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Posts Tagged ‘Iceland’


Iceland is now in the grips of what can only be termed as “hyperinflation”. We talked about Iceland recently in light of the ongoing global financial crisis, and as it turns out the near-full-collapse of Iceland’s financial system is connected to the the turmoil in both the US and the UK. It can be considered a microcosm in fact, which we should all study.

Global Europe Anticipation Bulletin (GEAB) wrote recently:

Studying the case of Iceland can give an idea of the upcoming stages of the crisis. That is what our team has been doing ever since the beginning of 2006. This country indeed provides a good illustration of what the US and the UK should be expecting. It can be considered – and that is what most Icelandic people do today – that the collapse of Iceland’s financial system came from the fact that it was disproportionate to the size of the country’s economy.

The interesting point is how the situation in Iceland can be a good indicator of what lies ahead for the US and UK. GEAB lists the following key points:

  • The recent upward trend of the US Dollar is a direct and temporary consequence of the collapse of stock markets
  • Thanks to its recent « political baptism », the Euro becomes a credible « safe haven » value and therefore provides a « crisis » alternative to the US dollar
  • The US public debt is now swelling uncontrollably
  • The ongoing collapse of US real economy prevents from finding an alternative solution to the country’s defaulting
  • « Strong inflation or hyper-inflation in the US in 2009? », that is the only question.

Check out more of GEAB’s illuminating write-up here.

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A country hailed as an economic success, happy population, energy efficient, and a country which has a state religion: Iceland is now feeling the sting of the financial crisis.

Seems, regardless of qualifications, the turmoil is sparing no one… well no one that benefitted from the leverage of credit in the last 10 years.

A primer on Iceland:

http://en.wikipedia.org/wiki/Iceland

Iceland has some of the world’s highest levels of economic and civil freedoms. As of 2007, Iceland is ranked as the most developed country in the world by the United Nations’ Human Development Index. It is also the fourth most productive country per capita, and one of the most egalitarian, as rated by the Gini coefficient. Icelanders have a rich culture and heritage, such as cuisine and poetry, and the medieval Icelandic Sagas are internationally renowned. Iceland is a member of the UN, NATO, EFTA, EEA and OECD, but not of the European Union. The country is a candidate for a non-permanent seat at the UN Security Council.

The situation now:

http://news.bbc.co.uk/2/hi/business/7655227.stm

Iceland acts to avoid bank chaos 

Icelanders on the financial crisis in their country
Iceland’s government has drafted emergency legislation to try and salvage the country’s banking system. 

http://www.timesonline.co.uk/tol/news/world/europe/article4889832.ece

Iceland agrees emergency legislation

Without the legislation, Iceland’s Prime Minister said the country was facing the real possibility of bankruptcy

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