Well there goes Reykjavik

October 7, 2008 8:29 PM

More subprime collateral damage. Iceland's now getting a $5B bailout from Russia. What does Russia want in return? Access to shipping lanes? The old US base? via
posted by blahblah (48 comments total)

the cold war continues. the cold war never ended.
posted by philip-random at 8:30 PM on October 7, 2008 [1 favorite]

Best comment from nakedcaptialist:

"You have to admire the efficiency of the Russians. Bush spends 700 billion in Iraq for nothing. Russia spends 5 billion and gets control of the North Atlantic shipping lanes. Putin sure can play the game."
posted by blahblah at 8:32 PM on October 7, 2008 [8 favorites]

The cold war's changed; the bear's been dreaming during it's hibernation.
posted by porpoise at 8:33 PM on October 7, 2008

It is of greatest concern to us that the doors at Project Koschei are not opened. Having the whole damned thing drop-shipped to Iceland would kind of suck, too.
posted by Kikkoman at 8:50 PM on October 7, 2008 [3 favorites]

Iceland's now getting a $5B bailout from Russia

As the article you linked to pretty clearly indicates, Iceland is seeking a $5B loan from Russia not getting a bailout.
posted by ssg at 8:51 PM on October 7, 2008

[obligatory Björk joke]
posted by furtive at 8:51 PM on October 7, 2008

Kikkoman in with the A COLDER WAR reference! 9.5!
posted by Justinian at 8:53 PM on October 7, 2008

Well, Icelanders do make some pretty good vodka ...
posted by krinklyfig at 8:54 PM on October 7, 2008

My wife and I visited Iceland a little while back and I found it to be a beautiful place and the people very engaging and down-to-earth. We had a great time and it broke my heart when I heard IcelandAir pulled out of Baltimore-Washington International (airport) recently.
posted by newdaddy at 8:54 PM on October 7, 2008

"You have to admire the efficiency of the Russians. Bush spends 700 billion in Iraq for nothing. Russia spends 5 billion and gets control of the North Atlantic shipping lanes. Putin sure can play the game."
posted by blahblah at 11:32 PM on October 7

This kind of glibness is annoying. Iraq has the world's second largest reserves of oil in the world, and these estimates are probably low. The United States controls that to the extent that it only gets out of the country with U.S. permission. That is something of value. maybe it isn't worth what the U.S. went through in Iraq, but it isn't worth nothing.

Russians won't control North Atlantic shipping lanes. They get a refueling base. Does anyone think Russia would dare to use its navy to stop a civilian shipping vessel in international waters?

The U.S. has the ability to project power anywhere in the world at any time. Don't extrapolate from the difficulties with urban guerrilla warfare in Iraq to the conclusion that the U.S. is militarily weak. Russia's military technology is frozen in 1992. Russia does not have stealth. They do not have robotics. Russia does not have its own GPS system yet--they allowed their system to fall into disrepair in the 90's and now must partner with India. They have not integrated information technology into battlefield operations. A military confrontation with the United States would leave Russia battered and humiliated.

They'll get control of nothing with this. If the base was important, the U.S. would not have let it go, especially in these times of out-of-control defense spending.

Furthermore, Russians might want to ask their leader (assuming there was any mechanism for Russian leaders to ever be accountable to their people) why they are giving Iceland $5 billion when Russia's economy is falling headlong into a depression. The Russian stock market fell 20% yesterday. Gas and oil prices are also collapsing, and with it the Russian government's ability to throw money around. The era of the BRIC countries is over. The next ten years is going to be dominated by risk-averse investing, and that means greater demand for U.S. govt securities, greater demand for the dollar, and more investment in large, cash-flow positive US companies.

So, have fun with your frozen airbase, Putin. Let's see if you can feed your people with it.
posted by Pastabagel at 9:08 PM on October 7, 2008 [6 favorites]

Does anyone think Russia would dare to use its navy to stop a civilian shipping vessel in international waters?

On the short term, no. But things change.
posted by philip-random at 9:11 PM on October 7, 2008

The cold war is back on? At least all this Luft Balloon stock I bought should go up.
posted by drezdn at 9:13 PM on October 7, 2008 [1 favorite]

I don't understand why you frame this as collateral damage from "subprime". Iceland has been in some major shit for some time now (link from 2006). The global financial crisis has certainly accelerated and intensified the situation in Iceland, but linking this directly to "subprime" is just lazy.
posted by mullacc at 9:14 PM on October 7, 2008 [1 favorite]

Here's an article on the issue written by a UQ economist in '06. As mullacc says: not really subprime fallout.
posted by pompomtom at 9:19 PM on October 7, 2008

The cold war's changed; the bear's been dreaming during it's hibernation.

Is there an animal we can use rhetorically to describe America when we want it to sound feral and murderous? The boa constrictor? The hagfish?
posted by stammer at 9:37 PM on October 7, 2008 [1 favorite]

What mullacc said. I've read a little bit about Iceland over the past few years, and the country is well and truly fucked, economically.

Sad news. They're great people, but it'll be a decade before they're out of this hole.
posted by bardic at 9:38 PM on October 7, 2008

Does anyone think Russia would dare to use its navy to stop a civilian shipping vessel in international waters?

On the short term, no. But things change.

military budget for 2008 - russia: $50 billion US: $683 billion

it's been a similar ratio for about 20 years now (see globalsecurity.org)

any thoughts of russia challenging US militarily, are pretty laughable. (and don't forget NATO - iceland is square in their turf)

giving georgia a bloody nose is one thing, but any sabre-rattling by the russians now-a-days, is pretty much just posturing for the masses back home. e.g. flying a single bomber around from time to time, sending a couple ships south america, etc.

the reason that stuff is in the press lately, is because it's been pretty unheard of in the last couple decades.
posted by jimjam at 9:41 PM on October 7, 2008

Iceland's fucked, too, huh? Depressing. My wife and I visited a few years back, loved it, and often joke about emigrating. Well, there goes that fantasy.
posted by The Card Cheat at 10:13 PM on October 7, 2008

I like how we're now calling this entire interrelated clusterfuck "Subprime", like:

I don't understand why you frame this as collateral damage from "subprime"

Because now when I read that, I picture some big-ass Transformer, maybe the out-of-control son of Optimus Prime.

He's big. He's bad. He's waaaay over-extended: Sub-Prime.
posted by rokusan at 10:15 PM on October 7, 2008 [3 favorites]

Ah, so this is what Putin and his KGB apparatchiks* have been up to. Why didn't McCain warn us?
posted by salvia at 10:30 PM on October 7, 2008

*apparatchiki? Is that how people actually form the plural?
posted by salvia at 10:31 PM on October 7, 2008

Iceland is seeking a $5B loan from Russia not getting a bailout.

Loans ARE bailouts. They were bailouts when it was Chrysler. And Chrysler paid the whole thing back. (Heck, they weren't even loans -- they were loan guarantees.)

This meme that loans != bailouts seems to have emerged in the last week or so, but there is no definition of a bailout (or "rescue package/plan") that excludes loans. It's sort of deliberately a vague term.
posted by dhartung at 12:18 AM on October 8, 2008 [1 favorite]

rokusan -- "I like how we're now calling this entire interrelated clusterfuck "Subprime", like:"

Its interesting how language evolves and adapts; Paul Muolo, the editor of National Mortgage News and author of Chain of Blame recounted in his book how his kids have started to use "subprime" as a verb. Apparently his daughter had a test coming up, and expressed her concerns as:

"I'd better not subprime that test"

Leading one book reviewer to add that things could have been worse:

"she could have Greenspanned her final"

In any case, the trouble in Iceland has been on on the horion for quite a while (considering how fast Economics moves sometimes). We talked about the shaky condition of their banking system as recently as May. In fact they had another currency collapse in 2006 which I briefly described here.

In 2006 they were able to sharply increase interest rates and attract sorely needed foreign currency. Just as an example, after the 2006 shock, Iceland's Kaupthing's bank was paying 6.5% AER on a demand account, while HSBC would only pay 5.75% AER on a three year deposit; this illustrates just how desperate Icelandic banks were to capture capital.

Now, against this rather shaky global backdrop they're just another emerging market sovereign in desperate need of capital. Thus the need for the Russian loan.

So Iceland's current difficulties were long foreseen.
posted by Mutant at 12:31 AM on October 8, 2008 [1 favorite]

Ah, so this is what Putin and his KGB apparatchiks* have been up to. Why didn't McCain warn us?

I thought Palin was keeping an eye on Russia?

Sad news. They're great people, but it'll be a decade before they're out of this hole.

Bear in mind it's not that long ago that Iceland was so poor that people were using old parchment for clothing and the like. They have a long way to go before they're as badly off as they were even a few generations ago.
posted by rodgerd at 2:09 AM on October 8, 2008

Are the Russians the only ones who have played RISK?
posted by bystander at 3:10 AM on October 8, 2008

Another lesson from The History of Finance - this is something we last saw in South America in the early 90's (e.g., Venezuela, Ecuador, etc), or Russia in the late 90's:

"...we're already seeing signs that people don't want to accept krona in transactions on Iceland.'' .

So the people living in Iceland are losing confidence in their own currency. Interesting. Gotta think about how to play this one.
posted by Mutant at 4:25 AM on October 8, 2008

(Note to the tourists: I don't think we really care that you and the wife travelled to Iceland and what you thought the people there. You wouldn't want me to comment in every thread about the financial crisis that I also know some people from New York and that they are really nice.)
posted by kolophon at 4:28 AM on October 8, 2008

Is there an animal we can use rhetorically to describe America when we want it to sound feral and murderous? The boa constrictor? The hagfish?

I like the analogy between the American people and a dog that's been left at home without being fed for a couple days.
posted by dunkadunc at 4:46 AM on October 8, 2008

There's definitely, definitely, definitely no logic
To human behavior
posted by Bighappyfunhouse at 5:00 AM on October 8, 2008

Bomb, bomb, bomb. Bomb, bomb Iceland.
posted by Sys Rq at 6:44 AM on October 8, 2008

This meme that loans != bailouts seems to have emerged in the last week or so, but there is no definition of a bailout (or "rescue package/plan") that excludes loans.

Agreed. My point was more that it is not a done deal that Iceland is getting this loan/bailout from Russia, despite what the FPP indicates. The word 'bailout' is so broadly defined that it is much more useful to use the term loan when talking about a loan.
posted by ssg at 7:14 AM on October 8, 2008

dhartung writes "This meme that loans != bailouts seems to have emerged in the last week or so, but there is no definition of a bailout (or 'rescue package/plan') that excludes loans. It's sort of deliberately a vague term."

A bailout to me implies the goverment provided a big stack of cash. While the Chrysler thing meets the dictionary definition using bailout to describe it is unfairly loaded.
posted by Mitheral at 7:22 AM on October 8, 2008

mullacc - point noted, though they probably would have been in as bad shape if the US and European markets didn't implode so fast on the world.

More on their decline.
posted by blahblah at 7:59 AM on October 8, 2008

...using bailout to describe blah blah blah...

Alternate nomenclature: Free money, payday, jackpot, ka-ching!, giant novelty cheque, playtime in Scrooge McDuck's vault, the US Treasury Clearinghouse Sweepstakes, the sweet sweet beeping of a dumptruck full of cash backing into your driveway, guessing within $500billion and winning both showcases, drive thru stickup, Operation Infinite G-string...

Bailout is what you do with sinking boats to keep them from capsizing just long enough to get to dry land. Once ashore, you still have to either patch up the holes or replace the boat. Seems to me like y'all are about to take the ol' Swiss Cheese Canoe back out for a paddle.
posted by Sys Rq at 8:01 AM on October 8, 2008

(All that said, the Iceland-Russia deal doesn't fit the definition. It's probably closer to the standard Mafia protection scheme.)
posted by Sys Rq at 8:05 AM on October 8, 2008

Seems odd to me that as much as the US spends to "compete" with Russia, they would have given Iceland the money, just to spite Putin. I mean, in the grand scheme of things, it is a drop in the bucket.

Interesting, anyway.
posted by paisley henosis at 9:21 AM on October 8, 2008

Once ashore, you still have to either patch up the holes or replace the boat.

Not to mention pay someone for lending you a bucket.
posted by rokusan at 1:09 PM on October 8, 2008

Actually, you'd just return the bucket filled with interest.
posted by Sys Rq at 1:20 PM on October 8, 2008

Is there an animal we can use rhetorically to describe America when we want it to sound feral and murderous?

WOLVERINES!
posted by lumpenprole at 4:24 PM on October 8, 2008 [2 favorites]

any thoughts of russia challenging US militarily, are pretty laughable.

What's laughable is the thought that there would be any need for the US to challenge Russia, or any other nation. The US could cut its military spending to 1/10th of current levels and still be perfectly secure within its borders. No one is ever going to invade the USA. Nobody wants to.
posted by five fresh fish at 6:58 PM on October 8, 2008

Ya really, relax USA. Your penis is still the biggest.
posted by stinkycheese at 12:02 AM on October 9, 2008

I'm glad I learned some Russian in high school. I was originally going to use it to spy on the damned Ruskies in the event of a "Red Dawn" invasion, , but ever since Guantanamo, "Homeland Security" and "Habeas corpus? What habeas corpus?" it seems like the identity of the "Evil Empire" has changed.

(Hello no-fly list!)


(Fly this: ..l.. )
posted by Marla Singer at 1:09 AM on October 9, 2008

No one is ever going to invade the USA. Nobody wants to.

He lives comfortably. His guard is down. Never for a moment does he suspect that in his typical American town, in his very neighborhood, on his very cul-de-sac, in his very home may be dozens--if not hundreds--of foreign operatives, lurking in wait for a one-word order from Ottawa: Pounce.
posted by Sys Rq at 6:11 AM on October 9, 2008

Russians won't control North Atlantic shipping lanes. They get a refueling base. Does anyone think Russia would dare to use its navy to stop a civilian shipping vessel in international waters?

Why do you think that they wouldn't?
posted by zippy at 9:43 AM on October 9, 2008

Immediate exclusion from the G8? A massive trade embargo? Its debts being recalled by other nations?

War is the most primative of tools. We have a lot better means of accomplishing our goals these days.
posted by five fresh fish at 4:24 PM on October 9, 2008

Country for sale: ICELAND - 99p start price no reserve.
posted by nthdegx at 4:01 AM on October 10, 2008

The scary thing about the Russians this go round is that in the past they've been constrained. First it was the pretense of a "civilized European empirial court." Then it was the pretense of "liberating the proletariat." The "Free World" had no such restraints. We had the liberty of propping up the Shah or capping Allende because we were protecting the free market from the clutches of godless socialists. Now the Russians have no pretense. They are the machine of pure, gangster capitalism and they can be as greedy and imperialist as the free will of the free market desires.
posted by Pollomacho at 4:22 AM on October 10, 2008

five fresh fish writes "War is the most primative of tools. We have a lot better means of accomplishing our goals these days"

True. How do you suppose that is working out for the people of Iraq or Georgia?
posted by Mitheral at 7:20 AM on October 10, 2008