Iceland officially goes bankrupt; expected to appal to IMF for loans

[aelf]

Hmm... I realise there isn't much discussion about the situation in Europe, relatively anyway. The media is portraying a bleak future for the EU. I wonder if any of the EU countries are heading Iceland's way. Would it be any help for Iceland to join the EU or adopt the Euro?

I understand that European banks are somewhat better regulated than the American ones, but that they are more leveraged. So the credit freeze is now affecting countries that are not actually that exposed to the risky loans that started it all? Is that the right picture I'm getting?

And since there isn't a coordinated response from the EU and it seems unable to deal with the situation as a group, will this crisis undermine it?

 

[Neomega]

They're not gonna starve. There's only 300.000 people, easy to supply from outside. And there's simply no way the rest of Scandinavia is going to sit idle, while our northern cousins starve.

How is the Swedish banking system doing? It may be hard to bail out your brothers when you got nothing to bail them out with.

And only 300,000 is nice, but most of Iceland's (80%, I think?) is long gone, and their soil conservation programs are not doing that well.

Of course, I was being somewhat excessive by talking of Icelandic children starving. But nevertheless, the Icelanders are in for a world of hurt.

 

[storealex]

I wouldn't know about Sweden, but the Danish is doing just about as bad as everyone else. And Im not talking about bailing them out, Im just saying that Icelanders starving on TV would mean massive aid.

 

[Agent Cooper]

There is another country with this in it's future.

...and what country would that be i wonder?

They're not gonna starve. There's only 300.000 people, easy to supply from outside. And there's simply no way the rest of Scandinavia is going to sit idle, while our northern cousins starve.

Very true - even if the Danish government borrowed a couple of billion Danish kr. to Iceland with the prospect of the money being lost in the long run, I don't see the Danes holding a grudge all things considered. In the 70's Denmark was indebted way beyond reason and it took more than a decade of very strict and conservative public spending to get the ship sailing again. Many Danes living today know what Iceland must be going through right now... Sweden had huge economic problems in the 90's etc....

 

[Loppan Torkel]

From what I know Iceland is worst off, then Denmark. Sweden, having had a financial crisis in the early '90s and Norway with its oil are a bit better off. I'm not sure how well Finland is doing.

 

[Kraznaya]

Sweden was rated as having the most stable banking system in the world just yesterday. The USA was 40th.

 

[Agent Cooper]

Hmm... I realise there isn't much discussion about the situation in Europe, relatively anyway. The media is portraying a bleak future for the EU. I wonder if any of the EU countries are heading Iceland's way. Would it be any help for Iceland to join the EU or adopt the Euro?

I doubt it - Iceland was a very special situation with bank debts in the reign of 50 billion Euros, some 8 times larger than the GDP. I'm unaware of the financial structure of other small European nations though, like Lichtenstein, Luxemburg etc.

I don't see a future for Iceland outside the Eurozone as things stand now.

I understand that European banks are somewhat better regulated than the American ones, but that they are more leveraged. So the credit freeze is now affecting countries that are not actually that exposed to the risky loans that started it all? Is that the right picture I'm getting?

And since there isn't a coordinated response from the EU and it seems unable to deal with the situation as a group, will this crisis undermine it?

Yes - I believe some expert on financial matter actually believed that the financial sector as a whole in the Western World is insolvent, regardless of their involvement with the risky loans - most of them are just hiding it succesfully. There does not seem to be a joined effective effort from the EU at this time - if things are going to get better fast, it might demand that things will lighten up in the US beforehand...

 

[Gigaz]

I don't think that the EU would allow Iceland to join the €-zone atm. The rules regarding stability and inflation are quite strict.

 

[Arwon]

It's pretty small though, probably easily absorbed.

 

[Agent Cooper]

I don't think that the EU would allow Iceland to join the €-zone atm. The rules regarding stability and inflation are quite strict.

True, but remeber that large contries such as France and Germany has operated outside those rules for years (budget deficits larger than allowed etc.) without any consequence for their Euro membership. But then again, without France and Germany the euro would not exist so I guess they can do pretty much what they want...

I agree that Iceland will not become an Euro nation overnight, but it must be an endgoal somewhere along the road to come...

 

[philippe]

Buy CD's of Björk.

She redistributes profit???

Björk becomes empress of iceland.

 

[Loppan Torkel]

Sweden was rated as having the most stable banking system in the world just yesterday. The USA was 40th.

Interesting, you have a link?

edit: nevermind, I think I found something - http://www.reuters.com/article/ousiv/idUSTRE4981X220081009

 

[Neomega]

Buy CD's of Björk.

She redistributes profit???

Björk becomes empress of iceland.

I love Bjork.

 

[Snorrius]

Hmm... I realise there isn't much discussion about the situation in Europe, relatively anyway. The media is portraying a bleak future for the EU. I wonder if any of the EU countries are heading Iceland's way.

Yes, actually quite a lot. Baltic states are very close to default (if we are talking strictly about EU, not all European country) and to sending their currencies to freefall. Of the big states, United Kingdom have very high chances to go bankrupt within next few years.

Would it be any help for Iceland to join the EU or adopt the Euro?

Very doubtful.

And since there isn't a coordinated response from the EU and it seems unable to deal with the situation as a group, will this crisis undermine it?

Actually, EU may not survive this crisis, at least if it will not dump problem states (Eastern European, Baltic states, UK) as soon as possible. Specially for Winner - Czechia is ok .

 

[bathsheba666]

How did the U.K. use anti-terror laws to get their money?

That sounds very interesting.

I was surprised too.

Can't remember where I saw it - very probably Guardian - and certainly can't remember the exact wording, but some of the laws were quoted and there was some reference to
"external {groups of people } working against the interests and security of the UK".

I'm not sure if the hook here was the foreign bank initially going broke, or the foreign government subsequently apparently reneging on their depositors security guarantees.

Again, can't remember the exact words, but there was some suggestion in the guardian's earlier articles that the iceland government had decided to guarantee the deposits of only Iceland citizens. This cropped up a good while before we heard about UK terror response.

Actually, very impressed by the icelandic president/prime minister.
His country has gone bankrupt and this morning he sounds just totally laid back about it...

"We have some issues to work through, but that is normal in this kind of situation"


He could even be old style english...if you ignore the phrasing.

 

[classical_hero]

Uh... Bin Laden, duh.

His first casualty, even they are not part of the war on terror. This is proof that Bin laden hates the west and what we stand for, showing that America was right to go to war.

 

[Cato the Elder]

Snorrius - why do you believe the EU will fall apart due to this crisis? Yeah sure countries have been controlling the situation rather independently so far, but both Eurozone and other EU leaders (including Britain) are expected to work together on minimizing the effects of this crisis as much as possible.

 

[plarq]

Snorrius - why do you believe the EU will fall apart due to this crisis? Yeah sure countries have been controlling the situation rather independently so far, but both Eurozone and other EU leaders (including Britain) are expected to work together on minimizing the effects of this crisis as much as possible.

Why? You shouldn't argue with mother russia! Russia will rise and everyone will fall!

 

[kronic]

Snorrius - why do you believe the EU will fall apart due to this crisis? Yeah sure countries have been controlling the situation rather independently so far, but both Eurozone and other EU leaders (including Britain) are expected to work together on minimizing the effects of this crisis as much as possible.

Well, the real test for the Eurozone is still ahead of us. It is at least entirely possible that some countries in the zone will not have the financial ressources to recapitalise their whole banking systems. If such a situation emerges, the rest of the Eurozone countries will have to face the question whether they will provide the necessary funding or not (in addition to their national rescue plans). In other words, the politicians would then need to sell to the public that they're bailing out someone else's banks. This is the reason why Germany was quick to shoot down the French proposal for a European fund (for example). But if governments in a situation as described above don't succeed or are not willing to do this, the breakup of the Eurozone is inevitable. Of course, that doesn't mean that the € is necessarily history by then but there could be well fewer members in the zone at the end of this crisis.

Now, with some luck we may not get to that point. But it has become a scenario that is not highly unlikely anymore.

 

[Nobody]

ask their creditors to go double or nothing? and flip a coin