Iceland Teetering Too
By Steve Hynd Wednesday Oct 08, 2008 4:00pm
I posted yesterday that nuke-armed Pakistan is only a month away from bankruptcy. Now tiny Iceland looks like it might get there first.
Iceland has formidable international reach because of an outsized banking sector that set out with Viking confidence to conquer swaths of the British economy — from fashion retailers to top soccer teams.
The strategy gave Icelanders one of the world's highest per capita incomes. But now they are watching helplessly as their economy implodes — their currency losing almost half its value, and their heavily exposed banks collapsing under the weight of debts incurred by lending in the boom times.
... A full-blown collapse of Iceland's financial system would send shock waves across Europe, given the heavy investment by Icelandic banks and companies across the continent.
Iceland right now is apparently in a state of shock and gives a snapshot of what a depression with the Great in it will look like everywhere - "cafes were half-empty, real estate agents sat idle, and retailers reported few sales" says the AP.
And, just as Pakistan has begged the West for $100 billion to stave off economic collapse, Iceland has had to go cap-in-hand to a bigger power too. Only they've chosen the Russians - asking for a 5.4 billion loan to shore up the nation's finances.
That must be giving NATO planners conniptions. Loans like that, in the present climate, aren't going to come without strings and Iceland is the keystone in NATO's maritime defenses in the North West Atlantic, designed to keep Russian warships and subs containable in their home waters should the need arise.
The Icelanders say there were no military strings attached to the deal but they're also making it clear they've found a new friend when their friends in the West refused to help. And where financial friendships form other ties usually follow.
"We have not received the kind of support that we were requesting from our friends," said Geir Haarde, prime minister. "So in a situation like that one has to look for new friends."
In spite of the new friendship, Mr Haarde said it did not extend to military cooperation, refuting the suggestion that Russia might be given access to an airbase vacated by the US air force in 2006. "We are a founder member of Nato," noted an official, "categorically denying" any such deal.
...Chris Weafer, chief strategist at Uralsib investment bank, said, "Lending money to Iceland is a very strong and clear statement from Russia that it is solvent and it has spare cash."
"This is going to make a big difference to the Icelandic economy and it's a very clear statement. It builds up political goodwill which could be helpful when it gets into difficult negotiations over territorial rights in the Arctic," said Mr Weafer.
Crossposted from Newshoggers
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Well folks... there's yer old domino theory coming home to roost after all... And guess what... Not a godless commie in sight.... imagine that....JD
Richard Portes of the London Business School agreed, noting the banks were well-capitalized and had not bought any of the toxic debt that has brought down banks elsewhere.
"I believe it is absolutely wrong to say these banks were reckless," said. "Quite the contrary. They were hugely unlucky."
Jack Damage says: "Well folks... there's yer old domino theory coming home to roost after all... And guess what... Not a godless commie in sight.... imagine that."
You forgot about all those Wall Street socialist CEO's.
Iceland....
Makes passive aggressive/insular Minnesota look like a Rainbow People
commune. They have always been a glorified anti-submarine warfare ship.
I say fuck'em unless the quit WHALING. Yes they are a whaling culture.
You don't know a lot about Iceland do you now?
And what does whaling have to do with anything? We are as much whaling culture as the US is, or didn't you know the US hunted whales:
http://en.wikipedia.org/wiki/Whaling#United_S...
The US actually hunts way more whale than Iceland. Only... mentioning that usually ignites the self righteous, nationalistic freak that dwells within and they go into "Shoot anything that moves!!!!" mode. You see; the USofA cannot do anything wrong.
Do you ever wonder if Bush sits around the white house in his undies thinking "Man did I ever fuck things up!!!" ???
I mean the collapse of the world's economic structures due to a hands off policy makes his past failures(prior to becoming president) look like child's play.
I mean it just boggles the mind how one man can do so much harm while doing it with his self proclaimed "good intentions".
BUSH HAS THE MIDAS TOUCH FOR FUCKING SHIT UP!!!
His policies have lead to our current problems. Way to go there big guy.
Bush didn't screw anything up. Every thing is going according to plan.
An economic meltdown is really just a fancy name for a huge transfer of wealth and power to the wealthiest 1% of the World's population.
As soon as the bailout started looking possible, Naomi Klein was on the air warning about this and the fact that is not a crisis to those poised to scoop it all up for themselves.
"When there's blood in the streets, there is money to be made."
Iceland is a nice country and I'd have no problem with CANADA loaning them money.
Lol...tyvm for the laugh..I need it!
Well they are a nice country and I wish we could help them but we have to get our own house in order first and that could take years.
I don't see how it's wrong for Iceland to go to Russia for aid... I say let'em go.
Now, does one of you "peace-loving" statists want to give me some rationale for demonizing the people of Iceland?
Is the poster of this article actually trying to stir something in us, because we don't have money to lend to FOREIGNERS?!?!
Try again later. This is a non-starter.
Throw a thousand turds on the wall, to see which one's stick. Functionally that's no different than the neo-cons.
And by the way, how many times is this web log going to keep asking me what 2 plus 2 is?
The point is the US has historically been the country with the fat wallet to help out our allies with.
We can't help our allies out now because of poor policies and a lack of oversight so now Russia has been able to buy influence in a region we have long held as sacrosanct.
Seriously.
Well 'obviously' if they're borrowing money there MUST be strings attached. (Since nobody ever lends money for simple reasons like profit?)
Since it's RUSSIA that might be loaning the money, 'obviously' it must be in exchange for military support - even though Iceland is completely dependent on NATO (they have no military other than a special police unit set up for the Rejkavík summit back in 1986)
But since they're denying any military deal.. then it must be some other untoward form of influence. (Even though Iceland is considered the least corrupt country in the world. And one who's population have no particular love of Russia.)
about it.
But its a fact of human nature you are better disposed towards your benefactors than those who wouldn't help, down the line. As I write in the post "where financial friendships form other ties usually follow."
But I've already figured out that you disliked something in one of my earliest posts here and have tried hard to find a way to hate everything else I've written ever since even if it means misconstruing or ignoring what I actually wrote.
S'OK, it's fun.
Regards, C
Except that now we will see the full compliment of the Russian Navy making ports of call in Iceland; just to check up on their investments you understand. thanks to the neo-con nutjobs Bush and Cheney for making the USA safer! I feel so much better!
In USA:
Democrats want to prevent depression and support the financial markets by investing taxpayer money in banks with troubled assets. Republicans want to give taxpayers money away to the shareholders and managers of banks with troubled assets.
I can see Iceland from my chalet in Alaska....does that count as foreign affairs experience?
Ah oh, sounds like it's time for Bjork to ride in to the rescue.
)O(
Saw this on FARK re: AIG
http://money.cnn.com/2008/10/08/news/companie...
Un fucking real.
this fell under the radar. didn't it?
Ah no big loss. I can't stand Bjork.
This must be Reagan's wonderful trickle down theory .
Cernig being a crackpot again.
Iceland isn't about to leave NATO. Nor is it very important any more - it was the USA who decided to leave Keflavík two years ago.
What part of the "no military strings" is so hard to get? If the Icelanders say it's so. That means it's so. They don't keep secrets on that island.
Besides, Iceland is probably NOT headed for any more of a depression than the rest of us. They had a huge speculation bubble with their financial sector. But that's not what employs most people there. It's not what fuels their economy. Fishing is. As long as people eat fish, they'll be just fine up there.
From the first link:
"Those free market reforms turned Iceland from a conservative, inward-looking country to one of a new generation of internationally educated young businessmen and women who were determined to give Iceland a modern profile far beyond its fishing base.
Entrepreneurs become its greatest export, as banks and companies marched across Europe and their acquisition wallets were filled by a stock market boom and a well-funded pension system. Among the purchases were the iconic Hamley's toy store and the West Ham soccer team.
Back home, the average family's wealth soared 45 percent in half a decade and gross domestic product rose at around 5 percent a year.
But the whole system was built on a shaky foundation of foreign debt."
When you have to give up a 45% rise in the satndard of living because you've gone back to a fishing economy, I'm sure it feels like a recession.
"They don't keep secrets on that island" Bullfeathers. I've been there. Just as secretive as anywhere else.
I think I addressed the "no military strings" in the post. It's not what's attached now but what comes from friendship later.
Regards, C
I've been there as well, several times. Iceland is consistently ranked as one of the least corrupt nations in the world, if not the least corrupt. They have considerably more transparency in their government and legislature than the USA does. (All government documents there are public by default, as opposed to the USA for instance.) So what are you basing the claim that they're "just as secretive" on?
Average family wealth increasing by 45% doesn't mean a corresponding equal increase in living standard. A fact underlined by the GDP figure.
Alexdem,
So what are you basing the claim that they're "just as secretive" on? I already told you - personal experince, i.e. at the personal level. Sheesh.
And to reiterate, I'm not suggesting some big covert deal as you keep insisting I am. Here's the key part, again: "where financial friendships form other ties usually follow". The end, that's it.
You may well feel that Iceland's ties to the West are too strong for their new benefactors to see a non-financial benefit from, and that's your perogative. Indeed, that may be true and I'd be inclined to agree the point is at least open and undecided as yet although I'd argue NATO would be dumb not to at least consider the contrary. But rather than do it nicely you have to get there by misconstruing what I wrote and being hostile to any polite dialogue.
Regards, C
If I'd written this post, given my tendency to comment, "Ceterum censeo
CarthaginemMoscow esse delendam," or at least have the tenor of my comments regarding Russia taken that way, but Cernig is simply pointing out that NATO must be feeling a little...powerless and frightened in the face of this particular bailout. Jesus, Cernig goes as far to include quotes from the Icelandic PM meant to calm NATO concerns.If I'd written this post, given my tendency to comment, "Ceterum censeo
CarthaginemMoscow esse delendam," or at least have the tenor of my comments regarding Russia taken that way I'd understand the accusatory tone, but Cernig is simply pointing out that NATO must be feeling a little...powerless and frightened in the face of this particular bailout. Jesus, Cernig goes as far to include quotes from the Icelandic PM meant to calm NATO concerns.My Navy buddies tell me that Icelanders have a severely negative attitude toward US and NATO military personnel, and swear that our servicemen and women treat the civilian indigenes with respect and have done nothing to incite their enmity.
This might explain why NATO pulled out of Reykjavik. It does not explain why Iceland's government approached Russia for financial aid--especially after Russia's invasion of Georgia.
Per a Paki acquaintance, the country has overinvested in development and education, even requiring a bachelor's degree from their policemen. I suspect that they have overinvested in military infrastructure and nuclearization.
$100 billion for an airport. Not a bad deal. Unless of course it goes underwater.
"...that nuke-armed Pakistan is only a month away from bankruptcy."
They have Nukes, but they're running out of money, power and food? Can we say Priorities??
but..but...aren't we still sending them $10mil a month?
$10mil a month worth of nuclear weapons tech, maybe.
They do need to protect themselves from Greenland.
Norway as well...
have been training for the day they invade.
So far they're only really good at the suicide part, though.
Health Care for all of their citizens.
this country has been run into the ground
by bush/cheney administration and our economy
is ruined. we have a national debt that is
beyond our ability to repay it for generations.
we can not afford to bail out the world and it
would be totally wrong to ask the American public
to bail out any other country until we have gotten
back on our own feet.
you don't loan or give away your money if
you can't meet your own obligations. charity
begins at home and the bush/cheney have only
enriched their and their friend's pockets at
the risk of destroying the American citizen's
future security both economically and morally.
Throwing trillions at the crisis with no plan.
This will not end well.
Let me get this straight: we're concerned that Iceland is getting help from Russia, but it's perfectly OK for China to own tons of our debt?
Good ol' American hypocrisy at its finest!
We should ask Russia, "Can you sparee aa dime, brother?"
good gobs of goose doo doo the chinese make great noodles hongfung , of course we love them ,
Let the Russians do it. Like all huge international loans in a few years Iceland will be asking Russia to forgive the debt. The same with Pakistan.
Iceland has never defaulted on their foreign, national debt. And they are actually dept free, apart from this loan from Russia that they had to take in order to clean up their part of the (US originated) global, financial crisis.
the destruction of the creditworthiness of the United States of America took a Great Leap Forward today, or perhaps we should say “one small step for Paulson, one flying leap for mankind.”
Can't BJORK do something about this?
Iceland should start exporting Death-Metal like Norway,
in order to keep their economy afloat.
Death-Metal is the only practical solution!!
U.K. threatens to sue Iceland to protect savers
Fuel prices going up through the roof; politicians bickering as we face the collapse of the global financial system; entire countries teetering on the brink...
Man do I love the opening scenes of 'The Road Warrior'! Sorry to get off-thread. I don't know what made me think of my favorite movie. I'll try to think of something more relevant.
Tomorrow is D-Day.
It all depends on what happens to the Lehman CDS Auctions.
watch a 10 minute explanation of the disaster awaiting the US.
http://www.youtube.com/watch?v=BynmfaBjFLA
and in text: http://market-ticker.denninger.net/
We've lost 15% of the market in 3 days.
Not only are the stock markets selling off - the bond market is too. And that is not supposed to happen.
We have strong signs of a dislocation.
they agree to supply any Murkin who wants one with an Icelandic passport and dual citizenship...
So... why do you think they borrowed their bailout package from Russia and not their "friends and allies" in the US?
Iceland is a canary the coal mine.
Icelands high exposurer to the toxic gas that is the subrime debacle
signals how bad this is going to be for the nations who have been highly exposed.
Others will follow.
I predict Africa is going to feel the full weight of this thing.
It's going to be really ugly out there.
Iceland's banks don't seem to have invested directly into the mortgage market.
And, honestly, other than those at the top of the economic food chain, I don't see how this effects the average African, seeing as the latter rarely sees any prosperity due to the greed of the former.
It's simple really, never before in history has a single currency been relied on by the entire world. - Robert Kiyosaki
He also said Never before in history have so many bet their retirement on the Stock Market.
Beware the 401k's and IRA wrapped up in mutual funds, that may be the final nail.
HELP ICELAND. BUY THE COMPLETE WORKS OF BJORK!
Capitalism at its finest.
"Only they've chosen the Russians " !!!!!
Now thats bloody hillarious. They took the Russian loan only after US and Europe told them to basically go fuck themselves.
If I understand this right, Britain's Finance Minister, Alastair Darling, precipitously set in motion the idea that Iceland was going to renege on its moral duty to reimburse IceSave investors in the U.K.
This led to threats by Britain which led, in turn, to the downfall of Iceland's largest bank, Kaupthing - the one for which John Cleese has made some lovely advertisements.
Except that this was all based on idle gossip, and Iceland had every intention of safeguarding those investments.
Loose tongues sank ships in WW2, and they just sank Iceland's largest bank.
No wonder relations between Iceland and the UK have not been so bad since the cod wars.
I should add that Alastair Darling used some sort of "anti-terrorist" powers to meddle in this affair.
Another diplomatic blunder - like he's calling Icelanders terrorists!
People like Darling really have no business in high government office.
They are basically incompetent, with no idea of consequences or accountability.
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