Canary in the coal mine...

October 9, 2008 11:32 AM

Iceland's last non state-owned bank is nationalised,with subsidiaries shut down in Finland, refusing to pay depositors in the UK and in adminstration in Luxemberg. Iceland has had to shut down trading on the stock market to stop panic dumping, and has become one of the most state run economies in the world. For everyone who wondered what true worst case is, this might be it (saving the Weimar scenario, but the US is too sane for that).
posted by jaduncan (74 comments total)

Dupe from yesterday?
posted by Pronoiac at 11:34 AM on October 9, 2008 [1 favorite]

I think this is the third bank.
posted by Lord_Pall at 11:41 AM on October 9, 2008

No double-- this news is from today, and doesn't seem to mentioned in yesterday's 'Iceland FAIL' thread.
posted by Fuzzy Monster at 11:41 AM on October 9, 2008

There was also this other "Iceland is fucked" thread from yesterday.
posted by Sys Rq at 11:43 AM on October 9, 2008

Am I insane for wondering whether they can remain a sovereign nation? It would be terrible if they became a de facto satellite of Russia.
posted by sonic meat machine at 11:46 AM on October 9, 2008

I'm unsure if I would lend Bjork 300 billion dollars.
posted by Lord_Pall at 11:46 AM on October 9, 2008 [1 favorite]

Canada's banking system kept high and dry by strict regulation.

What's funny is that the Conservatives would LOVE to get rid of bank regulations but just in the nick of time everyone found out just how useful high capital requirements are. Ah, Iceland, shine on you crazy deregulators.
posted by GuyZero at 11:46 AM on October 9, 2008 [9 favorites]

Oh, this is about Kaupthing not Icesave, except the "refusing to pay depositors in the UK" link, which is about Icesave, the subject of the post from yesterday. There is a recent mention of the nationalization of the three largest banks in the previous thread.
posted by Pronoiac at 11:50 AM on October 9, 2008

What's the reaction on the street in Iceland? Is anyone getting panicky and hoarding? I heard something about supermarkets being out of stock on a lot of stuff, but it was pointed out that this was only in the remote areas of the country where there was just one store. Any comment from Sportacus?
posted by crapmatic at 11:52 AM on October 9, 2008

Bad assumption my frigid Norwegian Icelandic ass!
posted by bitmage at 11:59 AM on October 9, 2008 [1 favorite]

If this continued Icelandic financial crisis causes the runner-up Miss Iceland to drop out of my school, me and the markets are going to have words.

Man, these financial meltdowns always hit you where you least expect it.

In your pants.

Wait, what?
posted by robocop is bleeding at 12:07 PM on October 9, 2008 [4 favorites]

*coughMeTacough*
posted by Sys Rq at 12:11 PM on October 9, 2008

The dow just dipped below 9000 too.
posted by bonaldi at 12:12 PM on October 9, 2008

Be honest. How many people here secretly want the market to fall to some ridiculously low level just to see it happen?
posted by Pastabagel at 12:23 PM on October 9, 2008 [8 favorites]

"but the US is too sane for that"

Ha ha ha ha!! I’ve heard that one before! *slaps knee*
Ha ha ha ha....wait, what the hell am I laughing for?
posted by Smedleyman at 12:27 PM on October 9, 2008 [5 favorites]

Be honest. How many people here secretly want the market to fall to some ridiculously low level just to see it happen?

The market fall is killing my parents 401k's. This has already resulted in my mother putting off retirement, despite poor health. It's looking more and more likely that I will have to financially care for them in their "golden years."

No. I don't want to see it hit some ridiculously low level. I want this insanity to stop. Unfortunately, reality seems to be ignoring my wants, again.
posted by bitmage at 12:27 PM on October 9, 2008 [2 favorites]

The U.S. market, Pastabagel?
posted by cgc373 at 12:28 PM on October 9, 2008 [1 favorite]

There's some misunderstanding re. the "refusing to pay" bit. Nobody knows, but it is AFAIK not the intention AFAIK of the Icelandic gov't to just forget about these accounts.
posted by krilli at 12:29 PM on October 9, 2008

In the words of friend of mine from the UK: All your cod are belong to us.

She seems very excited about this. Apparently there is a cod shortage?
posted by elfgirl at 12:30 PM on October 9, 2008

I want to be drunk while I watch the collapse of capitalism, but I know I'm going to need to use the booze as currency soon. It's so frustrating.
posted by mullingitover at 12:33 PM on October 9, 2008 [3 favorites]

I'm unsure if I would lend Bjork 300 billion dollars.

She'd probably do something like this with it.
posted by JaredSeth at 12:36 PM on October 9, 2008

Be honest. How many people here secretly want the market to fall to some ridiculously low level just to see it happen?

I work in a newspaper and events like this make my day, but I realise that people's savings are getting hammered too.

That said the wisdom of putting retirement money and savings cash directly on the markets has always seemed hella risky to me. It's a speculative market, and the value of shares can go down! Sure, the long term picture is upwards, but in the long term we're all dead, right? If it's down when you need your money back ...
posted by bonaldi at 12:46 PM on October 9, 2008 [2 favorites]

Be honest. How many people here secretly want the market to fall to some ridiculously low level just to see it happen?
posted by Pastabagel at 12:23 PM on October 9 [+] [!]

Luckily, schadenfreude doesn't alter markets.
posted by 445supermag at 12:49 PM on October 9, 2008 [1 favorite]

What a tumble here at the end of trading. From -280 to -600 in thirty minutes.
posted by sonic meat machine at 12:51 PM on October 9, 2008

"Refusing to pay depositors in the UK" is grossly misleading. That article is from two days ago, mentions itself that the freeze was on desposits and withdrawals, that it's a temporary situation, and in fact it was posted here in the other Iceland thread that since nationalization, the government has expressed every intention of paying back depositors.

I know we all enjoy us some drama, but please - consider the fact that this stuff has a real impact on real people's lives. Try to be accurate instead of panic-inducing.
posted by Marisa Stole the Precious Thing at 12:52 PM on October 9, 2008 [1 favorite]

ft: UK used anti-terrorist legislation to seize the UK assets of Landsbanki.

International politics in the age of asshattery.
posted by Free word order! at 12:53 PM on October 9, 2008 [3 favorites]

What strikes me about the whole Icelandic meltdown is that, in the face of some pretty fierce competition for the title of "Most inept economic policy", the Icelandic government wins it and then some. Each one of their reactions to the crisis has been more idiotic than the previous one. Selling out to Putin is just the icing on a gigantic shitcake of stupidity. I can understand that the talent pool is necessarily limited in a nation of 300,000, but come on, Icelanders, can't you throw those muppets out, and substitute them with somebody who inspires more confidence, like dare I say Björk.
posted by Skeptic at 1:00 PM on October 9, 2008 [2 favorites]

Welcome to Norsk Korea.

I don't actually really believe the above, I just couldn't resist the pun.
posted by WPW at 1:04 PM on October 9, 2008 [3 favorites]

OTOH, I did get this in my inbox today:

NEW YORK--OCTOBER 9, 2008-- Icelandair just slashed fares to
Iceland's capital, Reykjavik, from New York City to $400
roundtrip. We usually see one-way fares on this route go for
that price! This fare is good for travel November-March.
posted by smackfu at 1:23 PM on October 9, 2008

I remember the good old days when canaries in coal mines only suffered from black lung.
posted by dances_with_sneetches at 1:26 PM on October 9, 2008 [2 favorites]

Be honest. How many people here secretly want the market to fall to some ridiculously low level just to see it happen?

* raises hand *
posted by jessamyn at 1:28 PM on October 9, 2008 [3 favorites]

How many people here secretly want the market to fall to some ridiculously low level just to see it happen?

I have popcorn and cash. Om nom nom nom.
posted by ryoshu at 1:34 PM on October 9, 2008 [1 favorite]

work in a newspaper and events like this make my day, but I realise that people's savings are getting hammered too. In the UK at least the credit crunch is killing local papers. Their biggest advertisers were estate agents (realtors) by a long way, followed by car sales. As a result all local papers are really struggling to make a living - and only seem to keep journalists for a couple of years until they can get a job in PR or a press office. As someone who cares about local democracy and loves good journalism, this is something I find rather more upsetting than the problems in the city.

That said, as I work for a local council, I have had rather more Iceland today than I'd normally prefer...
posted by prentiz at 1:35 PM on October 9, 2008 [3 favorites]

It's looking more and more likely that I will have to financially care for them in their "golden years."

See, a market crash becomes more entertaining if you've known, and worried yourself sick over, this all along. Also if you can bake bread.
posted by uncleozzy at 1:46 PM on October 9, 2008

In other news: Pakistan seeks US funding to avoid bankruptcy
posted by homunculus at 1:56 PM on October 9, 2008

Marisa etc., etc. "Refusing to pay depositors in the UK" is grossly misleading.>

Her Majesty's Government must be grossly misled, then...
posted by Skeptic at 1:57 PM on October 9, 2008

In the UK at least the credit crunch is killing local papers.
This is true, but it combines with the horrors visited on them by certain US corporations who, bolstered by their soaring stock prices, came in and hoovered them all up, then gutted them for profit. More than one paper is hoping that the market crash will lead to sell-offs.

Even private equity would be better than these guys, and I say that in the full knowledge of the horrors of private equity.
posted by bonaldi at 2:04 PM on October 9, 2008 [1 favorite]

homunculus writes "In other news: Pakistan seeks US funding to avoid bankruptcy"

No handouts for Pakistan, but we could toss them a bil or two if they (verifiably) scrap their nukes and lock up the Taliban hiding out on their side of the border.
posted by mullingitover at 2:09 PM on October 9, 2008 [1 favorite]

Pakistan seeks US funding to avoid bankruptcy

You want a loan? Hand over Bin Laden.
posted by Fuzzy Monster at 2:28 PM on October 9, 2008 [1 favorite]

How many people here secretly want the market to fall to some ridiculously low level just to see it happen?

I'm 34, and paying into my pension fund. While keeping my job, I want a huge crash followed by twenty-five years of zero-growth, then a five-year bubble, upon which I cash out into gilts and cash and retire.

Just like if I were a Baby Boomer now, retiring with a final-salary pension scheme, fully guaranteed by the state, having downsized my six-bedroom house last year at a profit of $1.2 million, having had a completely free and paid-for university education while teenagers today face loans and course fees. One of the Baby Boomers whose accounts in Iceland and pensions are being fully covered by the UK tax-payer and the next three generations of taxpayers, including those poor enough to never be able to afford to invest in overseas accounts in the first place.

We British just finished paying off Lend-Lease a couple of years ago. At least that was debt incurred doing something worthwhile...
posted by alasdair at 2:44 PM on October 9, 2008 [10 favorites]

Hand over Bin Laden.

Talk about a Pyrrhic victory.

"We got Bin laden! All we had to do was to destroy the global economy and that smoked him out!!"
posted by GuyZero at 2:45 PM on October 9, 2008 [2 favorites]

Wierd Al weighs in(SLYT).
posted by PenDevil at 2:58 PM on October 9, 2008

I can't favourite alasdair hard enough.
posted by rodgerd at 3:06 PM on October 9, 2008 [1 favorite]

Be honest. How many people here secretly want the market to fall to some ridiculously low level just to see it happen?

I would have preferred to have just bundled the last several trading sessions into one huge selloff and taken a week off. But watching our clients' 401(k)s, IRAs and pension plans get destroyed while the market deleverages is not my idea of entertainment. It's sickening, quite literally.

Interestingly, we haven't even tripped the circuit breakers...which now only kick in at a drop of nearly 13% (1100 points) in the Dow - even after being adjusted to a 10% trigger just 9 days ago.
posted by malocchio at 3:11 PM on October 9, 2008

We've had no table service dining-out meals this past year, and aside from a Sunday morning local bakery ritual (avg $5 total) and ~monthly cheap hoagies from a local eatery prepare all our meals in house; brown bagging lunches. We might buy a DVD if it's in the $5 bin, but usually we get them, and CDs and books, from the library; the uptown comic shop gets most of our media purchase money (graphic novels and Shonen Jump, now subscribed). Bought a few video games (for our PS2 -- no next gen system here). We've got a clunky old data projector (that works if the room is pitch black) for movies and some quality audio gear (old, sturdy) for playback. No plasma or LCD screen; we're still using an old 27" tube set for the PS2. It works, though. We don't travel at all. Walk/cycle to work (4km each way for each of us). No nights on the town, just occasional dinners with friends. I haven't bought any fancy personal electronics (not absolutely required for my business). We don't have cell phones, we don't take cable TV. If there's one thing we're "frivolous" about, it is music. About a grand per year in concert subscriptions, another almost two grand in music lessons for the wife and step-son, and associated sheet music costs. We have no debt other than the mortgage (fixed rate, lots of equity), a ten year old car we rarely use, and a good amount of savings.

And life is good. I don't feel like my life is empty, but I guess some might, but I think that a lot more folks are going to find the money just not there for the sort of living they've been accustomed to. So my suggestion, I guess, is for folks to just sort of live quietly, frugally and sensibly and find fulfillment in reality and friendships, and the economic downturn will be okay.

Unless you lose your house.
posted by seanmpuckett at 4:18 PM on October 9, 2008 [7 favorites]

That said the wisdom of putting retirement money and savings cash directly on the markets has always seemed hella risky to me.

Oh, I agree. Unfortunately, the financial industry has made it pretty much impossible to do anything other than put your money in the market if you expect any kind of return that would carry you into retirement. Seriously. If you're trying to build even a modest retirement nestegg, (and build that college fund for your kids...oh, and that "in case I get cancer" fund the monday-morning-libertarians say we should've been saving all along) you have to be in the market in some fashion.
posted by Thorzdad at 4:39 PM on October 9, 2008 [1 favorite]

Be honest. How many people here secretly want the market to fall to some ridiculously low level just to see it happen?

What financial institutions around the world--not just in Iceland--are experiencing is asset deflation. Asset deflations sometimes turn into general price deflations (the exact opposite of the inflationary "Weimar scenario" referenced in the post). Before you break out your popcorn and marshmallows, read up a little on deflation. It's not something you would "see" happen--you'd definitely feel it.
posted by A Long and Troublesome Lameness at 5:53 PM on October 9, 2008 [2 favorites]

alasdair: Just like if I were a Baby Boomer now, retiring with a final-salary pension scheme, fully guaranteed by the state, having downsized my six-bedroom house last year at a profit of $1.2 million, having had a completely free and paid-for university education while teenagers today face loans and course fees.
What on earth? Did the UK underwrite Boomer education? I guess I'm technically a War Baby but I had to pay for my education and that included borrowing. I don't have any big-ass pension, either, but I did manage, last month, to finally pay off the mortgage on my 3-bedroom house. I was feeling pretty good about that, too, until I read your pissing and whinging about my entitlement.
posted by CCBC at 6:21 PM on October 9, 2008

"We British just finished paying off Lend-Lease a couple of years ago. At least that was debt incurred doing something worthwhile..."

... wikipedia seach...

The U.K didn't finish paying off its WWII Lend-Lease loans until 2006? Holy crap. That blows my mind. Amazing.
posted by Auden at 6:22 PM on October 9, 2008 [2 favorites]

Oh, and just which pensions are "guaranteed by the state"? Seems to me people have been getting stuck whenever some corp decides that it can balance the books by raiding the fund.
posted by CCBC at 6:24 PM on October 9, 2008

Man. So, so glad I'm nowhere near bailtoutland right now.

Hope my parents are okay though. We're keeping a close watch on mom's 401k. If THAT gets fucked, well...the only thing I can do is offer her a room here in Beijing.
posted by saysthis at 7:52 PM on October 9, 2008

Iceland, in Financial Collapse, Is Likely to Need I.M.F. Help
posted by PenDevil at 5:21 AM on October 10, 2008 [1 favorite]

Well I sure hope that IMF makes the cash punitively conditional on them getting their economy into line with growth-boosting US laissez-faire free-market capitalist principles and none of this chicanery they've been up to.
posted by bonaldi at 5:45 AM on October 10, 2008 [2 favorites]

That said the wisdom of putting retirement money and savings cash directly on the markets has always seemed hella risky to me.

Oh, I agree. Unfortunately, the financial industry has made it pretty much impossible to do anything other than put your money in the market if you expect any kind of return that would carry you into retirement. Seriously. If you're trying to build even a modest retirement nestegg, (and build that college fund for your kids...oh, and that "in case I get cancer" fund the monday-morning-libertarians say we should've been saving all along) you have to be in the market in some fashion.

Exactly: The typical rate of returns on savings accounts isn't even enough to keep pace with cost of living growth, as I understand it. So money in a savings account actually loses value over time. And a lot of companies offer 401k plans as their only retirement plan option. Now, depending on the structure of the plan, you may be able to self-direct your 401k investments into bonds or other fixed return investments. But, well, it was triple-A rated mortgage-backed bonds that started this mess, wasn't it? And I'm pretty sure a lot of company 401k plans don't let you self-direct your investments beyond, say, putting some percentage of your portfolio in value stocks vs. growth stocks, etc.
posted by saulgoodman at 6:31 AM on October 10, 2008 [1 favorite]

CCBC: From the immediate post-war period to 1998 university education was free (that is, no course fees.) Students also received a grant for living expenses, gradually replaced by loans from about 1990 onwards. So yes, university education was paid for by the taxpayer for baby-boomers, but teenagers now must borrow the money.

Final-salary pension schemes have largely been close to new joiners in the UK (in the private sector) because of the cost: current employees have to invest in private pensions, not linked to final salary. Those who are in final-salary pension schemes - baby boomers - are also guaranteed their pension by the taxpayer, even if the scheme or company goes bust.

People over fifty vote, and people under fifty don't. That's why taxes on capital - "council tax", dependent on the value of your house, and inheritance tax (death duties) - are under attack, while taxes on income and consumption are increasing. That's why spending on education (young people) hasn't soared as much as spending on health (old people). And that's why the British government is bailing out the investments of rich boomers overseas in foreign Icelandic banks that everyone knew were rotten, knowing that taxpayers who are children now will be paying it back.
posted by alasdair at 8:02 AM on October 10, 2008 [2 favorites]

Sigh. My second paragraph is inaccurate. In 2005 the UK government introduced a Pension Protection Fund, a mechanism by which working people paying into a final salary scheme must contribute to paying the salaries of retired people whose pension schemes have gone bust. In addition, insolvency, accountancy and corporate law makes payment into the final salary scheme a huge priority, over profitability and survival of the company that employs existing workers. Finally, I have absolutely no doubt that the government will bail out final salary schemes if necessary. So my point still stands...
posted by alasdair at 8:10 AM on October 10, 2008

Dear Market Santa

As a government employee looking to buy a bigger house I would like a good hard housing market crash that tanks prices of four bedroom Victorian houses on the south coast of England while mysteriously leaving the price of poky two bedroom terraces unchanged. Also, please bring me enough inflation to inflate away my debts but not so much that I have trouble paying for the things I like.

And a Collateralised Debt Pony.
posted by athenian at 11:22 AM on October 10, 2008 [1 favorite]

Alasdair: Wow, Britain certainly treated its Boomers better than any other country. No wonder you didn't pay off lend-lease until 2006! But you're still whinging, so my point still stands.
posted by CCBC at 1:19 PM on October 10, 2008

I'm sorry reality is upsetting for you, CCBC.
posted by rodgerd at 5:52 PM on October 10, 2008

Well, and I am upset, too! Here I thought that Britain's woes were due to Margaret Thatcher's screwing the place over and it turns out it wasn't her, it was those darn Boomers. Maybe Dennis is a Boomer? He's certainly a piece of work. Anyway, my reality is turned upside down. I can appreciate how upset you and Alasdair must be at losing these entitlements but think how upset I am to find out what a sweet deal Britain had in the post-War years. It certainly doesn't match the stories I heard from UK immigrants, but they were all Boomers and probably lying.
posted by CCBC at 7:47 PM on October 10, 2008

Here I thought that Britain's woes were due to Margaret Thatcher's screwing the place over A lot of us would argue that Thatcher fixed the British economy after the managed decline of the 70s. Do you have a specific example in mind?
posted by prentiz at 5:15 AM on October 11, 2008

CCBC, I don't actually understand what point you're trying to make. To which part of my analysis do you object?

Here's another explanatory example. In the UK one of our taxes is called Council Tax. It's an annual tax based on the value of your house, so generally bigger house = more tax.

For old people, children left home, this obviously provides a financial incentive to move to a smaller property, which helps to free up these larger houses for the next generation who are just having their own children. These old people benefited from this when they were younger and having children.

However, there is enormous political pressure in the UK to scrap this tax, since old people want to hang onto their homes. But the tax revenue has to come from somewhere: well, then, the proposal goes, we'll introduce a local income tax. This shifts some of the burden of taxation from rich old people with capital but no income to middle-aged people with income but no capital.

Old people, boomers, want to change the rules as they go along, pulling up the ladder behind them, the ladder that helped them get where they are now. Just like they elected Thatcher to cut income taxes when they were at their income peak in the 1980s. Just like they want to make future poor people pay to rescue their high-risk, high-yield Icelandic investments. It is unjust and selfish.

Congratulations on paying off your mortgage, though! We're having a big extension because we couldn't afford a bigger house, but that'll be great. Don't get me wrong, I'm very well off, and I accept that I'll be paying higher taxes in the future to save the banking system in general. But I don't see why I should have to pay higher taxes for handouts to old people with a huge sense of entitlement.
posted by alasdair at 11:08 AM on October 11, 2008 [1 favorite]

Alasdair, it is statements like this that bother me: Old people, boomers, want to change the rules as they go along, pulling up the ladder behind them, the ladder that helped them get where they are now. So all the Boomers are well-off now? They are all property-owners? I'm wondering, is this really a generation vs. generation thing the way you've painted it? Seems to me a lot of Boomers suffered under Thatcher, especially if they lived in the North. Are you sure this isn't a class thing that you are laying on your parents?

As for the Icelandic bank affair: the British government jumped on that hard and early, not so much because they really thought Iceland would default, but to demonstrate a hard line that would reassure people and head off any bank runs (IMO).
posted by CCBC at 12:15 PM on October 11, 2008

alasdair: a possible alternative explanation is that the proportion of older people (who might think about council and inheritance tax) has increased in the general population and has massively increased among likely-to-vote population as young voter turnout declines. The Tories are dancing with the one who brung them.

(For a graph of age-group voter abstention in the UK, see page 5 of this PDF, but note that I wrote that presentation so HERE BE SELFLINKS)
posted by athenian at 2:03 PM on October 11, 2008

athenian, I agree with you. As I wrote above. "People over fifty vote, and people under fifty don't."

I think CCBC is objecting because I'm couching this in language that CCBC finds provocative, not because I'm wrong. Let's try again:

The "greying" of the British population is reflected in changes in voters' concerns, exacerbated by differential voting rates. Young voters worry about education and salary, older voters about health and pension rights. This is reflected in politics and the media, and ultimately in taxation and spending policy.

Can we agree on that statement?
posted by alasdair at 10:15 AM on October 13, 2008 [1 favorite]

alasdair: Okay, that's a reasonable statement. Let me remind you, though, of how this started. You were complaining that you were going to have to pay because of greedy Boomers investing in obviously bad Icelandic banks. ("...the British government is bailing out the investments of rich boomers overseas in foreign Icelandic banks that everyone knew were rotten, knowing that taxpayers who are children now will be paying it back.") Recent news stories indicate that the main investors include Councils, charities, and even the National Health Service. Perhaps your position on this matter has shifted.
posted by CCBC at 3:13 PM on October 13, 2008

CCBC: I believe I'm correct in writing that no-one realised when we started this argument that councils, charities and government agencies were so involved - I certainly wasn't - so I'll stand by original statement, while conceding that I probably wouldn't have made it 24 hours later.

Now, we've agreed that boomers are exerting political pressure to change spending and taxation policy, right? You were objecting to my vocabulary, rather than my analysis.

So, do you think these changes are morally neutral (or positive), or are they driven by simple self-interest? Here are the examples I gave from British politics (more details above):

- The move away from property and capital taxes to income taxes.
- The increases in spending on health at the expense of education.
- The changes in pension provision for existing and future pensioners.
And my general point:
- Bailing out rich, older investors at the expense of future young taxpayers.

I see pure, naked self-interest, at the expense of others.

Now, for the final time, can you come up with any counter-examples, or a different analysis for the trends I'm identifying? Or are you going to stick with the name-calling? Because all I've got from you so far is a refusal to face the facts or discuss the issues, driven - I'm forced to conclude - by your own discomfort at the selfishness of your generation.

As an aside: I'm sorry this has been a rather bad-tempered discussion, and I'm aware that we're discussing things from a British viewpoint which may be unfamiliar to you and which may have led to a failure of understanding between us. My apologies, and please let me assure you I don't hold you personally responsible for the behavior of the British middle classes....!
posted by alasdair at 10:06 AM on October 16, 2008

Oh, my. I think I'll let the discussion stand as it is.
posted by CCBC at 1:28 PM on October 16, 2008

Probably for the best.
posted by alasdair at 2:29 PM on October 17, 2008

Good article by Brendan O'Neill of Spiked on the Icelandic economic crisis and Britain's response, Britain vs Iceland: after the Cod Wars, the ‘Wad Wars.’ I don't agree with every word but it's a well written and argued. From the conclusion:

Finally, the Icelandic crisis shows the impact that the current financial fallout may have on what is termed the ‘real economy’. As a result of a stockmarket boom in the 1990s, Iceland’s banking sector grew rapidly, to such an extent that it eventually dwarfed the rest of the Icelandic economy: the banking sector had assets nine times the size of Iceland’s gross domestic product of $19billion. The ‘banking crisis’ in Iceland is intimately bound up with the country’s ‘real economy’, with some predicting job losses and lowered living standards for the Icelandic people as a result. Similar developments may take place elsewhere. Not surprisingly, people in Iceland are protesting. Last week, protesters gathered in the main square in Reykjavik to call for serious action to secure the economy; some Icelandic people have reported having problems withdrawing and transferring money from their bank accounts, and are demanding assurances from their leaders that their hard-earned money is safe (15).

There is no need to take sides in the disturbing spat between the governments in London and Reykjavik. Far better to side with the people of Iceland who, like many others in the developed world, may suffer as a consequence of their leaders’ mismanagement of the economy and the inability of international institutions to stabilise global economic conditions. Having lived harsh, hand-to-mouth existences for centuries, Icelandic people have only relatively recently enjoyed high wages, comfortable living standards and the fruits of modern technology. And despite the complaints of shallow anti-capitalists on web discussion boards – who argue that the Icelandic people typify ‘ordinary people’s stupidity’ in ‘bingeing on consumerist rubbish’ (16) – there is no reason why they should accept a cut in their living standards now.

My sister has probably lost all of her savings in this, though the rest of my family seems to have escaped the worst.
posted by Kattullus at 8:42 AM on October 19, 2008

Maybe this is the thread to point out that Hungary and Ukraine have both asked for (and gotten some assurance that they will receive) funds from the IMF. Serbia and the Baltic states are probably next (maybe Russia will help there) and Spain, who is simultaneously buying up foreign banks (via Santander, its largest bank which now holds more than 10% of the UK's banking business) and shoring up the savings banks that are threatened by the collapse of its real estate-based economy. Of course, all of these states claim that they are nothing like Iceland. Meanwhile, Italy has taken a big loan from Libya (part of the repayment will be tagged as compensation for Italy's colonization of the country before WWII -- "moral recognition", says Berlusconi, of the damage caused by Italy.) And that's just Europe. The IMF is going to be very busy. (Oh, and the IMF managing director is being investigated.)
posted by CCBC at 2:07 PM on October 20, 2008

Nordic Terror
posted by homunculus at 2:26 PM on October 25, 2008

So far, Russia hasn't loaned Iceland a nickel. Sure, they said they would, but so far, they haven't. The IMF is talking with Iceland now and Norway has promised a loan. They will probably keep that promise.
posted by CCBC at 5:09 PM on October 25, 2008

Stunned Icelanders Struggle After Economy’s Fall
posted by homunculus at 1:40 PM on November 8, 2008