geezer466

Iceland Coming In From The Cold

23 posts in this topic

Iceland is safe to invest in again, according to Fitch, which has upgraded its credit rating three years after its economy spectacularly collapsed. Fitch raised Iceland's sovereign rating by one notch, to BBB- from BB+, meaning that the country's debt is now "investment grade"

Interesting that Iceland is being brought back in from the cold at such a pivotal time.

The fact they had their own currency and were able to devalue to 'get the bad stuff' over quickly has brought them back from the cliff edge much quicker. Complete bust to something approaching normality in just three years. A greek would snatch your hand off for a piece of that!!

Share this post


Link to post
Share on other sites

Hell, they paid back their IMF loan early. That should be good for an upgrade. Arresting and prosecuting bankers should also put the fear into the ratings agencies.

Share this post


Link to post
Share on other sites

it costs as much to make a cup of tea in Iceland as it does in Greece in terms of human time.

Why has devaluation helped?

I say...default has done the job nicely, and that financialisation of everything Icelandic made everything too expensive to sell.

Share this post


Link to post
Share on other sites

Small economy innit. Wouldn't work for Greece, or us. smile.gif

Share this post


Link to post
Share on other sites

Small economy innit. Wouldn't work for Greece

Why not? If they devalue by 60% then almost all tourist going to the Med would go there, and they have full employment before the summer's out.

I getting ready on Hire Your Own Island for Week buy button.

Share this post


Link to post
Share on other sites

You cannot really compare the two. Iceland was brought to its knees by its banks, but the government was otherwise living fairly well within its means. The problem in Greece is that the Government is borrowing just to keep paying bills, and is living way beyond its means. Devaluation in Greece - if it had its own currency would not help at all. It woul still need to implement massive cuts, which is what the Greeks don't like.

Just the same as in the UK, we could devalue all we like, but cuts in government spending are still required.

Share this post


Link to post
Share on other sites

You cannot really compare the two. Iceland was brought to its knees by its banks, but the government was otherwise living fairly well within its means. The problem in Greece is that the Government is borrowing just to keep paying bills, and is living way beyond its means. Devaluation in Greece - if it had its own currency would not help at all. It woul still need to implement massive cuts, which is what the Greeks don't like.

Just the same as in the UK, we could devalue all we like, but cuts in government spending are still required.

True.

Also the problems Iceland had (the banks) while serious, weren't long term. They just let the banks go bankrupt, and rebuilt from there.

It doesn't have problems of tax collection, corruption, embezzlement, bureaucracy etc. that Greece has, that will take years to fix (if at all).

Share this post


Link to post
Share on other sites

Prior to the banks turning up and f*cking everything up, iceland was fine.

They are very family centric and have a tiny population compared to the land mass.

Greece was screwed before the banks helped them "improve their quality of life" and simply doesn't have the social cohesion of iceland. They also owe several magnatudes more.

Share this post


Link to post
Share on other sites

Hell, they paid back their IMF loan early. That should be good for an upgrade. Arresting and prosecuting bankers should also put the fear into the ratings agencies.

I'm waiting for the case of the Greek People versus Goldman Sachs to be drawn up and taken to the EU.

Share this post


Link to post
Share on other sites

You cannot really compare the two. Iceland was brought to its knees by its banks

I'd venture to suggest that Iceland is comparable to many. Tiny Ireland was brought to its knees by banks. Iceland also had a rash of overbuilding property no one was ever going to buy. And people buying Range Rovers ( 'Game Overs') on credit.

The difference is that Iceland wasn't held to ransom and usury (or 'rescued') like its bank-stricken counterparts. It wasn't forced to privatise its only assets - like selling its thermal energy to Deutsche Thernalkom - and it didn't have the ball and chain of EU regulation preventing it from utilising local resources (like whale blubber) to revitalise the economy. Most of all, it wasn't forced to recapitalise its criminal banks, a la Ireland and Greece.

Share this post


Link to post
Share on other sites

Prior to the banks turning up and f*cking everything up, iceland was fine.

They are very family centric and have a tiny population compared to the land mass.

Greece was screwed before the banks helped them "improve their quality of life" and simply doesn't have the social cohesion of iceland. They also owe several magnatudes more.

You clearly don't know what you are talking about. in Greece family is far more important than in most other European countries, also social cohesion among common people is far stronger than in center-north Europe (where individualism is king), the difference is in Greece (like also in Italy, but not as strongly) the state is seen as an intruder/oppressor rather than part of social life.

Edited by awake_eagle

Share this post


Link to post
Share on other sites

I'd venture to suggest that Iceland is comparable to many. Tiny Ireland was brought to its knees by banks. Iceland also had a rash of overbuilding property no one was ever going to buy. And people buying Range Rovers ( 'Game Overs') on credit.

The difference is that Iceland wasn't held to ransom and usury (or 'rescued') like its bank-stricken counterparts. It wasn't forced to privatise its only assets - like selling its thermal energy to Deutsche Thernalkom - and it didn't have the ball and chain of EU regulation preventing it from utilising local resources (like whale blubber) to revitalise the economy. Most of all, it wasn't forced to recapitalise its criminal banks, a la Ireland and Greece.

+1

The shylocks weren't allowed to net out their one-way, wrong-way, fifty-times leveraged bets. Simple as.

By the time Iceland blew up its national debt was something like 850% of gdp. A Thatcherite chancer called 'Odds on' was the prime mover, although practically the entire country was taken in by the mania so few can legitimately claim to be without responsibility.

Share this post


Link to post
Share on other sites
I'd venture to suggest that Iceland is comparable to many. Tiny Ireland was brought to its knees by banks. Iceland also had a rash of overbuilding property no one was ever going to buy. And people buying Range Rovers ( 'Game Overs') on credit.

No, on a whole most of Icelands debts came from the government trying to rescue the banks.

The vast majority of the banks loans were to foreign companies in foreign countries.

People in Iceland bought nice things because they were being paid lots of money in all the new banking jobs and jobs providing services for those working in banking. Personal borrowing was low.

Share this post


Link to post
Share on other sites

Didn't Iceland get a bit of help from Norway?

Yes, the Nordic countries passed the hat when it was clear countries like the UK were intent upon burying Iceland. There is more to be said for good neighbours than the EU.

Only when Russia offered a 'geopolitical' loan did the EU and IMF suddenly become Iceland friendly, after much arm-twisting by NATO.

The EU could cut Greece adrift tomorrow, but in the meantime, where would it get funding and oil? Russia and Iran would step in to save poor little Greece.

Share this post


Link to post
Share on other sites

Most of all, it wasn't forced to recapitalise its criminal banks, a la Ireland and Greece.

I was not aware that Greece had been bailing out any banks? I thought it was a government debt problem bringing Greece to its knees?

Share this post


Link to post
Share on other sites

The big threat was that banks would never lend to Iceland again. The analogy I came up with is its like a car company threatening to never sell you a car again.

Share this post


Link to post
Share on other sites

Yes, the Nordic countries passed the hat when it was clear countries like the UK were intent upon burying Iceland. There is more to be said for good neighbours than the EU.

Only when Russia offered a 'geopolitical' loan did the EU and IMF suddenly become Iceland friendly, after much arm-twisting by NATO.

The EU could cut Greece adrift tomorrow, but in the meantime, where would it get funding and oil? Russia and Iran would step in to save poor little Greece.

Good point.. I had forgotten about that Russian offer. The golden rule is that the man with the gold rules. And Russia, China and friends increasingly have the real hard cash. The Western powers either have to match their offers or countries will sign up with the other team.

As nations throughout Asia, Africa and South America have already taken the Chinese cash.

You mentioned Greece, well the Chinese are everywhere in Greece right now. The president of COSCO, 'captain Wei' is a national hero in Greece. After the plans and money the Chinese are spending to expand the ports in Greece, buildup the rail and build a series of warehouses in Greece. With the Chiense plan to use Greece as a trans-shipment point for their products entering Southeastern Europe and North Africa. There is also talk of the Chinese coming in financing a series of mines in Greece.

Share this post


Link to post
Share on other sites

More on Iceland

Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population,

Iceland’s $13 billion economy, which shrank 6.7 percent in 2009, grew 2.9 percent last year and will expand 2.4 percent this year and next, the Paris-based OECD estimates. The euro area will grow 0.2 percent this year and the OECD area will expand 1.6 percent, according to November estimates.

Iceland’s approach to dealing with the meltdown has put the needs of its population ahead of the markets at every turn.

Iceland’s special prosecutor has said it may indict as many as 90 people, while more than 200, including the former chief executives at the three biggest banks, face criminal charges.

http://www.bloomberg.com/news/2012-02-20/icelandic-anger-brings-record-debt-relief-in-best-crisis-recovery-story.html

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.