now. Yeah, that

Nathaniel E. Baker 44:02
is pretty disconcerting. Alright, cool. Jared nibbler. Maybe in closing tell we can tell listeners how to find the book How To find out more about you. Are you active on the social media at all?

Jared Bibler 44:15
My my best social media now is actually LinkedIn. So you can find me there, huh? Okay, I relaunched my Twitter account, but it’s not much happening right now. All right. Okay. Let’s cheer you up. I mean, I tweet but I don’t know if anybody reads it. Okay. Well, I will, I’ll follow you. What’s

Nathaniel E. Baker 44:30
your what’s your Twitter?

Jared Bibler 44:31
It’s @Jared_Bibler

Nathaniel E. Baker 44:33
Oh, that’s easy, okay.

Jared Bibler 44:35
And the book website is IcelandsSecret.com. You can order the book on there. It points you to Amazon or wherever you’d like to order it.

Nathaniel E. Baker 44:46
Are you planning a book tour of the United States anytime anytime soon?

Jared Bibler 44:49
I really want to do this. And my publisher said, Oh, nobody does that anymore. But that would be so cool.

Nathaniel E. Baker 44:57
It would be post pandemic. I probably People don’t do it. Yeah. Other than that, you know, right.

Jared Bibler 45:04
Yeah. But maybe I’ll come to Boston and, okay, I can do a signing at Barnes and Noble or something. Cool works there. So yeah.

Nathaniel E. Baker 45:10
Oh great. Very good. All right. Jared, thank you so much for coming on the Contrarian Investor Podcast today. Thank you all for being with us and for listening. And with that, we look forward to speaking to you again next time.

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