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 eatyualive
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 Icelands Economy Collapsed. Who's next? 
#9264816 - 11/18/08 10:05 AM (4 years, 5 months ago) |
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I read Icelands economy collapsed and Japan is in recession. Europe announced recession and although reluctantly, The us has some what announced recession.
Who is next on the hit list?
And is the usd going to fall?
Many nations are talking about getting off the usd now?
Will this cause hyperinflation and tear our nation to the ground?
Please discuss... want to hear some ideas from people who don't live in the us as well as us citizens. thanks in advance.
Here is the article on iceland its getting me worried. anyone else worried?
New york times
REYKJAVIK, Iceland — The collapse came so fast it seemed unreal, impossible. One woman here compared it to being hit by a train. Another said she felt as if she were watching it through a window. Another said, “It feels like you’ve been put in a prison, and you don’t know what you did wrong.”
This country, as modern and sophisticated as it is geographically isolated, still seems to be in shock. But if the events of last month — the failure of Iceland’s banks; the plummeting of its currency; the first wave of layoffs; the loss of reputation abroad — felt like a bad dream, Iceland has now awakened to find that it is all coming true.
It is not as if Reykjavik, where about two-thirds of the country’s 300,000 people live, is filled with bread lines or homeless shanties or looters smashing store windows. But this city, until recently the center of one of the world’s fastest economic booms, is now the unhappy site of one of its great crashes. It is impossible to meet anyone here who has not been profoundly affected by the financial crisis.
Overnight, people lost their savings. Prices are soaring. Once-crowded restaurants are almost empty. Banks are rationing foreign currency, and companies are finding it dauntingly difficult to do business abroad. Inflation is at 16 percent and rising. People have stopped traveling overseas. The local currency, the krona, was 65 to the dollar a year ago; now it is 130. Companies are slashing salaries, reducing workers’ hours and, in some instances, embarking on mass layoffs.
“No country has ever crashed as quickly and as badly in peacetime,” said Jon Danielsson, an economist with the London School of Economics.
The loss goes beyond the personal, shattering a proud country’s sense of itself.
“Years ago, I would say that I was Icelandic and people might say, ‘Oh, where’s that?’ ” said Katrin Runolfsdottir, 49, who was fired from her secretarial job on Oct. 31. “That was fine. But now there’s this image of us being overspenders, thieves.”
Aldis Nordfjord, a 53-year-old architect, also lost her job last month. So did all 44 of her co-workers — everyone in the company except its owners. As many as 75 percent of Iceland’s private-sector architects have probably been fired in the past few weeks, she said.
In a strange way, she said, it is comforting to be one in a crowd. “Everyone is in the same situation,” she said. “If you can imagine, if only 10 out of 40 people had been fired, it would have been different; you would have felt, ‘Why me? Why not him?’ ”
Until last spring, Iceland’s economy seemed white-hot. It had the fourth-highest gross domestic product per capita in the world. Unemployment hovered between 0 and 1 percent (while forecasts for next spring are as high as 10 percent). A 2007 United Nations report measuring life expectancy, real per-capita income and educational levels identified Iceland as the world’s best country in which to live.
Emboldened by the strong krona, once-frugal Icelanders took regular shopping weekends in Europe, bought fancy cars and built bigger houses paid for with low-interest loans in foreign currencies.
Like the Vikings of old, Icelandic bankers were roaming the world and aggressively seizing business, pumping debt into a soufflé of a system. The banks are the ones that cannot repay tens of billions of dollars in foreign debt, and “they’re the ones who ruined our reputation,” said Adalheidur Hedinsdottir, who runs a small chain of coffee shops called Kaffitar and sells coffee wholesale to stores.
There was so much work, employers had to import workers from abroad. Ms. Nordfjord, the architect, worked so much overtime last year that she doubled her salary. She was featured on a Swedish radio program as an expert on Iceland’s extraordinary building boom.
Two months ago, her company canceled all overtime. Two weeks ago, it acknowledged that work was slowing. But it promised that there would be enough to last through next summer.
The next day, everyone was herded into a conference room and fired.
Employers are hurting just as much as employees. Ms. Hedinsdottir has laid off seven part-time employees, cut full-time workers’ hours and raised prices. The Kaffitar branch on Reykjavik’s central shopping street was perhaps half full; in normal times, it would have been bursting at its seams.
While business is dwindling, costs are soaring. When the government took over the country’s failing banks in October, Ms. Hedinsdottir’s latest shipment of coffee — more than 109,000 pounds — was already on the water, en route from Nicaragua. She had the money to pay for it, but because the crisis made foreign banks leery of doing business with Iceland, she said, she was unable to convert enough cash into foreign currency.
Take note, isn't this a democratic nation thats modern? just like the us?
im just wondering what country is economic collapse proof?
im assuming lets say the us does crash in a hypothetical situation. does that mean that the entire global economy crashes because we are the economic superpower? please fill me in. my inquiring mind wants to know.
trying to feed this fire in my head with some alternative opinions.
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Edited by eatyualive (11/18/08 10:08 AM)
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 phi1618
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Re: Icelands Economy Collapsed. Who's next? [Re: eatyualive]
#9264839 - 11/18/08 10:14 AM (4 years, 5 months ago) |
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Here's USD vs. a basket of currencies:
Right now, everybody wants dollars or treasuries and nothing else.
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eatyualive
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Re: Icelands Economy Collapsed. Who's next? [Re: phi1618]
#9264856 - 11/18/08 10:23 AM (4 years, 5 months ago) |
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yeah your right. and the scary thing is. the usd should be going down. didn't this happen to japan in the 90's?
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phi1618
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Re: Icelands Economy Collapsed. Who's next? [Re: eatyualive]
#9264863 - 11/18/08 10:27 AM (4 years, 5 months ago) |
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What happened in Iceland is that the banks took on a massive carry trade - borrowing USD or JPY and lending ISK or EUR. Very profitable, while it lasted, and there are 20 or so super-rich Icelanders who've presumably left the country.
The total size of the bank liabilities was larger than the Icelandic economy, and they were denominated in foreign currencies - GBP, USD, JPY, etc. Now that the shit's hit the fan (look at the chart above for USD, find one for JPY, and think about what would happen if you borrowed in one of those currencies and then levered up 30-1), Iceland just isn't large enough to bail out their banks, and need foreign help.
British people deposited an amount roughly the size of Icelands GDP in Islandic banks through the internet, and the British gov't has seized Icelandic assets conditional on Iceland guaranteeing those deposits - since the size of the deposits is roughly the size of Iceland's GDP, the gov't is understandably reluctant to make those guarantees. Same thing for Norway.
Iceland can't get an IMF loan without sorting that situation out, and so they're playing political hardball, threatening to go to the Russians for a loan. The Russians are having their own financial troubles, but they wouldn't mind having a nicely positioned Naval base out in the North Atlantic.
As far as who's next, there are some Eastern European countries - Poland being the largest - with significant liabilities in foreign currencies. What happens is the local currency collapses, leaving the value of the foreign currency liabilities larger than the value of local currency assets.
Fortunately, this situation won't happen here in the US, because everybody uses dollars. Not to belittle the situation, but we are at the hub of the world financial system, and the disruption will always be more severe at the periphery (until the present system collapses, and so far world governments are acting as well as could be hoped to prevent that).
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eatyualive
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Re: Icelands Economy Collapsed. Who's next? [Re: phi1618]
#9264871 - 11/18/08 10:30 AM (4 years, 5 months ago) |
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thanks again phi!
don't we have an 86 billion dollar trade deficit each month?
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Edited by eatyualive (11/18/08 10:31 AM)
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phi1618
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Re: Icelands Economy Collapsed. Who's next? [Re: eatyualive]
#9265069 - 11/18/08 11:33 AM (4 years, 5 months ago) |
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According to this:
http://afp.google.com/article/ALeqM5i3K49Hf6QFUY6eAyQzVat7NMHhkw
last statistics show 56.5 billion in Sept. US GDP is 13.3 trillion.
The problem in Iceland is that their banks accumulated total debts of 10 times GDP and more, and their debts were in foreign currencies. Our debts are very manageable, by comparison.
Here's a good article on the situation, by an Icelander:
http://www.ft.com/cms/s/0/66c87994-aec1-11dd-b621-000077b07658.html
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eatyualive
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Re: Icelands Economy Collapsed. Who's next? [Re: phi1618]
#9265281 - 11/18/08 12:39 PM (4 years, 5 months ago) |
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good deal man thanks for the links!
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zouden
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Re: Icelands Economy Collapsed. Who's next? [Re: eatyualive]
#9266648 - 11/18/08 05:33 PM (4 years, 5 months ago) |
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Also, Iceland has only 3 banks. I believe more than 3 banks collapsed in the US, but there's plenty left so you're not nearly as affected.
I'm following the Australian scenario a bit, though not very closely, as I'm not going to be affected by the financial crisis (having no investments, no debts, and a reliable job). They haven't announced a recession yet. I suspect we'll do better than most countries.
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eatyualive
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Re: Icelands Economy Collapsed. Who's next? [Re: zouden]
#9271330 - 11/19/08 10:41 AM (4 years, 5 months ago) |
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yeah keep us posted please.
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phi1618
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Re: Icelands Economy Collapsed. Who's next? [Re: eatyualive]
#9276915 - 11/20/08 07:28 AM (4 years, 5 months ago) |
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Looks like they got their IMF aid:
Quote:
The International Monetary Fund-led loan package to crisis-hit Iceland totals $10.2 billion, a Finnish government official said on Thursday.
The IMF said late on Wednesday its board approved a $2.1 billion loan for Iceland to try to stabilize what the fund called a 'banking crisis of extraordinary proportions.'
"The whole IMF package, which includes British and Dutch loans to the Icelandic deposit guarantee agency, is about $10.2 billion, out of which the Nordic countries' share is about a quarter," Finland Finance Ministry Under-Secretary Martti Hetemaki told Reuters.
"Iceland cannot, at the moment, get loans from markets," Hetemaki said, but added the Nordic countries have not yet finalised the details, including the length of the loans and the share of each Nordic country.
A spokesman for the Swedish Finance Minister Anders Borg said the Nordic $2.5 billion loan to Iceland would be split roughly equally between Sweden, Finland, Norway and Denmark.
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zorbman
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Re: Icelands Economy Collapsed. Who's next? [Re: phi1618]
#9278250 - 11/20/08 01:51 PM (4 years, 5 months ago) |
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Quote:
Right now, everybody wants dollars or treasuries and nothing else.
Quote:
Looks like they got their IMF aid
Now they're really fucked.
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Why does changing the party in power never change policy? Could it be that the views of both parties are essentially the same? - Ron Paul
Edited by zorbman (11/20/08 02:18 PM)
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lonestar2004
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Re: Icelands Economy Collapsed. Who's next? [Re: zorbman]
#9278309 - 11/20/08 02:05 PM (4 years, 5 months ago) |
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who the fuck would live in a country called Iceland?
can they even grow their own food?
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America's debt problem is a "sign of leadership failure"
We have "reckless fiscal policies"
America has a debt problem and a failure of leadership.
Americans deserve better
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zouden
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Re: Icelands Economy Collapsed. Who's next? [Re: lonestar2004]
#9278939 - 11/20/08 04:07 PM (4 years, 5 months ago) |
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Dude they can grow bananas in Iceland. Their heat comes from below, rather than above. They also have unlimited electricity. I believe their boats are hydrogen powered too...
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I know... that just the smallest
part of the world belongs to me
You know... I'm not a blind man
but truth is the hardest thing to see
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lonestar2004
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Re: Icelands Economy Collapsed. Who's next? [Re: zouden]
#9279084 - 11/20/08 04:34 PM (4 years, 5 months ago) |
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cool, at least they wont freeze to death if their economy keeps tanking.
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America's debt problem is a "sign of leadership failure"
We have "reckless fiscal policies"
America has a debt problem and a failure of leadership.
Americans deserve better
Barack Obama
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ApJunkie
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Re: Icelands Economy Collapsed. Who's next? [Re: lonestar2004]
#9279173 - 11/20/08 04:48 PM (4 years, 5 months ago) |
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yeah, Iceland is awesomely sophisticated. Really a unique little country
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lonestar2004
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Re: Icelands Economy Collapsed. Who's next? [Re: ApJunkie]
#9279195 - 11/20/08 04:51 PM (4 years, 5 months ago) |
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Quote:
ApJunkie said:
yeah, Iceland is awesomely sophisticated. Really a unique little country
can you be flat broke yet "sophisticated" 
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America's debt problem is a "sign of leadership failure"
We have "reckless fiscal policies"
America has a debt problem and a failure of leadership.
Americans deserve better
Barack Obama
|
zouden
Neuroscientist
Registered: 11/12/07
Posts: 7,091
Loc: Australia
Last seen: 3 years, 7 months
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Re: Icelands Economy Collapsed. Who's next? [Re: lonestar2004]
#9279282 - 11/20/08 05:07 PM (4 years, 5 months ago) |
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I don't see why not?
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I know... that just the smallest
part of the world belongs to me
You know... I'm not a blind man
but truth is the hardest thing to see
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Redstorm
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Re: Icelands Economy Collapsed. Who's next? [Re: lonestar2004]
#9280897 - 11/20/08 08:50 PM (4 years, 5 months ago) |
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Quote:
lonestar2004 said:
Quote:
ApJunkie said:
yeah, Iceland is awesomely sophisticated. Really a unique little country
can you be flat broke yet "sophisticated"
Have you ever heard of art and theater majors? 
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lonestar2004
Live to party,work to affordit.
Registered: 10/03/04
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Re: Icelands Economy Collapsed. Who's next? [Re: Redstorm]
#9281743 - 11/20/08 11:04 PM (4 years, 5 months ago) |
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--------------------
America's debt problem is a "sign of leadership failure"
We have "reckless fiscal policies"
America has a debt problem and a failure of leadership.
Americans deserve better
Barack Obama
|
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