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The Economic Collapse of Iceland – What is Going On?

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  • Thu, Oct 30, 2008 - 08:30pm

    #1

    KKPSTEIN

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    The Economic Collapse of Iceland – What is Going On?

Does anyone else think it odd that there is not a lot of media coverage of what is going on with Iceland right now?  Considering that almost overnight, the country went from being quite a prosperous nation to now looking for handouts from Russia.  How do you think they will stabilize their currency?  The so-called black market which is actually the “free market” will become more prevalent.  It is what will be what will eventually happen to all fiat currency based nations will eventually have to face they their currency collapses, yet no one seems to be talking about it

 

  • Thu, Oct 30, 2008 - 11:22pm

    #2
    rkopf

    rkopf

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    Re: The Economic Collapse of Iceland – What is Going On?

I copied this post from here. Its from october 28th:

 

 

– The Central Bank lowered interest rates last week from 15,5% to 12%.
However, because of agreement with the IMF before the weekend, interest rates were raised to 18% today.
This means companies and individuals, that are already struggling to
pay loans, will suffer even more. No new loans at all from anywhere.

– The IMF agreement last week gives us $2.1 billion to prop up our
currency. This is not enough, and we’re seeking an extra $4 billion
from other countries, the Fed, ECB and Scandinavian CB’s.

– It is estimated that economic contraction will be around 10%.

It is estimated that 20% of companies will not be able to pay payroll this month. I have a feeling a lot of companies are just "ghost" companies, people still working, but the company is essentially bankrupt.

– Massive layoffs in the construction industry, and the banking sector of course.

Inflation roared to 15,5% this month, expected to rise.

– Our currency is still worthless and still not traded overseas.
Although there was a news today that hinted there was some trade with
the ISK, where it was less than half the value that our CB claims.

– I must note that there are no shortages (yet) of food, fuel and medicine, or much else I’ve noticed.
But if current situation continues then we could see some shortages,
but not of necessities. However, because of rationing of foreign
currency other importers are not able to import new supply of e.g.
clothes, industry material etc. I expect many companies not being able
to continue their operations because of import restrictions.

The sovereign state has not yet defaulted on any loans, despite statements in the foreign media. It requires a lot of help to get back on it’s feet, and seems to be getting it soon.

– A lot of families are "stuck" in their homes, cannot sell, cannot
move, cannot buy. The mortgage debt is around 10-40% higher then the
value of their homes. Home value is expected to drop significantly in
the coming months.

– The government owns all the banks, and indirectly owns all the media,
and all the debt of the people. With taxes and debt payment the people are in a state of servitude to the government. Not many realize this.

– Some conspiracy theories are on the icelandic forums that the government is censoring the media, directing them to mitigate the news. They own all the media after all!

– Many are considering strategies out of this, e.g. husband and wife
divorcing and allowing one of them to default on the debt and go
bankrupt, while the other one keeps a clean slate. Some are thinking
about fleeing to another country.

– The government has been able to offer a temporary freeze on payments
on mortgages, 4-6 months. The depression is expected to last at least 1
year, maybe 2 years.

– There are some protests, but they seem to be minor. There is general
calm, but still anxiety, frustration, over the situation. I expect
things to get a lot worse when people lose their jobs and have nothing
better to do than to protest.

I think the coming friday/monday is the big reveal moment, e.g. who
pays the payroll and who doesn’t. Just then we’ll realize how serious
the situation is. I expect thousands to lose their jobs.

How does once a free-market capitalist system, with the highest
standard of living in the world, the most freedom of the press in the
world, the happiest people in the world and least corrupt people in the
world turn into a Orwellian fantasy almost overnight is beyond me.

  • Sat, Nov 01, 2008 - 07:33pm

    #3

    KKPSTEIN

    Status Bronze Member (Offline)

    Joined: Oct 20 2008

    Posts: 77

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    Re: The Economic Collapse of Iceland – What is Going On?

Hi rkopf, Thanks. Odd that there’s not a lot of media coverage on this now. I’m interested to find out how Iceland will proceed with this. Will their standard of living go down. Is this just the beginning and much worse things are to come?
“- Some conspiracy theories are on the icelandic forums that the government is censoring the media, directing them to mitigate the news. They own all the media after all!”

Yikes! That explains why we haven’t heard much about it. Iceland does have the reputation for being such a free society, progressive politics, etc. Is it too late to back the currency with silver or gold?

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