Let's Buy Iceland!

[Porsche-O-Phile]

If all the Pelicans go in on it, maybe we can buy it. Then we'd all have somewhere to race/work on our cars with impunity from Big Brother. BWAHAHAHAHAHA!!!

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http://www.cbsnews.com/stories/2008/10/07/world/main4508148.shtml

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Iceland Teeters On Brink Of Bankruptcy
Once-Prosperous Island Could Be First "National Bankruptcy" Of Global Financial Meltdown

REYKJAVIK, Iceland, Oct. 7, 2008

(AP) This volcanic island near the Arctic Circle is on the brink of becoming the first "national bankruptcy" of the global financial meltdown.

Home to just 320,000 people on a territory the size of Kentucky, Iceland has formidable international reach because of an outsized banking sector that set out with Viking confidence to conquer swaths of the British economy - from fashion retailers to top soccer teams.

The strategy gave Icelanders one of the world's highest per capita incomes. But now they are watching helplessly as their economy implodes - their currency losing almost half its value, and their heavily exposed banks collapsing under the weight of debts incurred by lending in the boom times.

"Everything is closed. We couldn't sell our stock or take money from the bank," said Johann Sigurdsson as he left a branch of Landsbanki in downtown Reykjavik.

The government had earlier announced it had nationalized the bank under emergency laws enacted to deal with the crisis.

"We have been forced to take decisive action to save the country," Prime Minister Geir H. Haarde said of those sweeping new powers that allow the government to take over companies, limit the authority of boards, and call shareholder meetings.

A full-blown collapse of Iceland's financial system would send shock waves across Europe, given the heavy investment by Icelandic banks and companies across the continent.

One of Iceland's biggest companies, retailing investment group Baugur, owns or has stakes in dozens of major European retailers - including enough to make it the largest private company in Britain, where it owns a handful of stores such as the famous toy store Hamley's.

Kaupthing, Iceland's largest bank and one of those whose share trading was suspended last week to stop a huge sell-off, has also invested in European retail groups.

Thousands of Britons have accounts with Icesave, the online arm of Landsbanki that regulators said was likely to file for bankruptcy after it stopped permitting customers to withdraw money from their accounts Tuesday.

To try to wrest control of the spiraling situation, the government also loaned $680 million to Kaupthing to tide it over and said it was negotiating a $5.4 billion loan from Russia to shore up the nation's finances.

The speed of Iceland's downfall in the week since it announced it was nationalizing Glitnir bank, the country's third largest, caught many by surprise despite warnings that it was the "canary in the coal mine" of the global credit squeeze.

Famous for its cod fishing industry, geysers, moonscape and the Blue Lagoon, Iceland was the site of the Cold War showdown in which Bobby Fischer of the United States defeated Boris Spassky of the Soviet Union in 1972 for the world chess championship. Last year, Iceland won the U.N.'s "best country to live in" poll, with its residents deemed the most contented in the world.

No more.

Despite sunny skies Tuesday after three days of unseasonably cold weather, Reykjavik's mood remained grim - cafes were half-empty, real estate agents sat idle, and retailers reported few sales.

"I'm really starting to get worried now. Everything is bad news. I don't know what's happening," said retiree Helga Jonsdottir as she headed to a supermarket.

Icelanders are also beginning to question how a relative few were able to generate the disproportionate wealth - and associated debt - that Haarde has warned puts the entire country at risk of bankruptcy.

Iceland's reinvention from the poor cousin in Europe to one of the region's wealthiest countries dates to the deregulation of the banking industry and the creation of the domestic stock market in the mid-1990s.

Those free market reforms turned Iceland from a conservative, inward-looking country to one of a new generation of internationally educated young businessmen and women who were determined to give Iceland a modern profile far beyond its fishing base.

Entrepreneurs become its greatest export, as banks and companies marched across Europe and their acquisition wallets were filled by a stock market boom and a well-funded pension system. Among the purchases were the iconic Hamley's toy store and the West Ham soccer team.

Back home, the average family's wealth soared 45 percent in half a decade and gross domestic product rose at around 5 percent a year.

But the whole system was built on a shaky foundation of foreign debt.

The country's top four banks now hold foreign liabilities in excess of $100 billion, debts that dwarf Iceland's gross domestic product of $14 billion.

Those external liabilities mean the private sector has had great difficulty financing its debts, such as the more than $5.25 billion racked up by Kaupthing in five years to help fund British deals.

Iceland is unique "because the sheer size of its financial sector puts it in a vulnerable situation, and its currency has always been seen as a high risk and high yield," said Venla Sipila, a senior economist at Global Insight in London.

The krona is suffering in part from a withdrawal by a falloff in what are called carry trades - where investors borrow cheaply in a country with low rates, such as Japan, and invest in a country where returns, and often risks, are higher.

After watching the free-fall for several days, the Central Bank of Iceland stepped in Tuesday to fix the exchange rate of the currency at 175 - a level equal to 131 krona against the euro.

Haarde said he believed the measures had renewed confidence in the system. He also was critical of the lack of an Europe-wide response to the crisis, saying Iceland had been forced to adopt an "every-country-for-itself" mentality.

He acknowledged that Iceland's financial reputation was likely to suffer from both the crisis and the response despite strong fundamentals such as the fishing industry and clean and renewable energy resources.

As regular Icelanders begin to blame the government and market regulators, Haarde said the banks had been "victims of external circumstances."

Richard Portes of the London Business School agreed, noting the banks were well-capitalized and had not bought any of the toxic debt that has brought down banks elsewhere.

"I believe it is absolutely wrong to say these banks were reckless," said. "Quite the contrary. They were hugely unlucky."

[Noah930]

Originally Posted by Porsche-O-Phile

If all the Pelicans go in on it, maybe we can buy it. Then we'd all have somewhere to race/work on our cars with impunity from Big Brother. BWAHAHAHAHAHA!!!

Did you catch the story in National Geographic from a few months back? I don't think the climate's too conducive to the wrenching and racing you've got in mind, unless it involves studded tires for 3/4 of the year.

Damn shame that the greed of Americans and our investment/banking industry is bringing down those in other countries (and entire other countries, as well).

[Dan in Pasadena]

I've always heard that Iceland should be named Greenland, and that Greenland should be named Iceland because their climates are exactly opposite how they are named. Plus, some of the hottest looking blondes EVER come out of Iceland.

I'm down for buying Iceland. Out of $750B we should kick an extra $5B for it. Gives us a nice northern base. Hell, make it a U.S. protectorate like Alaska and Hawaii once were.

[competentone]

Originally Posted by Noah930

Did you catch the story in National Geographic from a few months back? I don't think the climate's too conducive to the wrenching and racing you've got in mind, unless it involves studded tires for 3/4 of the year.

Damn shame that the greed of Americans and our investment/banking industry is bringing down those in other countries (and entire other countries, as well).

"Global warming" could heat things up and make the climate more tolerable.

As for "the greed of Americans" causing Iceland's bankruptcy -- I don't follow that argument. They are the ones who borrowed the money which they can't pay back now.

If I understand their situation correctly, Iceland's collapse is more like a "micro example" of what will be happening in the U.S.. Everyone, including the government, got too deep in debt and finally the whole system just collapses.

[Noah930]

Originally Posted by competentone

As for "the greed of Americans" causing Iceland's bankruptcy -- I don't follow that argument. They are the ones who borrowed the money which they can't pay back now.

If I understand their situation correctly, Iceland's collapse is more like a "micro example" of what will be happening in the U.S.. Everyone, including the government, got too deep in debt and finally the whole system just collapses.

But the whole system was built on a shaky foundation of foreign debt.

The country's top four banks now hold foreign liabilities in excess of $100 billion, debts that dwarf Iceland's gross domestic product of $14 billion.

I admit not knowing the details of Iceland's financial collapse, but according to the story, there's a large component of the current international financial crisis contributing to the events in Iceland. It doesn't sound like Iceland would be in this predicament right now, if it weren't for the events triggered by the credit meltdown that we've got going on right now (and which seems to have kicked off a domino-effect throughout most of the world, as well). So while we Americans aren't guilty of everything going on in Iceland and the rest of the world, we're certainly a significant contributing factor to others' troubles. At least that's my understanding and reasoning. (Not necessarily guaranteed to be right, mind you.) My definition of American greed refers to not only those individuals in America that have borrowed to buy houses they couldn't afford, but also our financial institutions' betting the collective farm on risky investment strategies based upon those now-failing home loans.

[gassy]

It could be our real Ban Island.

[sammyg2]

The company I work for's stock hit $65 last year. Today it's at $9.33
Three of us at work decided that next Friday we're going to pool our paychecks and buy a controlling interest in the company we work for and fire the board of directors

[cstreit]

Can't we buy something warmer please?

I'm sure one of the caribbean islands will need a bailout soon.

[legion]

We should erect a floating fortress off of its shores.

[Aerkuld]

I've just found some loose change down the back of the sofa so I'll chip in. One condition: the deal dos not include Bjork. She's mad as a box of frogs.

[Gogar]

Do the native women get to stay?

[Aerkuld]

Originally Posted by Gogar

Do the native women get to stay?

Except Bjork.

[gwood]

GM shares closed at $4.76 today. If we bought GM we could use their test tracks and make them manufacture spare parts for whatever we wanted.

[Bill Douglas]

Originally Posted by Dan in Pasadena

Plus, some of the hottest looking blondes EVER come out of Iceland.

Yes indeed. Small and pointy, not big and round.

[jyl]

The crisis has moved well beyond US subprime mortgages.

I am not that well read up on the details, but I think European banks are in danger for reasons that have to do as much with their own lending as with lending by US banks. The most obvious example is the UK banks being hurt by UK residential mortgages, from Northern Rock to Bradford & Bingley. Germany's Hypo is in the commercial property lending business. Fortis I am not clear about, but they seem to have over-extended themselves buying ABN-Amro. Dexia appears to be suffering from its connection to Depfa and thence to Hypo. Admittedly the Swiss banks do seem to be hurt by their US subprime lending, but they made the loans. My impression is that the large European banks were even more leveraged than the US banks. And then there are the markets, like Russia and Brazil, being hurt because of commodity price falls.

If you use the analogy of a forest fire, I think the first spark was in the US (plus the UK, after all Northern Rock went under back in 2007) but has found fuel elsewhere as well. And the European firefighters were slower to act, are less coordinated, and have less firefighting equipment than the US ones.

Hopefully someone knowledgeable like 911teo will chime in.

[tcar]

Originally Posted by Dan in Pasadena

I've always heard that Iceland should be named Greenland, and that Greenland should be named Iceland because their climates are exactly opposite how they are named.

Climate has changed... when they were named, Greenland was farmland. Climate about like Ohio is now. Except for trees, too far north.

[livi]

Never mind Iceland. Please buy the southern part of Sweden instead (Skåne), where I live. We used to belong to Denmark. I would prefer being a banana republic (Pelican republic/Republique de Pelicanique) than listening to the morons from Stockholm.

[onewhippedpuppy]

Sweden and Iceland both have hot blondes. Sweden has Markus and Saab. Advantage Sweden!

[jyl]

Originally Posted by jyl

The crisis has moved well beyond US subprime mortgages.

I am not that well read up on the details, but I think European banks are in danger for reasons that have to do as much with their own lending as with lending by US banks. The most obvious example is the UK banks being hurt by UK residential mortgages, from Northern Rock to Bradford & Bingley. Germany's Hypo is in the commercial property lending business. Fortis I am not clear about, but they seem to have over-extended themselves buying ABN-Amro. Dexia appears to be suffering from its connection to Depfa and thence to Hypo. Admittedly the Swiss banks do seem to be hurt by their US subprime lending, but they made the loans. My impression is that the large European banks were even more leveraged than the US banks. And then there are the markets, like Russia and Brazil, being hurt because of commodity price falls.

If you use the analogy of a forest fire, I think the first spark was in the US (plus the UK, after all Northern Rock went under back in 2007) but has found fuel elsewhere as well. And the European firefighters were slower to act, are less coordinated, and have less firefighting equipment than the US ones.

Hopefully someone knowledgeable like 911teo will chime in.

See this

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3167438/Financial-Crisis-Extreme-leverage-haunts-Europes-banks-as-rollover-crunch-looms.html

[M.D. Holloway]

how about posting some pics of those hot Icelandic babes?