Iceland on the brink of a meltdown.
Posted by Norlander on October 05 2008 16:42:23
Having been on a business trip to Iceland this week, and seeing first hand the state of their economy, I am brought back to our own 6. October, in our case 1992 and not 2008.
Iceland was a surreal place, everything costs half. The ISK króna has lost over half it's value over the last year, and is currently slugging it out with Zimbabwe and Turkmenistan as the worst preforming currency of the past 12 months. Zimbabwe and Turkmenistan FFS! This is further compounded by the fact that many loans in Iceland were obtained in Yen, Euros and Dollars. Hence they have seen their loans basically double in size. The Guardian has a good article out today on this issue. It is well worth a read. For those looking to buy a cheap car it might not be a bad idea to look in Iceland. Plenty of luxury cars that they now cannot afford to have.
Finally the size of the Icelandic banks is a problem, the 3 biggest banks are between 5 and 15 times the size of the public budget (depending upon how it's calculated), which means that the Government cannot afford to bail them all out. I witnessed a bank-run on Landsbankin (which is privatized, go figure, luckily they made a new real Landsbanki)
On the up side I recommend everyone to go Christmas shopping in Reykjavik. Things are half-price, it's like Eastern Europe in the 90's. Even the Hilton Hotel was cheap...
...but tomorrow is the 6. of October...
Extended News
Having been on a business trip to Iceland this week, and seeing first hand the state of their economy, I am brought back to our own 6. October, in our case 1992 and not 2008.
Iceland was a surreal place, everything costs half. The ISK króna has lost over half it's value over the last year, and is currently slugging it out with Zimbabwe and Turkmenistan as the worst preforming currency of the past 12 months. Zimbabwe and Turkmenistan FFS! This is further compounded by the fact that many loans in Iceland were obtained in Yen, Euros and Dollars. Hence they have seen their loans basically double in size. The Guardian has a good article out today on this issue. It is well worth a read. For those looking to buy a cheap car it might not be a bad idea to look in Iceland. Plenty of luxury cars that they now cannot afford to have.
Finally the size of the Icelandic banks is a problem, the 3 biggest banks are between 5 and 15 times the size of the public budget (depending upon how it's calculated), which means that the Government cannot afford to bail them all out. I witnessed a bank-run on Landsbankin (which is privatized, go figure, luckily they made a new real Landsbanki)
On the up side I recommend everyone to go Christmas shopping in Reykjavik. Things are half-price, it's like Eastern Europe in the 90's. Even the Hilton Hotel was cheap...
...but tomorrow is the 6. of October...