If you think there is volatility in the U.S. markets, you should look at Iceland.  The country closed its stock market entirely on October 9th due to “unusual market conditions”.  When they re-opened a few days later on October 14th, the market crashed 76% in a single day.  Those frequent 5% up and down days in the U.S. market seem pretty lame in comparison to Iceland.

In the currency markets, Iceland is also struggling, with their krona down over 50% this year, most of the losses having occured in the last few weeks.  And if that were not enough, the country just raised their key interest rate a whopping 6 percentage points to 18%.  This came as quite a surprise for a country that had just lowered their rates from 15.5% down to 12% two weeks ago.

The high interest rates of Iceland were once the appeal to Everbank foreign currency certificate of deposit buyers, who targeted high overseas rates to invest their money in.   A note on the Everbank Iceland CD page now states:

We do not currently offer any product denominated in Iceland krona.   Due to the Icelandic banking crisis, currency trading of the krona has been frozen.  This effectively locks Everbank out of this market and prevents us from offering this currency going forward.  If you currently hold a certificate of deposit in the Icelandic krona with Everbank  please know that we are making every effort to receive payments in U.S. dollars upon maturity of your account.

So much for chasing the yields on foreign currency certificates… For those still in denial on the potential for other seemingly stable countries to collapse, you will be happy to know that Everbank may still offer certificates of deposits in the Mexican peso, the Czech koruna, the Indian rupee, the Danish krone, the Brazilian real, the South African rand, the Swedish krona and many others.  I’ll pass on those offers with my own personal money, however, and invest in the good old greenback from the U.S.A.