the sooner trust and faith begin to grow again in world markets, the sooner they will rise up from this slump, or recession – at the moment we don ’ t know which term is more appropriate. many things are changing, both in iceland and elsewhere. a new edition of the book “ ten little negroes ” causes ripples of unrest. of course, there is no reason to ban books, but the unrest caused by this book is actually a positive thing. it is a sign of changing times, enhanced understanding, and diminishing prejudice. when that book was published in the mid - 20th century, hardly anyone thought of it as being hurtful or offensive in any way. but now we see that it can indeed be those things, and this is why the publication of the book and the ensuing discussion are a positive indication of new times and changed perspective. actually, recent decades have seen a fervent effort to recast well - known terms and names for all sorts of phenomena so as to avoid injuring those who, either temporarily or for the long term, might be vulnerable. this is also positive, though some of these philanthropic efforts have gone a bit too far in their enthusiasm. another phenomenon we see is that newly coined terms soon become cloaked in a sort of semi - divinity in iceland – like the term “ international expansion, ” which no one dares oppose lest he be accused of being an anachronism, devoid of a sense of “ vision, ” as it is now called, and of not knowing when the time is ripe for action. upon closer scrutiny, the term “ international expansion ” seems to be nothing more than investment abroad – together with utilisation of knowledge and talent, of course. in that sense, the construction of the aluminium smelter in reydarfjordur can be called alcoa ’ s international expansion into iceland, though no one has bothered to call it that. but it is : it is investment combined with the utilisation of knowledge of the aluminium industry. that expansion is promising in many ways, of course, and some aspects of it have already generated substantial returns, not least because people took advantage of favourable conditions and external circumstances. for a while, cheap capital was readily available, and some were bold enough to grab the opportunity. but the flip side of expansion, and the side that cannot be ignored, is that iceland is becoming uncomfortably beleaguered by foreign debt. at a time when the icelandic government has

rapidly reduced its debt and the central bank ’ s foreign and domestic assets have increased dramatically, other foreign commitments have increased so much that the first two pale into insignificance in comparison. all can still go well, but we are surely at the outer limits of what we can sustain for the long term. the term “ international expansion ” is so thoroughly bathed in radiance that even when people seem to be invading companies that are owned by the public, the invasion is called “ expansion ”. and companies whose primary obligation, by law and by the nature of their operations, is to provide the public with specific services at the lowest price possible, suddenly find themselves participating in foreign risk ventures without there having been any rational discussion of the matter beforehand – and all in the name of “ international expansion. ” in matters such as this, we must proceed with the utmost caution. we icelanders have been successful in our endeavours in the recent past, and we have had the wit to be careful when necessary, but it would be imbecilic to believe that we can loosen our belts – that is, if we want to continue being successful. one of the ways in which we must remain vigilant is to refuse to allow inflation to gain a foothold in our economy. all attempts to dodge this responsibility will harm the icelandic people, with unforeseeable consequences. we must not increase our foreign debt beyond its current limits – on the contrary, it is right and necessary that we reduce our foreign debt and achieve a more favourable balance with abroad. plans for international expansion must therefore be carried out within sensible limits. the immoderate zeal that is so intoxicating may not be allowed to steer our course for the future. we know that, in many ways, our upward climb rests on a bed of clouds. to some extent, this is inevitable, and it is normal that items like intangible assets should be prominent in good times ; but when the sky darkens and the clouds become heavy, the rain can start at a moment ’ s notice, and little may be left of those assets when the air clears. so we must take care in this as well as in other things. by law, the central bank of iceland is assigned a clearly defined role. the bank takes that role very seriously. it does not ask to be spared criticism of its work and its decisions, but it would appreciate some support in its attempt to keep inflation within tolerable limits