Iceland is bankrupt
Iceland is all but officially bankrupt
From the International Herald Tribune
People go bankrupt all the time. Companies do, too. But countries?
Iceland was on the verge of doing exactly that on Thursday as the government shut down the stock market and seized control of its last major independent bank. That brought trading in the country's currency to a halt, with foreign banks no longer willing to take Icelandic krona, even at fire-sale rates.
As the meltdown in the Icelandic financial system quickened, with the government seemingly powerless to do anything about it, analysts said there was probably only one realistic option left: for Iceland to be bailed out by the International Monetary Fund.
"Iceland is bankrupt," said Arsaell Valfells, a professor at the University of Iceland. "The Icelandic krona is history. The IMF has to come and rescue us."
Prime Minister Geir Haarde, who had warned this week of the threat of "national bankruptcy," said Thursday that Iceland's finance minister, Arni Mathiesen, would be in Washington this weekend for the autumn IMF/World Bank meetings. He declined to say whether Iceland was seeking a rescue package from the international lender.
"We will certainly keep this option open, but we have not yet made a decision," Haarde said Thursday at a news conference.
The IMF managing director, Dominique Strauss-Kahn, said in Washington that he had activated an emergency funding system, last used during the Asian financial crisis of the late 1990's, to help countries in crisis. Though not mentioning Iceland by name, he said: "We are ready to answer any demand by countries facing problems."
Iceland has approached Russia about a loan of €4 billion, or $5.5 billion, to help see it through the crisis, but Haarde said no agreement had been reached.
An IMF intervention in Iceland, which would necessarily involve accepting a series of harsh measures to restore fiscal and monetary stability, would underline the extraordinary reversal in the country's fortunes after a decade-long, debt-fueled binge by the country's banks, businesses and some private citizens. The banks, while avoiding the toxic mortgage securities that have humbled Wall Street, expanded aggressively at home and abroad. When credit tightened and the krona fell this year, they were unable to finance their debts.
In these circumstances, going to the IMF "is probably the only thing Iceland can do," said Richard Portes, an economist at the London Business School.
Events have moved so fast that the full import of national bankruptcy has yet to sink in here. It's happened before, of course, but in places like Argentina and Thailand, not a country that likes to think of itself as close to Europe.
And on an island raked by icy North Atlantic winds and dotted with volcanoes and geysers, where people live with the threat of earthquakes and maritime disasters, few residents seem to be losing their cool over the financial crisis - yet. But some have suffered deep losses, and others are simply bewildered at how things could have gone so wrong so quickly.
"There is a lot of fear in society and there are people who are losing everything," Bubbi Morthens, an Icelandic rock favorite, said Wednesday after singing at an impromptu midday concert in central Reykjavik intended to lift people's spirits.
Like many of his compatriots, Morthens did well when Iceland was riding high, accumulating considerable wealth. But when the government seized control of Iceland's third-largest bank, Glitnir, last month, Morthens said he lost his life savings, which he had invested in the bank's stock.
On Thursday, the government seized Kaupthing Bank, the country's largest lender, effectively completing the nationalization of the banking system after the previous takeover of Glitnir and the No.2 lender, Landsbanki.
Meanwhile trading in the currency froze up Thursday, according to Bloomberg News, citing dealers at Nordea, a big Scandinavian bank. The last trade was made at 340 krona to the euro, Nordea said - less than half what the Icelandic currency was worth at the start of the week.
Haarde said the Central Bank of Iceland had set up a special system to handle currency transactions, so that Icelandic companies could conduct international business.
"We are gradually moving through this crisis," he said, sounding surprisingly unworried for the leader of a country facing economic and financial disaster. "There are still a few issues to resolve but that is the nature of these kinds of things."
Problems with the krona have been at the core of the government's inability to control the crisis. Without a viable currency, there is no way to support the banks, which have done the bulk of their business in foreign markets. There is also no way to bring down inflation or interest rates, both already in double digits before the crisis intensified in recent days.
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Indeed a wonderful International Herald Tribune article, just as we have learned to expect them.
It has a lot of negative "information" about Iceland, but can it refer to its past articles which foretold all these tribulations?
Conveniently, the article forgets to mention the single biggest problem in Iceland's economy: It has no military budget which can be cut! That is tough, but on the other hand that should give a lot of confidence to US readers, or what?
There is of course only one way out for Iceland: The IMF which urgently needs new borrowing clients to fleece because its old ones escaped with the help of neighbours without predatory tendencies. Argentina comes to mind in this connection.
And Iceland should take the same deadly medicine as IMF has prescribed to all its other "patients"!
IMF is only too pleased with the idea:
"Dominique Strauss-Kahn, said in Washington that he had activated an emergency funding system, last used during the Asian financial crisis of the late 1990's, to help countries in crisis".
How short memory do they think we have? There is quite a number of books which have recorded that the "Asian financial crisis" was indeed not a crisis but a financial attack on countries which had been left defenceless because of subversive policies imposed on the victim countries by the World Bank and the IMF.
The Icelanders are intelligent people who have not let themselves be dumbed down like their North American and European neighbours. They have a lot of fresh air to keep their heads cool, they consume a healthy amount of Omega 3 and they can easily see that there is no reason to take the IMF prescription as nobody, including OECD ever diagnosed the symptoms which IMF finds in all its patients and which lead to one treatment that fits all:
"which would necessarily involve accepting a series of harsh measures to restore fiscal and monetary stability"
These IMF people are not in the business of treating economic ills, they are plainly in the business of spreading an unbelievable and false gospel!
The best thing you can say about the IMF is that they are so consumed by their mission to spread an all-destructive gospel that they do not even fear death for themselves which will ensue as they kill or alienate their last client and consequently themselves as the parasites they are!
To my Icelandic friends I want to say:
You are no poorer that you were before. You have done the same kind of international banking as everybody else has. You have abided to the same international rules and standards as everybody else in the industry and you have invested abroad in all the good names, so how come that your portfolio has suddenly become completely rotten?
Maybe you have bought more than your fair share of junk beautifully wrapped up by the highly respected banksters in Wall Street?
Your abundance of energy, human and natural have been left unaffected, there is no reason why your future should be less promising than it appeared last year. You have the strongest democratic tradition in Europe and you are far less likely to succomb to fascism than your neighbour the USA.
Have you possibly entered the turfs of people, who do not necessarily welcome you because you do not belong to their tribe?
Basically you are facing two choices: To embrace your real friends and brothers in the Nordic countries and in Christian Russia or to embrace IMF, the failing US and Zionism and convert to Talmudic Judaism! This is a choice between life and death - literally!
May our true Lord guide you, protect you and bless you!