Iceland, formerly a very wealthy nation, is now bankrupt. BBC tells personal stories.

[antimatter98]

On Nov 20 BBC radio 4 broadcast this program (audio) about the scene in
one of the world's wealthiest countries, Iceland, after it went bankrupt.

Synopsis:
"Crossing Continents this week investigates the human impact of the economic disaster that has hit the tiny nation of Iceland.
Paul Henley meets ordinary Icelanders, like the Olafssons with their five children and five cats.
Both parents have just lost their jobs and they do not know what they are going to do for money this winter.
He also meets those who have benefited from the crash <...>"

Link to the audio (Real Player):

http://news.bbc.co.uk/media/avdb/news/world/audio/225000/nb/225240_au_nb.ram

Link to the BBC Radio 4 Crossing Continents web site:

http://news.bbc.co.uk/2/hi/programmes/crossing_continents/default.stm

[Elwood P Dowd]

1. Man, what a sad report.

They ran up debt that was 12 times the amount of the annual GDP.

[LaurenG]

2. Kicked and recommended for others to hear.

:cry:

[Doremus]

3. K & R

It would probably behoove all of us to listen to the audio. These are interviews with average people living in the aftermath of Iceland's collapse. This was the fifth richest country in the world until recently. Now there is rampant unemployment and homelessness.

[jbane]

4. I've been there, and it is ...

a country that has what it needs to rebound from this but it may not recover the standard of living they have had.

[Neshanic]

5. I am listening to this now. Horrible situation.

[Doremus]

6. Why are Iceland and the UK not on good terms?

There were a couple of references to it but no further information. :shrug:

[ovidsen]

7. Bad investments

I read in the NYT a week or so that British Police Departments invested their pension funds in Iceland banks because the return was so much better than in British banks.

Then the bottom fell out from under Iceland's banks and the pension funds of British cops went into the toilet.

This may not be the only reason relations between Iceland and Britain are a bit dicey. But it's certainly one of them.

[LaurenG]

8. I believe is was over the Euro and joining the EU

Iceland didn't want to join the EU. (on edit - or not. I think the poster above makes sense).



IceNews - Daily News

International Nordic News
Iceland cannot adopt Euro with joining EU, says Stark

By Chris Bolwig on Feb 23, 2008 in Finance and Business, Iceland

Jurgen Stark, a Member of the Executive Board of the European Central Bank, recently spoke in Reykjavik on the subject of Iceland joining the EU.

According to a report by CEP News, Stark said that Iceland would not be able to adopt the EU currency without first becoming a member of the EU.

“Each and every one of the countries participating in the European monetary union has followed one and the same route towards the adoption of the single currency, based on the principle of equal treatment,” he explained. “A country must first be a member of the European Union before it can adopt the euro.”

Adopting the Euro without joining the EU has been considered a possibility by many in Iceland’s financial sector, primarily due to Iceland’s highly volatile currency.

more


http://www.icenews.is/index.php/2008/02/23/iceland-cannot-adopt-euro-with-joining-eu-says-stark/

[WritersBlock]

9. Greed on the part of local councils, private savers, and others who put their money into Icelandic

banks because of the high returns offered.

We thought we were getting a great deal. Yeah, "we." My husband and I each transferred savings accounts to Icelandic banks earlier this year because it was supposed to be such a good thing.

But the way I see it, we made the choice to do so; no one forced us into it. No one forced anyone else, or any entity, in the UK to put their money in a bank in Iceland, either.

What really pissed in the pudding, however, was when the UK government invoked anti-terror legislation in order to freeze Icelandic assets in the UK when this all happened. Truly a case of adding insult to injury, IMHO.


http://uk.reuters.com/article/domesticNews/idUKTRE4988F020081009

[Cessna Invesco Palin]

15. Just to reaffirm what WritersBlock said...

It was the UK government's actions that really precipitated the bad blood. I can see merit to both sides of the argument, though. At the point when the UK government did this, it didn't seem like the Icelandic government even understood its own goddamn banking laws, and they were saying a lot of stuff that made absolutely no sense at all.

[NNN0LHI]

18. Don't think when the UK used some obscure terrorism law to take Iceland's assets went over very well

[bean fidhleir]

10. This is their chance to socialize their economy. But they probably won't be that smart.

They could say "okay, we're in crisis mode, just like during Viking days. So we're going to socialize everything. Nobody owns anything big anymore, nobody has and debt anymore, everybody gets a share of everything we've got left, and we're all going to work like hell to build our country back up. Those who don't want to play can leave forever. But your wealth stays behind."

But they won't. Even when people go into the crapper, too many can think of nothing but doing the same things that got them into trouble. The only change is that they'll do them harder, or more carefully, or only on Tuesdays, or with a different paint job.

[pitohui]

14. they already had a socialist economy

at least they did 15 yrs ago when my husband was doing some business with them

what happened?

[bean fidhleir]

24. "what happened?"

From what I could read, when this story first broke, what happened is that some people -mostly younger ones with no sense of history- got greedy and thought the good times could never end.

"It Can't Happen Here" seems to be the cry of every soon-to-be-victim in history.

[bean fidhleir]

25. "what happened?"

From what I could read, when this story first broke, what happened is that some people -mostly younger ones with no sense of history- got greedy and thought the good times could never end.

"It Can't Happen Here" seems to be the cry of every soon-to-be-victim in history.

[bvar22]

21. What you describe is NOT "Socialism".

You are describing pure Communism.
BIG difference.

[bean fidhleir]

23. You might be right.

In a disorderly, collapsed situation where capitalist greed has wrecked the country, they have some people who have everything while others have nothing at all. That's not healthy.

So my sense is that they need to treat the whole thing like a round of Monopoly that's ended. Which is to say declare game over, and level the playing field again.

That might be communism, but I can't think of another way out that could possible result in a healthy system. Can you?

Whether they should let the game run under capitalist rules after that (i.e. play another round of Monopoly) would be something for them to decide. Maybe they'd decide that that kind of zero-sum life isn't healthy, but that they can relax some of the strictures. There are lots of possibilities, including making the same mistakes all over again.

[Joanne98]

11. They were living off the Japanese carry trade. They need to diversify.

[Liberal_in_LA]

12. kick and rec

Thanks for posting this. I'd forgotten about Iceland's situation in the banking crisis. DIdn't realize it continued so bad for them.

[Blarch]

13. Milton Friedmans last experiment.

Here is Miltons famous debate with the Socialists of Iceland in 1984 that brought Miltons unregulated free market ideas to Iceland, His ideas were put into place in 1991, 18 years later, they are done.

http://www.youtube.com/watch?v=0-rLKk6qebI

Another one bites the dust from The Chicago School of economics.

[pitohui]

17. was it that long ago?

they were still socialist and provided for all when my husband was involved with a project w. an icelandic firm, honestly doesn't seem like it was as far back as 1991! i was thinking more like 95, how time gets past us!

i knew they had capitalistic endeavors in other countries, this venture was one of them, but as far as we knew, everyone in iceland proper had a social safety net

there were people in a whale factory, where there had been no whale in several years, who were getting a guaranteed income to show up for work and then just play cards

it beats people losing their homes...

they seemed to be horrified at the level of poverty and lack of education in the mississippi delta, where they had the proposed project

[Liberal_in_LA]

16. Ireland: Headed for a similiar fate as Iceland?

Ireland: Headed for a similiar fate as Iceland?

http://allnewsweb.com/page222111.php

Who would have ever imagined that Iceland would be in a virtual state of economic anarchy and revolution. Only recently was this small and rather frozen Island nation the envy of the world. Along came the financial crisis and all that changed almost overnight. All the nation's major banks have collapsed, to be taken over by the government and one third of the Icelandic population risk losing their homes or life savings. This is in large part due to the fact that the bank's debt was many times larger than the Icelandic gross national product and heavily exposed to some of the more toxic loan markets.

Today as usually sedate Icelanders take to the streets in protest demanding that the government resign, a number of prominent economists claim that there is a good chance that Ireland might be the next European nation to hit the skids in a very big way. 'The Irish property market was so severely overpriced, and the level of debt here is sky-high: as people realise they can't eat a house and as investment from the US starts drying the bubble will burst' argues Sean McCarthy a senior economic advisor to the Irish banking sector.'When the property bubble truly deflates here and panic takes over, God help Ireland.' Indeed property prices have fallen dramatically already and consumer spending is down. New houses stand empty and Ireland was the first of the EU economies to go into recession. The problem is that most observers think we haven't even come close to seeing the bottom of the Irish market.

[wartrace]

19. Wait til next year, America will be in the same situation.

Who is going to buy our treasury bills & notes?

[Blue_Tires]

20. ttt

[crispini]

22. k