Iceland Latest (If You Don't Want To Know The Score Look Away Now)
It has to be asked how could a country with a population the size of Coventry be allowed to run up foreign liabilities seven times the size of its GDP?
With the deregulation of its financial market in the mid-1990s and subsequent stock market boom, Iceland had transformed itself from the poor cousin in Europe to one of the region's wealthiest countries. Icelandic banks and companies made acquisitions across Europe, including the iconic Hamley's toy store the West Ham soccer team, and a sizeable stake in at least one major UK compounder.
But its all gone the shape of a small soft edible fruit for poor old Iceland.
In recent days, Iceland's government has taken over the country's second-biggest bank, fixed the exchange rate of its plummeting currency, and asked Russia for a €4 billion loan as it scrambles to stop the collapse of its economy.
It has also introduced emergency laws that give the government sweeping new powers to take over companies, limit the authority of boards, and call shareholder meetings.
The one thing apparently keeping the country's tottering economy from complete collapse is an influx of money from foreign journalists and camera crews flying into Reykjavik to film the action!
After watching the currency free-fall for several days the Central Bank of Iceland stepped in yesterday to fix the exchange rate of the krona at a level equal to 131 krona against the euro.
Some analysts, however, are not convinced by measures such as the fixing of the exchange rate.
"Given the fact that the Icelandic FX (foreign-exchange) reserve is less than US$3 billion, the peg does not look very credible, and we do not expect it to be maintained," said Lars Christensen, chief analyst at Danske Bank, in a research report.
Around 300,000 Britons (an amount funnily enough similar to the entire population of Iceland), wooed by sexy interest rates, are said to have deposits in Icelandic banks. Alistair Darling has today said that the government would guarantee deposits of British savers with online bank Icesave which yesterday stopped customers, including thousands in Britain, from withdrawing money from their accounts. Although reports suggest that punters may have to wait three months or so to get their money back.
Still that gives them plenty of time to decide where to put it next. Meanwhile....
Its not all doom & gloom for our Icelandic readers, take heart that there IS ONE (and one alone) world currency that has performed even worse than yours versus the dollar in the last thirty days. The bad news is its Zimbabwe's!
With the deregulation of its financial market in the mid-1990s and subsequent stock market boom, Iceland had transformed itself from the poor cousin in Europe to one of the region's wealthiest countries. Icelandic banks and companies made acquisitions across Europe, including the iconic Hamley's toy store the West Ham soccer team, and a sizeable stake in at least one major UK compounder.
But its all gone the shape of a small soft edible fruit for poor old Iceland.
In recent days, Iceland's government has taken over the country's second-biggest bank, fixed the exchange rate of its plummeting currency, and asked Russia for a €4 billion loan as it scrambles to stop the collapse of its economy.
It has also introduced emergency laws that give the government sweeping new powers to take over companies, limit the authority of boards, and call shareholder meetings.
The one thing apparently keeping the country's tottering economy from complete collapse is an influx of money from foreign journalists and camera crews flying into Reykjavik to film the action!
After watching the currency free-fall for several days the Central Bank of Iceland stepped in yesterday to fix the exchange rate of the krona at a level equal to 131 krona against the euro.
Some analysts, however, are not convinced by measures such as the fixing of the exchange rate.
"Given the fact that the Icelandic FX (foreign-exchange) reserve is less than US$3 billion, the peg does not look very credible, and we do not expect it to be maintained," said Lars Christensen, chief analyst at Danske Bank, in a research report.
Around 300,000 Britons (an amount funnily enough similar to the entire population of Iceland), wooed by sexy interest rates, are said to have deposits in Icelandic banks. Alistair Darling has today said that the government would guarantee deposits of British savers with online bank Icesave which yesterday stopped customers, including thousands in Britain, from withdrawing money from their accounts. Although reports suggest that punters may have to wait three months or so to get their money back.
Still that gives them plenty of time to decide where to put it next. Meanwhile....
Its not all doom & gloom for our Icelandic readers, take heart that there IS ONE (and one alone) world currency that has performed even worse than yours versus the dollar in the last thirty days. The bad news is its Zimbabwe's!
