

Iceland close to bankruptcy - visakhcr
http://timesofindia.indiatimes.com/After_banks_nations_Iceland_close_to_bankruptcy/articleshow/3572258.cms

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streety
I found this to be an interesting read for the UK consumer perspective:
[http://www.fool.co.uk/news/your-
money/savings/2008/10/07/ice...](http://www.fool.co.uk/news/your-
money/savings/2008/10/07/iceland-in-crisis.aspx)

Personally I have a significant sum of money in an icesave, part of
Landsbanki, account. With the Icelandic government talking about every-
country-for-itself the guarantee they have in place on the first £16k doesn't
look that secure any longer.

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Xichekolas
What kind of rates were you getting? I heard tell of 10+%.

Of course, if you lose the principal, it's not likely to pay off now, but
still impressive.

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Tichy
If someone offers you 10% interest, it is practically a given that the whole
thing is not very trustworthy. I assume therefore that people investing in
Iceland only did so with superfluous money that won't be missed too much.

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maxklein
I'm not worried. All this is just hype, things are quite fine in the world.
Money does not disappear until value does, and people are still producing a
lot of value.

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tom_rath
Wow.

It just occurred to me that folks here younger than 28 have never seen an
actual recession (I'm assuming that under-12s could not care less about
business news and missed the early 90s bust). It's just been one long boom for
you, right?

I suspect the world is about to surprise you in a very unpleasant way.

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maxklein
You want to bet? I say there will be no recession, you say there will be a
recession.

Sure, I've never seen a recession, but that does not mean that I am unable to
differenciate a real problem from a manageable problem.

McCain was right - the fundamentals of the economy ARE strong. A recession
starts at the bottom - it starts when people stop spending. It does not start
at the top. What is happening right now is just a restructuring. A flesh
wound, one could say.

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tom_rath
Believe whatever you want. It doesn't make it true.

Do you know that Detroit was once one of the wealthiest cities in the United
States? Things change.

What you're seeing now is a period of dramatic change. Approach it as you'd
like.

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maxklein
Sorry, I don't know much about Detroit. From Wikipedia, it seems like Detroit
is fine. But I have no real idea how it looks like in the city.

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sown
Executive summary: it is a shit hole.

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vikram
The PR skills of Iceland's government are terrible. They keep saying OMG we
are going to go bankrupt. Surely then no one is going to lend them any money.

I don't think other countries aren't asking for debts to be repaid. Then it's
just the creditor of the banks which are asking for their money. Presumably
the savers want to take their money out. So it's a run on all the banks of the
country. But since they already nationalized the banks, surely they just have
to print more currency. The currency takes a hit and it feels like Russia in
the 80s, but it's probably still better than other outcomes.

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pjesi
Actually no, they are not saying we are going bankrupt, the world media is.

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marvin
There's not a chance the Icelandic government will actually go bankrupt. It
would be historic. Sovereign states do go bankrupt once in a while, but I've
never heard of one choosing to bankrupt itself in order to partially pay off
the bad debt of a corporation.

If Iceland has obligations to some of these companies, they'll likely just
default on the debt. The end result would be the same, but perhaps with
somewhat less political turmoil.

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gwsaines
I couldn't get a handle on what assets were falling away from the Icelandic
banks. The article says that they weren't mixed up in the now toxic subprime
assets, so is it just the credit crunch that is inhibiting Iceland banks from
making short run payments, or are their assets crumbling in other ways? Anyone
care to explain?

When I was in school taking econ courses every day I was always so informed
about this stuff. I feel so ignorant now!

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gills
I have heard they have too much debt denominated in foreign currencies. Their
recently-deregulated banking has been a major economic growth area for Iceland
(read: levered to their eyeballs). The global instabilities pretty much pulled
the rug from under their feet, and their productive economy is not large
enough to be likely to pay off the debts; so their currency gets dumped. That
makes it harder to pay the foreign debts, and each failure to pay further
damages the currency.

I think they will almost certainly have to default.

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pjesi
My interest rate at Landsbankinn was around 14%, which is normal because of
the high interest rate from the Central Bank (15.5%).

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jdavid
doh, i actually was hoping that iceland was more shielded from this than
japan.

maybe, if they go through this first, they will be the first to succeed post
Credit Crisis.

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nihilocrat
Hey, as long as EVE Online (CCP) doesn't go under, I'm straight.

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cjenkins
I'm guessing they're actually doing pretty well in this situation. I'd hazard
to guess that a lot of their revenue comes from subs in the US and Europe (aka
dollars and euros). As inflation goes crazy on Icelandic krona, you figure the
salaries they're paying to their people takes up less and less of the cash
they pull in each month.

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bluelu
Another indicator that the USA made a great job at selling their debts to
other countries, where entire states have now to pay for the greed of a few
people.

Each cent that is missing now (which went to american banks when they were
selling these products) has to paid by the entire world now.

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dualogy
"Missing"? "Money itself isn't lost or gained, it's simply transferred."

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whacked_new
Or printed.

