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Icelanders Run Out Of Cash To Repay Foreign Debts: Nordic Credit

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http://www.bloomberg.com/news/2013-10-09/icelanders-run-out-of-cash-to-repay-foreign-debts-nordic-credit.html

Iceland’s private sector is running out of cash to repay its foreign currency debt, according to the nation’s central bank.

Non-krona debt owed by entities besides the Treasury and the central bank due through 2018 totals about 700 billion kronur ($5.8 billion), the bank said yesterday. The projected current account surpluses over the next five years aren’t estimated to reach even half of that and will equal a shortfall of about 20 percent of gross domestic product.

The nation faces a “repayment risk of foreign debt by private entities in the economy, who don’t have access to foreign financial markets,” Sigridur Benediktsdottir, head of financial stability at the Reykjavik-based central bank, said yesterday in an interview. “We view this as being exacerbated or made worse by the fact that our current account is actually declining.”

Prime Minister Sigmundur David Gunnlaugsson has said Iceland’s foreign exchange shortfall is “a matter of huge concern” as he tries to scale back currency controls in place since 2008. The government’s biggest challenge is to allow capital to flow freely without triggering a krona sell-off that would cause Iceland’s foreign debt to spike and undermine the nation’s economic recovery.

Taking out loans in a foreign currency.... Another financially savvy move, I'm sure it all made sense at the time.

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Why are these private errors a concern for the nation?

Might depend on the nature of those entities.

If they're just financial entities, that's one thing. And if they're providers of essential services, they become attractive takeover targets. But what if some of them are major employers? Could be less easy/more painful to abandon or replace.

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Guest eight

So some idiots who lent money to an island of puffin farmers aren't going to get paid? Boo hoo.

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So some idiots who lent money to an island of puffin farmers aren't going to get paid? Boo hoo.

Exactly. At some point people are going to have to admit that all this debt that has been created can't be paid back. I have no idea how we have not reached that point yet when it seems so blatantly obvious.

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Exactly. At some point people are going to have to admit that all this debt that has been created can't be paid back. I have no idea how we have not reached that point yet when it seems so blatantly obvious.

So blatantly obvious that they obviously have blatantly forgotten that they blatantly lent to others and obviously scary amount of money elsewhere too which is kinda blatantly obvious by now that it can't be paid back!

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  • 404 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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