The Crisis in Iceland: Every Bubble Ends in Rubble
A friend asked me at brunch recently about the situation in Iceland. Here is a commentary:
The small nation of Iceland–population 320,000–can’t produce much of anything that is in demand in the international markets. During the 60s and 70s Icelandic Airlines had a pretty good business running the cheapest flights you could find between the US and Europe, but that is long in the past. They do catch fish out of the dwindling North Atlantic fisheries, and tourists show up who appreciate the stunning natural beauty of a landscape with geysers, hot springs, and an abundance of wilderness hiking. But that’s about it.
Technologically the Icelanders are highly competent, which helps them produce sufficient geothermal and hydroelectric energy to produce their own electricity.
During the worldwide explosion of high finance, particularly during the early to mid-2000s, they became investors, applying their skills as robust ex-Vikings to working the world’s financial markets. By big-time borrowing from European banks, including British ones, they were able to leverage their credit into substantial stock and bond holdings. Iceland was once one of Europe’s poorest nations, but now it began to feel and act rich.
Unfortunately, when the world’s financial system tanked in 2008-2009, Iceland fell hard and fast. The investors lost not only their shirts but also their thermal underwear, and their creditors–led again by Britain–found them in default. With the banks going, well—bankrupt–and the Icelandic government taking them over, the creditors naturally looked to the government to make good on the nation’s debts. The government approached the International Monetary Fund for bailout loans, with the IMF, as is its wont, expecting them to raise taxes and cut public services in order to free up money.
Since Iceland is not part of the EU, they have a certain ability to resist and to tell Britain et.al. “up yours,” and that is pretty much where it stands. Economically they are back to pondering how to support what had become one of the most prosperous lifestyles in the world, since fish and tourism don’t quite do it for a modern state. Iceland is also looking to the other Nordic nations for financial help and is trying to get outsider oil companies to search its territorial waters for petroleum deposits.
Nothing can hide the fact that Iceland remains in serious financial trouble with its sovereignty deeply compromised. The Icelanders have also become something of heroes to progressives who like to see someone stiffing the international bankers, or at least wanting to. But nothing can change the fact that Iceland is an object lesson in what can happen to a nation that hangs its prosperity and its future on a financial bubble.
Every bubble ends in rubble. At least Iceland now has a chance to look within to its own human and natural resources for salvation.
In January 1986 Cook became the first NASA official to testify publicly on the space agency's prior knowledge of flaws in the solid rocket booster O-ring joints that destroyed Challenger and took the lives of its seven astronauts. He told his story in the book Challenger Revealed, published in 2007. Publisher's Weekly wrote of the book: "Easily the most informative and important book on the disaster."
THE UNFINISHED INFAMY.
RICHARD AN EXCELLENT ARTICLE – BUT, AS WE CAN SEE FROM JOHN RUSKIN c.1885 NOTHING IS NEW – INDEED IT IS THE ULTIMATE
INFAMY!
RUSKIN:-“But to what extent the adoration of the Usurer, and the slavery consequent upon it, has perverted the soul or bound the hands of every man in Europe, I will let the reader hear, from authority he will less doubt than mine : -
Letter from Paris Correspondent, “Times” 30th January, 1885.
“Financiers are the mischievous feudalism of the 19th century. A handful of men have invented distant, seductive loans, have introduced national debts in countries happily ignorant of them, have advanced money to unsophisticated Powers on ruinous terms, and then, by appealing to small investors all over the world, got rid of the bonds. Furthermore, with the difference between the advances and the sale of bonds, they caused a fall in the securities which they had issued, and, having sold at 80, they bought back at 10, taking advantage of the public panic.
Again, with the money thus obtained, they bought up consciences, where consciences are marketable, and under the pretence of providing the country thus traded upon with new means of communication, they passed money into their own coffers. They have had pupils, imitators, and plagiarists ; and at the present moment, under different names, the financiers rule the world, are a sore of society, and form one of the chief causes of modern crises.
“Unlike the Nile, wherever they pass they render the soil dry and barren. The treasures of the world flow into their cellars, and there remain. They spend one-tenth of * “Cash,” I should have said, in accuracy not “wealth.” their revenues; the remaining nine-tenths they hoard and divert from circulation. They distribute favours, and are great political leaders. They have not assumed the place of the old nobility, but have taken the latter into their service. Princes are their chamberlains, dukes open their doors, and marquises act as their equerries when they deign to ride.
“These new grandees canter on their splendid Arabs along Rotten Row, the Bois de Boulogne, the Prospect, the Prater, or Unter den Linden. The shopkeepers, and all who save money, bow low to these men, who represent their savings, which they will never again see under any other form. Proof against sarcasms, sure of the respect of the Continental Press, protecting each other with a sort of freemasonry, the financiers dictate laws, determine the fate of nations, and render the cleverest political combinations abortive. They are everywhere received and listened to, and all the Cabinets feel their influence. Governments watch them with uneasiness, and even the Iron Chancellor has his gilded Egeria, who reports to him the wishes of this the sole modern Autocrat.” The Times Dated January 30th, 1885.
Yours sincerely
Comment by David M Pidcock on June 2, 2010David Pidcock