October 20th, 2008Iceland Crisis - Failed Banks, Currency Collapse, Food Shortages
Telegraph UK on the Iceland financial crisis - Put the financial sector on steroids and pass out loans like candy on Halloween, and eventually you have over $100 billion in liabilities in a country with a mere $14 billion GDP. Add to that a massive consumer debt problem, fueled by consumers who took on foreign currency home and auto loans to “escape” the high 15.5% interest rates of the Icelandic banking system. Those “escapes” resulted in near doubling of principal balances as the krona, Iceland’s currency, collapsed by more then 50% and ceased trading on world currency markets.
Bloomberg reports on Iceland cutting interest rates from 15.5% to 12% - Those Icelandic foreign currency CD’s used to be very popular to U.S. residents looking to gain a leg up on the meager dollar based returns. Purchasers of such instruments are now getting a hard lesson in risk assessment.
The Globe and Mail’s take on Iceland’s problems - Summarizes Europe, American and Icelandic bank nationalizations as a form of “corporatism”, and not “socialism”.
Daily Newscaster reports on Iceland food shortages - Iceland’s number one discount grocery store only had enough food left on shelves for 2 weeks of normal use. Food inflation goes up 50% overnight, imports nearly cut off, and officials ask for IMF help to stem the crisis.
October 20th, 2008 at 2:05 am
Nothing is further from the truth that there is food shortage in Iceland now. All grocery stores are with all products like they have always been.
1. Icelanders can produce enough of food on their own, without any foreign help.
2. The foreign trade has been slowly recovering, as UK has lifted of the terror law put on ALL Icelandic company, even though the banks are the only ones that hit trouble.
Food price might rise on imported goods, but I drought there will be shortage.