Bank Holiday in Cyprus

What happens when it's lifted? A bank run?

Bubbles, Gorton, Krugman and Cyprius-Iceland-Ireland.

The Яussians Are Coming! The Яussians Are Coming! by Krugman

...
As long as you haven’t bought into the Barney-Frank-did-it school of thought, you realize that the global crisis of 2008 was in a fundamental sense made possible by the erosion of effective bank regulation. As Gary Gorton (pdf) has documented, we had a 70-year “quiet period” after the Great Depression in which advanced countries had very few major financial flare-ups; Gorton argues, and most of us agree, that the key to this quietness was a constrained, regulated financial system that also limited the opportunities for excessive non-bank leverage. 

But this regulation in turn depended, to an important extent, on limited international capital flows; otherwise regulations made in Washington or elsewhere would have been bypassed via havens like, well, Cyprus. And once capital controls began to be lifted in the 1970s we entered an era of ever-bigger financial crises, starting in Latin America, then moving to Asia, and finally striking the whole world. 

So what are we going to do about this? Cyprus, as a euro-zone country, should really be part of a euro-wide safety net buttressed by appropriate regulation; it’s insane to imagine that the euro can be run indefinitely with merely national deposit insurance. But euro-area deposit insurance doesn’t seem to be in the cards — and anyway, there are plenty of other potential Cypruses out there. 

All of which raises the question, is the era of free capital movement just a bubble, fated to end one of these years, maybe soon?

What Good is Wall Street by John Cassidy

(via Yglesias)

The Beatings Will Continue Until Morale Improves

Irish Officials Acknowledge Need for Aid in Debt Crisis.

Ireland: a Textbook Example of the Dangers of Balanced Budgets and Fiscal Responsibility by Dean Baker

OECD sees global recovery slowing

From Dsquared:

Day of the Triffins

I am mildly surprised that Paul Krugman hasn't used this as a title for a blog post about the US$/yuan exchange rate yet. I donate it as open source to the community.

That is all.

Via Wikiepdia:

Triffin dilemma
The Day of the Triffids

(via DeLong)

Krugman writes about the new OMB director Jacob Lew.

So Obama’s nominee to head OMB told a Senate panel that deregulation didn’t lead to the financial crisis. Urk. I think he may technically be right -- it wasn’t so much deregulation as the failure to extend regulation to keep up with financial innovation that did it. Still, talk about stepping on the message.

And this gets to a point I’ve been trying to formulate: while the Obama’s political problems are largely due to a lousy economy, it’s also true that the administration seems to go out of its way to alienate its supporters.
...
In fact, it often seems to me that there’s an almost compulsive aspect to the administration’s anti-dog whistling. Maybe it comes from hanging out with the political and business establishment, which leads to a desire to seem respectable by dissing the DFHs. But memo to the president: Wall Street will hate you anyway. All you’re doing is undermining the enthusiasm of people you need.

After the Iowa primary, I was for Obama and against Hillary. What Krugman fails to mention is that Lew is/was Hillary's budget guy. He was a Clintonoid like Larry Summers and Robert Rubin.

I don't begrudge Obama for relying on Clintonistas for advice - they know how the Federal government in all of  its complexity works. But they did come from a deregulatory mileu, something Krugman fails to mention. And you have to wonder if they've learned their lesson, especially when Jacob Lew makes such a fundamental mistake.

Krugman's right that technically it wasn't deregulation which caused the crash - DeLong insists repealing Glass-Stegall didn't help cause the crisis. But as he says in the quote above " it wasn’t so much deregulation as the failure to extend regulation to keep up with financial innovation that did it." It was a deregulatory bias which did cause the crisis, something members of the Clinton administration enabled.

Were they going to regulate the shadow banking system while deregulating the plain old vanilla banking system? I don't think so. But Krugman is right in that Jacob Lew here doesn't seem to get it and the Obama people should have prepared him.

Sometimes it seems like DeLong and Krugman bend over backwards and/or go out of their way to defend Bill Clinton. When you consider the Clintonistas' political opponents like Newt Gingrich, John Boehner, George W. Bush, Mitch McConnell, Sarah Palin, Fox News, Rep. Paul Ryan, Rep. Eric Cantor, etc. it's difficult to begrudge them.

I should mention Krugman was discussing a news story by the Huffington Post's excellent business reporter Shahien Nasiripour.

The media gets criticized all the time but I believe journalists Neil Irwin, Sewell Chan and Nasirpour have been doing an exemplary job this past year.

Update: the more I think about what the new OMB nominee said, the more it pisses me off. Fed Chair Ben Bernanke testified to the Financial Crisis Inquiry Commission that the guy to read on the crisis is Gary Gorton. The other day Yglesias pointed to a new paper by Gorton on financial regulation. From the abstract:

We first document the rise of shadow banking over the last three decades, helped by regulatory and legal changes that gave advantages to the main institutions of shadow banking: money-market mutual funds to capture retail deposits from traditional banks, securitization to move assets of traditional banks off their balance sheets, and repurchase agreements ("repo") that facilitated the use of securitized bonds in financial transactions as a form of money.

Shouldn't Jacob Lew, former executive at Citigroup and budget director for Bill and Hillary, know this?

The International

Felix Salmon on Basel III.

(via Yglesias)

The Next Six Months are Crucial
(or Dylan Matthews Reduces Uncertainty*)

I see Dean Baker has a lengthy fisking of Thomas Friedman's column for today, but I'm not going to read it until I perform the exercise of doing it myself. Then I'll compare notes and see how I did.

Friedman takes the title of his column "Really Unusually Uncertain" from a description Bernanke recently made about the economy in testimony to Congress. The Fed Chairman described the atmosphere as "unusually uncertain" because the economy was giving off mixed signals. Economists are also divided on where the economy is heading, with many saying they don't know.

Right from the start, Friedman puts on his pundit hat and quotes PIMCO's** C.E.O Mohamed El-Erian to the effect that "Structural problems need structural solutions."  The Consenus seems to have latched on to the term "structural."*** Yesterday, the Minnesota Fed President asserted that the labor market had "structural" problems that would take time to sort out. Friedman opines:

There are no quick fixes. In America and Europe, we are going to need some big structural fixes to get back on a sustained growth path -- changes that will require a level of political consensus and sacrifice that has been sorely lacking in most countries up to now.

"We" are all going to need to compromise and sacrifice. But what exactly are these "structural problems"?

The first big structural problem is America’s. We’ve just ended more than a decade of debt-fueled growth during which we borrowed money from China to give ourselves a tax cut and more entitlements but did nothing to curtail spending or make long-term investments in new growth engines. Now our government owes more than ever and has more future obligations than ever -- like expanded Medicare prescription drug benefits, expanded health care, an expanded war in Afghanistan and expanded Social Security payments (because the baby boomers are about to retire) -- and less real growth to pay for it all.

Well Obama's health care reform should help with the deficit and government debt. Social Security isn't that bad off and the government's debt problems should ease with growth. Bill Clinton balanced the budget ten years ago, but he did it with "debt-fueled growth" - or rather with help from a stock market tech bubble and Alan Greenspan. Here Friedman raises an interesting issue. How do we get "sustained" growth rather than "debt-fueled" growth? Or more accurately, how do we get sustained debt-fueled growth, rather than bubblicious debt-fueled growth?

Structurally speaking, our political elites allowed the housing bubble to blow up and pop. And just to make sure the resulting financial crisis would be severe and sink us in recession, they allowed the shadow banking system to metastasize and outgrow Depression-era government regulations, some of which were scrapped anyway. At least Friedman, along with Rogoff and Reinhart, call for more fiscal**** stimulus in the face of weak employment levels:

America will probably need some added stimulus to kick start employment, but any stimulus right now must be in growth-enabling investments that will yield more than their costs, or they just increase debt. That means investments in skill building and infrastructure plus tax incentives for starting new businesses and export promotion. To get a stimulus through Congress it must be paired with spending cuts and/or tax increases timed for when the economy improves.

Government to the rescue! Golden straightjackets and invisible bond vigilantes be damned! (The world may be flat, but US Treasuries are still the safest investment.)

Second, America’s solvency inflection point is coinciding with a technological one. Thanks to Internet diffusion, the rise of cloud computing, social networking and the shift from laptops and desktops to hand-held iPads and iPhones, technology is destroying older, less skilled jobs that paid a decent wage at a faster pace than ever while spinning off more new skilled jobs that pay a decent wage but require more education than ever. 

I'm not sure but here things may be much more ominous than Friedman lets on. There's no class conflict or "outsourcing" in Friedman's (flat) world, just much less controversial concepts like "retraining" and "entrepreneurial innovation," even if the jobs aren't there thanks to a lack of aggregate demand.  And why is there less demand? Because as Friedman acknowledges, older, less skilled jobs are getting destroyed. Without consumers getting paid, they can't have demand - without incurring debt - and the US economy can't grow. (Without rising house prices they can't get loans.) And finally, Friedman turns to Europe:

But the global economy needs a healthy Europe as well, and the third structural challenge we face is that the European Union, a huge market, is facing what the former U.S. ambassador to Germany, John Kornblum, calls its first "existential crisis." For the first time, he noted, the E.U. "saw the possibility of collapse." Germany has made clear that if the eurozone is to continue, it will be on the German work ethic not the Greek one. Will its euro-partners be able to raise their games? Uncertain.

Greece couldn't devalue - as Argentina did - because they're on the euro, whereas the euro has been lower against the dollar which helped Germany's exports. Germany has basically exported its way to growth, something everyone can't do simultaneously, unless we find another planet to import our goods. Also Germany has better "automatic stabilizers" in times of recession and an innovative work-sharing program which reduced the fall in employment. So Germany - who didn't have a housing bubble even when England and Spain did - is doing better than the United States whose only social safety net is low interest rates/full employment and is suffering because of the fact.

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*My favorite recent blog subject title which was composed by Ezra Klein about his research assistant. Or perhaps Matthews wrote it himself?
** PIMCO's co-founder and co-chief investor Bill Gross was at Geithner's pow-wow on the housing market.
*** Is Structuralism back in vogue? I'd prefer post-structuralism.
**** Even though Friedman mentions Bernanke, he has no opinion on what the Fed can or should do. He's like the Mark Wahlberg character in the movie The Other Guys who has no idea what the Federal Reserve Bank is or does.

Henwood on Dodd-Frank.

The Volcker Rule by John Cassidy

Volcker’s skepticism about bankers and other financiers dates back to his days at the Fed, where he opposed the Reagan Administration’s efforts to deregulate the banking system. In 1982, Congress passed the Garn-St. Germain Depository Institutions Act, which gave struggling thrift banks (also known as savings and loans) the right to make commercial loans. (Previously, they had been restricted to residential lending.) The legislation was intended to enable thrifts to earn higher profits, and it was strongly supported by Treasury Secretary Donald Regan, the former head of Merrill Lynch. Volcker repeatedly disagreed with Regan and with other members of the Administration. Referring to the S. & L.s, he told his staff, "Give ’em commercial lending power, and they’ll end up with all the bad loans."

This is precisely what happened, and Volcker regards the S. & L. crisis, which ended up costing taxpayers about a hundred and eighty billion dollars in today’s money, as a template for the financial catastrophe of 2007-08. Unlike many economists, who regard financial innovation as generally a good thing, he is suspicious of many things that today’s big financial institutions do, such as creating complex securities and building elaborate mathematical models. Last December, at a conference in England for banking executives, he said that the most important banking innovation of recent decades was the A.T.M.

...
"It does show leadership in the United States, which will help encourage actions abroad. Without the U.S. stepping up, you’d never get a coherent response." He pointed out that the language banning proprietary trading was strong and that even the much weaker language on hedge funds and private-equity funds still contained some safeguards that would force big banks to change how they do business. He also cited the crackdown on derivatives trading and a clause, which he had campaigned for, that creates a position for a second vice-chairman of the Fed, who will be explicitly responsible to Congress for financial regulation. "I think that might turn out to be one of the most important things in there," he said. "It focusses the responsibility on one person."

Anthony Dowd [Volker's chief of staff] added, "We both felt like we got kind of excluded at the very end. But, when you step back, there were fifty-four lobbying firms and three hundred million dollars spent against us. So we didn’t do too badly."

To summarize, the bursting of the housing bubble caused a loss of aggregate demand and turned many loans bad which caused firms like Bear Stearns, Lehman Brothers, A.I.G., etc. etc. to collapse. Which caused a chain reaction and panic - no one trusted anyone else's accounting until the "stress tests" - which further reduced aggregate demand in a vicious circle. And then the governments of the world stepped in.

The economy is growing again, yet there's risk of it slipping into a double dip recession. Many in the Pain Caucus - who don't like seeing all of this government action and deficit spending even during a recession - argue the economy needs no more help from the government or central banks and will continue to grow on its own.

Inflation Fears

Ken Rogoff is a professor at Harvard and dues-paying member of the Pain Caucus. Not surprisingly he has worked at the IMF. Brad DeLong debates him in the Financial Times where he writes "Rogoff sees the economy now as suffering from structural maladjustments generated by the expansion of the 2000s in which workers must be trained in new kinds of jobs and shifted over to different sectors in which they have no previous experience, and that that process cannot proceed rapidly without generating inflationary pressures that will destabilise confidence in price stability." Maybe the bubbliciousness of the 2000s came in part from the profits made off of shipping jobs overseas?

Sewell Chan writes that the "Fed is in the Hot Seat," as Bernanke testifies before Congress today.

With unemployment high and inflation low, a question is being asked more often and more loudly: Can and should the Federal Reserve do more to get the economy moving?

...
So far, the debate within the Fed has occurred largely outside of public view, but it reflects how the economic picture has darkened from just a few months ago, when the prospects for a gradually improving economy and a robust stock market seemed more hopeful. Back then, the dominant talk was when to start tightening monetary policy and selling assets on the Fed’s balance sheet.

"Now there is a general recognition that that talk was premature," said Peter N. Ireland, a professor of economics at Boston College and a former economist at the Federal Reserve Bank of Richmond.

Why was that talk premature, as in why where they overly optimistic? That's what I would ask Bernanke after pointing out that the Fed missed the housing bubble which cost the economy trillions. Since the Fed has been consistently wrong, is it possible the Fed has a bias? (As Dean Baker points out, the IMF has been consistently wrong which suggests it's policy recommendations are politically motivated.)

Sewell Chan:

In addition, although core inflation, which excludes the highly volatile prices of food and energy, has been running at about half of the Fed’s target of nearly 2 percent, inflation expectations "have not come down nearly as much as one would expect, given how much slack there is in the economy," Ms. Dynan said.

The size of the Fed’s balance sheet, which has more than doubled since the financial crisis of 2008, and the large amount of bank reserves sitting at the Fed has made officials at the central bank nervous about the potential for rapid inflation once banks decide to start lending more vigorously again, she noted.

Where is Ms. Dynan's data on high inflation expectations? Link please? Again I don't understand where this fear of phantom inflation is coming from. With unemployment high, the economy in a liquidty trap, and aggregate demand weak, everyone should be afraid of deflation. Very afraid.

Floyd Norris on which countries will turn out like Greece.

Which governments will not be able to pay their bills?

The ones with private sectors that are not doing well enough to bail out the government.

That should be one lesson of the near default this year of the Greek government. Government finances are important, but in the end it is the private sector that matters most.

...

It may seem odd to talk of businesses bailing out governments, when the reverse is what appeared to happen over the last couple of years. But government credit, in the end, is based on its ability to collect taxes. A healthy private sector will provide the taxes, if they are to be provided at all. 

...

The overseas debt of most countries is denominated in currencies the governments cannot print and its citizens do not use, which is one reason crises can sneak up on traditional analyses. Argentina’s debt-to-G.D.P. ratio was about 50 percent, recalled Albert Metz, a managing director of Moody’s, shortly before the nation defaulted in the 1990s. The currency collapsed, and the ratio tripled overnight.

...

There is another lesson of the recent crisis that should be understood. The obligations of a country’s financial sector are, in extremis, contingent obligations of the government. Allowing the financial system to collapse is simply not an acceptable alternative.

...

The left wants more stimulus spending, and sees economic optimism as playing into the hands of its opponents. The right wants proof that President Obama is doing a bad job, which it hopes will lead to large Republican gains in November, and sees economic pessimism as in its best interests.

In fact, there are few signs of a double-dip recession. As Daniel Gross asked in Slate this week, "Retail sales are up, and credit card debt is down. Why is that bad news?" Americans are spending about 5 percent more than a year ago, even with this week’s retail sales numbers that were pronounced disappointing by some. But it appears that the spending is coming more from those who can afford it than from those who need to borrow.

The important goal now is a healthy economy, and there are signs that it is arriving. Corporate profits were surprisingly strong in early 2010, and early second-quarter reports are encouraging.

It is the success, or failure, in obtaining that goal that will determine whether there is a real crisis in federal debt.

Yes the bursting of the housing bubble caused a lot of wealth and demand to vanish. However part of the financial crisis was pure panic and a "flight to safety." As people with money gain confidence, they'll begin spending and taking on risk.

The "demand for money" is high as those with wealth are being cautious. Which is why Bernanke should do a helicopter drop.

Dwight Garner reviews Diary of a Very Bad Year: Confessions of an Anonymous Hedge Fund Manager, which contains a series of interviews Keith Gessen, editor of n + 1, conducted with an anonymous hedge fund manager from New York City, referred to as HFM.

These interviews, which first appeared on the n + 1 Web site, nplusonemag.com, began in 2007, when the subprime mortgage disaster become impossible to ignore, and continued through last year. They’re an urbane if frazzled chronicle of shock and despair.

...

The conversations that fill "Diary of a Bad Year" range across many subjects, including, but far from limited to, computerized trading; Japan’s zombie banks; why the Securities and Exchange Commission is a hapless financial enforcer; the brutal fall of Lehman Brothers; China’s amusement at America’s money woes; the awesome stubbornness of Treasury Secretary Timothy F. Geithner, whom HFM knows a little; how the hippies in the Class of 1969 ruined Harvard’s endowment; why holiday staff parties are so awful; and why, when the subject turns to Bernard L. Madoff, it’s worth keeping in mind that "a lot of economics has the dynamic of a Ponzi scheme -- it really only works when you’re expanding." (emphasis added)
...
He is lovely on the insanity of what has happened to the market. "This is not a crisis that was caused because there was a drought, or because a meteor hit London and obliterated it, or because there was a war that destroyed capacity," he says. Later: "You know, it’s easy to understand how living standards would go down if somebody bombed all the factories in America. What’s kind of hard to get your head around is that those factories are still there"

He is good, too, on the simple "animal spirits" that drive markets, perhaps in the wrong direction. The world’s financial situation remains precarious. "But after a while when you wake up each day," HFM says, and sun still rises, there’s still food, it’s not 'Mad Max' with Australian guys with mohawks driving up and down the roads killing you for gas* ... and people start to feel better."
...
How bad can things still get? At one point HFM says about forthcoming bankruptcies: "You know what it’s like? It’s like somebody drops a depth charge onto a submarine, and you hear a big explosion, but you don’t know what’s happening. Like, a little while later bodies start to bob up? We’re waiting for the bodies to bob up"

 ---------------------------
*

And so it goes

I am reading Liaquat Ahamed's Lords of Finance and really liked these two paragraphs about Keynes on page 166.

The gold standard had only worked in the late nineteenth century because new mining discoveries had fortuitously kept pace with economic growth. There was no guarantee that this accident of history would continue. Moreover, while the original rationale for the gold standard -- the commitment that paper money could be converted into something unequivocally tangible -- might have been necessary to instill confidence at some point in history, this was no longer the case. Attitudes toward paper money had evolved and it was not necessary to allow the supply of precious metals to regulate the creation of credit in a sophisticated modern economy. Central banks were perfectly capable of managing their countries' monetary affairs rationally and responsibly, [Keynes] argued, without any need to shackle themselves to this "barbarous relic."

Though the Tract was a technical monograph, the Cambridge undergraduate in Keynes could not resist lacing the book with the playful sarcasms that had made The Economic Consequences such a success. He flippantly dedicated the book, "humbly and without permission, to the Governors and the Court of the Bank of England," knowing very well that the members of that august body would disagree with almost everything he had to say. He poked fun at the self-importance of those "conservative bankers" who "regard it as more consonant with their cloth, and also as economizing on thought, to shift public discussion of financial topics off the logical on to an alleged moral plane, which means a realm of thought where vested interests can be triumphant over the common good without further debate."

I never studied World War I much, so I was interest to read the Lords of Finance's discussion of World War I reparations, and the Treaty of Versaille, which many argue led to the rise of the Nazi party in Germany.

By the end of the war, the European allied powers - sixteen countries in all - owed the United States about $12 billion, of which a little under $5 billion was due from Britain and $4 billion from France. In its own turn, Britain was owed $11 billion by seventeen countries, $3 billion of it by France and $2.5 billion by Russia, a debt essentially uncollectible after the Bolshevik revolution.

At an early stage of the Paris Peace Conference, both the British and the French tried to link reparations to their war debts, indicating that they might be prepared to moderate their demands for reparations if the United States would forgive some of what they owed America. The United States reacted strongly, insisting that the two issues were separate.

Keynes and many economists found the reparations* excessive. British historian A.J.P. Taylor believed that the reparations weren't as over-the-top as Keynes viewed them, but that they were punitive enough to cause resentment in Germany while still not punitive enough to prevent Germany from rising to power again. According to Wikipedia,

In many ways, the Versailles reparations were a reply to the reparations placed upon France by Germany through the 1871 Treaty of Frankfurt, signed after the Franco-Prussian War. Note however that the amount of the reparations demanded in the treaty of Versailles were comparatively larger (5B Francs vs. 132B Reichsmark). Indemnities of the Treaty of Frankfurt were in turn calculated, on the basis of population, as the precise equivalent of the indemnities demanded by Napoleon after the defeat of Prussia.

(By the way, Daniel Radcliffe will start in a new version of All Quiet on the Western Front.)

DeLong asks for comments on his chapter on World War I titled "Chapter 15: The Knot of War, 1914-1920." 

Meanwhile, the overclass is demanding punitive reparations after the victory in its war on the lower class.

Reuters reports: 

In a statement after annual consultations with U.S. authorities, the IMF raised its U.S. growth forecasts slightly to 3.3 percent for 2010 and 2.9 percent for 2011, but said unemployment would remain above 9 percent for both years.

The lofty jobless rate, coupled with a large backlog of home foreclosures and high levels of negative home equity, posed risks of a "double dip" in the housing market, it said. But the IMF said it did not think a renewed recession was likely.

"The outlook has improved in tandem with recovery, but remaining household and financial balance sheet weaknesses -- along with elevated unemployment -- are likely to continue to restrain private spending," the Fund said.

Yglesias notes that at least the IMF is forcasting that the rest of the world will be growing at a nice pace.
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*From Wikipedia "Under the Hoover Moratorium of June 1931 issued by the American president Herbert Hoover, which was designed to deal with the world-wide financial crisis caused by the bankruptcy of the Creditanstalt in May 1931, Germany ceased paying reparations." Creditanstalt was the largest bank of Austria-Hungary and the Lehman Brothers of the Great Depression.

Dean Baker on David Brooks's magical thinking.

In his worst column so far this year, Brooks writes:

Some theorists will tell you that if governments shift their emphasis to deficit cutting, they risk sending the world back into recession. There are some reasons to think this is so, but events tell a more complicated story. 

A theorist named Ben Bernanke, chairman of the Federal Reserve Bank who was appointed by Bush and kept on by Obama, i.e. the most powerful man in the federal government, said yesterday that "This very moment is not the time to radically reduce our spending or raise our taxes, because the economy is still in a recovery mode and needs that support."

For example, retail sales declined in May. This is just one month, but it's a weak report.
Brooks:

Alberto Alesina of Harvard has surveyed the history of debt reduction. He’s found that, in many cases, large and decisive deficit reduction policies were followed by increases in growth, not recessions. Countries that reduced debt viewed the future with more confidence. The political leaders who ordered the painful cuts were often returned to office. As Alesina put it in a recent paper, "in several episodes, spending cuts adopted to reduce deficits have been associated with economic expansions rather than recessions."

Someone should Fisk that paper. At the very beginning of his column Brooks writes "Sixteen months ago, Congress passed a stimulus package that will end up costing each average taxpayer $7,798. Economists were divided then about whether this spending was worth it, and they are just as divided now."

And then a couple of paragraphs later "Over all, most economists seem to think the stimulus was a good idea..." Were economists divided into two camps where most thought the stimulus was a good idea and a minority of ambitious, know-nothing suck-ups didn't?

Paul Krugman on Chermany.

You know the answer, don’t you? Yep: everyone is counting on the US to become the consumer of last resort, sucking in imports thanks to a weak euro and a manipulated renminbi. Oh, and while they rely on US demand to make up for their own contractionary policies, they’ll lecture us on how irresponsible we’re being, running those budget and current account deficits.

Michael Lewis's Vanity Fair piece on Iceland.

(via Lindsay Beyerstein)

Last summer I caught Sigur Rós's tour film Heima which was really good. In 2006, having toured the world over, Sigur Rós returned home to play a series of free, unannounced concerts in Iceland. Heima is a unique record of that tour filmed in 16 locations across the island, taking in the biggest and smallest shows of the band's career. 'Heima' is a 97 minute documentary feature film including songs from all four Sigur Rós albums alongside previously unreleased material.