Iceland is Bankrupt

http://www.itulip.com/forums/showthread.php?t=5738

I don't have a lot of time to post on this, but there seems to be surprisingly little good reporting on it. It appears that the State of Iceland is bankrupt. The value of the krona is in freefall, the Stock exchange is closed and the banks, with vast liabilities many times higher than GDP have been nationalised.

The reaction of other States, in particular Britain, has been fury rather than sympathy, as the Icelandic banks are unable to reimburse the millions of private and public deposits that were made into the British branches of Icelandic banks.

There are a number of very clear parallels between Iceland and Ireland's economic position - low national debt, loans many times GDP, "assets" comprising mainly real estate and commercial investment, much of it in the sinking UK market.

The situation in Iceland is desperate, with many people having lost everything. A large Russian loan has been offered, but it is unclear if this would make Iceland solvent. Perhaps we could use this thread to follow the situation there, and to learn anything we can from it.

The Russians got in quickly. The Icelandic premier said he interprets Gordon Brown's comments as being an attack on Iceland's interests. All they have left to trade is their huge geographical military strategic importance. The issue may now be whether Iceland wil leave NATO. This is a big big deal.

Iceland deserves to be where it is at the moment. Ireland, for all its faults, didn't buy very much into the derivatives ponzy scheme in the way Iceland did. Ironically, the ability to create a property bubble in our own back garden saved us from the excesses of derivative betting. Mind you the fool(s) that paid €195 millions for an acre in Ballsbridge showed we didn't need to enter that particular game.

Iceland was leverage to the hilt on an economy of c. 250,000 individuals, and a very weak currency to boot. It then decided to start betting on the CDS market as well and sought international capital in the form of individual deposits to fund their involvement in the derivatives markets. I can fully understand why the UK is angry, although it is a bit like the kettle calling the pot black.

Iceland's made its own bed and whoever gets into bed with them now will extract their pound of flesh. I imagine the EU could fund Iceland but with some tough caveats on the economy, but the political will of both parties is stretched at the moment. I expect calmer heads to prevail once the stock markets settle this week and the new capital starts to flow into European beds. The EU, imo, is not about the let Russia slap bases in between the EU and North America.

Rocky

IMO The EU should seek to help Iceland. The Geopolitical consequence of surrendering the north Atlantic are too big a risk. That said I do think it is high time we started to properly normalise relations with Russia. I would sooner do business with the Russian Mafia than an American Bank or financial institution.

Squire wrote:Rocky

IMO The EU should seek to help Iceland. The Geopolitical consequence of surrendering the north Atlantic are too big a risk. That said I do think it is high time we started to properly normalise relations with Russia. I would sooner do business with the Russian Mafia than an American Bank or financial institution.

I agree and I have to believe the EU won't let the Russians gain influence. Given the trillions in new capital being talked about by various govts, bailing out little old Iceland will cost peanuts.

A bit of hyperbole on the mafia thingy, but I get your drift. tomato or tomato, or as that US VP once wrote potatoe.

Majority of Iceland's MPs want to join the European Union now anyway, according to Deutsche Welle. As various Commissioners have stated, Iceland could become a member of the Union within one year of application though membership of the €uro would obviously come much later.

I would be with Squire on it, membership of the Union for Iceland should be very much encouraged.

What about Russia? Would they join too?

cactus flower wrote:What about Russia? Would they join too?

I doubt they would want to, and I doubt they'd get in with their track record on democracy.

Don't think Russia has any interest in joining the European Union, cactus. Unless you have any information which you want to bring to the issue.

If they want to join and comply with our requirements over a sustained period, in regard to economic policy, democracy, the rule of law and the protection of minorities outlined in the Copenhagen Criteria, then why not.

Seems to be a very hypothetical question though.

Never say never, who knows how the wheel will turn in the next 20 years. I can see nothing but benifit coming from greater cooperation with Russia. Positive engagement is needed.

we'll swap the cod for loans to bail out their economy.

where england failed, we'll succeed!!!!

Fishing policy is one of the greatest barriers to their membership.