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  1. #1
    Glowy Goopy Goodness The_Liquid_Laser's Avatar
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    Default What is happening in Iceland?

    According to this article:
    Iceland's Government Founders Amid Voter Ire Over Crisis - WSJ.com

    The government in Iceland has collapsed, and the government in Belgium has recently collapsed as well. I realize that Iceland's economy relied heavily on banking, but having a government collapse in a nation with a modern economy seems shocking to me. There are a lot of European posters on this board, and I'd like their perspectives on this particularly. Is this not as serious as it seems, or is it a severe event for all of Europe? We don't receive a lot of world news in the US, so it is hard for me to put this event in proper perspective.
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  2. #2
    Reason vs Being ragashree's Avatar
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    Iceland has a tiny population of about 3 hundred thousand (I believe), is heavily dependent on imports to maintain one of the highest standards of living in the world, has one of the highest costs of living in the world as a result, and doesn't have anything to sustain it all except fish and tourism and (until recently) banking, it seems.

    Probably it's even more significant that (financed a lot of the time by their own banks) Icelandic companies during the recent period of economic growth were going on a huge buying spree throughout Europe. Several of the largest store chains in Britain, for example - a country with a population about 200 times that of Iceland, have recently come under Icelandic ownership, along with numerous other large companies there and in the rest of Europe (and several of Britain's longest established and largest chains have been closing all on their own recently due to the current economic climate).

    Oh, and the British government was pressurising the Icelandic one over a sum of around a billion £'s that Uk local authorities had invested in Iceland's failed banks, which our dear government was considerately insisting that they secure in its entirity. Presumably by gifting them the next ten years cod harvest, as I don't think they have a lot else now. I don't know what became of that, but the Icelanders were pretty pissed off about it.

    I think they simply overreached themselves - it has been simply more pressure than such a small and limited economy could take. I remember their prime minister (or president, whatever) saying something to that effect a month or two ago. It's really not surprising...
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  3. #3
    Glowy Goopy Goodness The_Liquid_Laser's Avatar
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    So, do you think that Iceland's situation will not have a significant impact on the rest of Europe because of its relatively small population?
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  4. #4
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    I'm pretty sure I said this over a month or two ago. If anyone's just now hearing about it, then you should know how good your attention to the news is... or how good the news you listen to is.

    Iceland collapsed and broke down in riots. The same sort of thing is/has been happening in other countries since the beginning of the crisis. Much of the world has it much worse than we do, FOR NOW. In fact, the UK is in some deep shit at this point. All of their government intervention to try and control the economy by flooding it with money (oh gee, does this sound familiar to anyone???) is backfiring on them big time. They are due to go under, which could have a domino effect in Europe. In the mean time, they are swiftly beginning to nationalize all their banks like a bunch of loons.

  5. #5
    Reason vs Being ragashree's Avatar
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    God knows :confused: There are a lot of things to consider. I do think it's probably a symptom of the overall disease, which has affected them particularly badly because of their inherent vulnerability at present. Logically, their economy really is too small a proportion of the overall European one to have any significant impact... But the problem, as always, is not with concrete real world issues (usually a minor factor in economic events so far as I can see) but with collective human psychology, which with most people being the sheep that they are is a fragile and unpredictable enity at the best of times - it never seems to take much to lead them en masse down the path to their own destruction (and mine too unfortunately). Iceland is a fairly redundant organ, a sort of second appendix in the collective European economic organism, and I don't think that even problems with the substantial Icelandic holdings overseas should have more than a marginal effect on the much larger economies of other countries - certainly not more than they can absorb.

    The problem, I think, is that an event such as the government and economy of a formerly stable and prosperous country collapsing in this way is going to shake people's confidence, particularly when it recieves a nice healthy dose of the usual hysterical and speculative media coverage. If enough people are convinced that the Icelandic situation need cause problems elsewhere, then the prophecy could become self-fulfilling and the infection will indeed spread. I really hope the media doesn't go overboard on this one (no one usually cares about Iceland, except themselves); then we might get off lightly here, as we should. I feel sorry for them, as I think they're going to suffer badly here; but they seem to have made some even more stupid economic descisions lately than ourselves and the Americans, which is quite an achievement really :rolli: If they couldn't see what they were getting themselves into, they have only themselves to blame.
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  6. #6
    Reason vs Being ragashree's Avatar
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    In fact, the UK is in some deep shit at this point. All of their government intervention to try and control the economy by flooding it with money (oh gee, does this sound familiar to anyone???) is backfiring on them big time. They are due to go under, which could have a domino effect in Europe. In the mean time, they are swiftly beginning to nationalize all their banks like a bunch of loons.
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  7. #7
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    Quote Originally Posted by ragashree View Post
    The problem, I think, is that an event such as the government and economy of a formerly stable and prosperous country collapsing in this way is going to shake people's confidence, particularly when it recieves a nice healthy dose of the usual hysterical and speculative media coverage. If enough people are convinced that the Icelandic situation need cause problems elsewhere, then the prophecy could become self-fulfilling and the infection will indeed spread. I really hope the media doesn't go overboard on this one (no one usually cares about Iceland, except themselves); then we might get off lightly here, as we should. I feel sorry for them, as I think they're going to suffer badly here; but they seem to have made some even more stupid economic descisions lately than ourselves and the Americans, which is quite an achievement really :rolli: If they couldn't see what they were getting themselves into, they have only themselves to blame.
    This logic is flawed. The big wigs in the financial world, and most anyone who deals with the economy and government are WELL aware of what's going on around the globe, UNLIKE the general public. The general public wont care so much whats going on around the globe as much as what they feel at home, but the people on wall street, economists, and those involved in global trade already know this stuff anyway, so increased media coverage wont do anything besides turn the mainstream media into something that is actually USEFUL AND INFORMATIVE. But I wont hold my breath on that happening....

  8. #8
    Senior Member matmos's Avatar
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    What's interesting is that Iceland was, up to a year ago, one of the cosiest, wealthiest and least militant of countries. It has been made bankrupt by the actions of a few high-flyers (who have left enormous debts - the banks, all 3 bust, owed over 10 times the GDP - for the man in the street to pick up).

    I've known Icelanders and they are very pround of how socially advanced they are. What sticks in their craw is the *injustice* of this predicament. The UK used anti-terror legislation to seize Icelandic assets in Britain - a humiliation they probably didn't deserve.

    The most politically placid of peoples are now on the march, in their own unique way.

    To cross refer with Jim Rogers' comments about the UK being "finished" []FT.com / UK - Jim Rogers: ‘UK has nothing to sell’ because the oil is gone and the City has imploded, Iceland has very little that it can trade on it's debt. Except fish.

    Risen has made an excellent point by connecting the civil unrest to the mess we're in.

    If thousands of previously mild-mannered Icelanders can take to the streets, watch out.

    Looking from here in the UK, the financial disaster resembles a giant, unstoppable multiplier principal in reverse; the deleveraging has a long way to go. At least we have some control over financial policy. The Germans and the Italians do not have a plan B or C.

  9. #9
    Queen hunter Virtual ghost's Avatar
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    Quote Originally Posted by The_Liquid_Laser View Post
    According to this article:
    Iceland's Government Founders Amid Voter Ire Over Crisis - WSJ.com

    The government in Iceland has collapsed, and the government in Belgium has recently collapsed as well. I realize that Iceland's economy relied heavily on banking, but having a government collapse in a nation with a modern economy seems shocking to me. There are a lot of European posters on this board, and I'd like their perspectives on this particularly. Is this not as serious as it seems, or is it a severe event for all of Europe? We don't receive a lot of world news in the US, so it is hard for me to put this event in proper perspective.

    As it is said Iceland is too small to have a major impact.
    Population of Iceland is 0.3 million and pupulation of Europe as continent is around 800 million. As for Belgium they have inner divide for a long time this is not created by a current crisis it is something that lasts for a long time.

    In Croatia things are not so drastic as in other parts of the world.
    Since we did not connect with others that much when it comes to economy.
    Some people say that maybe we will even have a slight but observable growth.

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