The Collapse in Iceland
Iceland, like various other countries, has recently had to bail out a major bank. And like other countries, it looks like there may be more bank failures on the horizon. But where Iceland differs from other countries is that it’s tiny — fewer than 300,000 people live there — so that even though it’s a prosperous country, it simply doesn’t have very much money in the aggregate. And while its banks aren’t huge, they are quite large relative to the overall size of the Icelandic economy. Consequently, Iceland’s bank nationalization is leaving the country as a whole in need of a bailout.
Financial problems aside, Iceland’s one heck of a nice country. Absolutely beautiful and blessed with abundant reserves of puffins, hydropower, fish, and Bjork. Ultimately, taking over Iceland could be an excellent long-term move for a great power on the rise. Maybe China wants a new colony? After all, the US shut down the Keflavik Naval Air Station last year so it’s a wide open field.
UPDATE: More here from the Observer. Joking aside, the situation is quite serious: “Yesterday people were buying up supplies of olive oil and pasta after a supermarket spokesman announced on Friday night that they had no means of paying the foreign currency advances needed to import more foodstuffs.”
39 Responses to “The Collapse in Iceland”
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October 5th, 2008 at 1:39 pm
Can’t the US take over Iceland? Don’t they have an abundance of ice as well? That could come in handy.
October 5th, 2008 at 1:42 pm
“Yesterday people were buying up supplies of olive oil and pasta after a supermarket spokesman announced on Friday night that they had no means of paying the foreign currency advances needed to import more foodstuffs.”
At least they’ll die eating well.
In America, folks would buy up Wonder Bread and mayo.
October 5th, 2008 at 1:44 pm
“Can’t the US take over Iceland? Don’t they have an abundance of ice as well?”
Greenland has the ice. Iceland has the green.
It’s the most blatant case of false advertising I’ve ever seen.
October 5th, 2008 at 1:46 pm
It’s the most blatant case of false advertising I’ve ever seen.
Not to be equaled until they made ‘The Never Ending Story’
October 5th, 2008 at 1:51 pm
Do not forget that Icelanders also have the highest total fertility rate in Western Europe, at 2.07 births per woman. Go Iceland!
October 5th, 2008 at 1:55 pm
Even on Bjork is more than an abundance, it’s a gross over-supply!
October 5th, 2008 at 2:07 pm
When describing the great things about Iceland, let’s not forget their second most popular musical artist, the amazing Sigur Ros! Any country that can give birth to those guys is okay in my book!
October 5th, 2008 at 2:15 pm
Please please let Ireland be next!
October 5th, 2008 at 2:39 pm
According to Harper’s, maybe Iceland isn’t quite so perfect.
http://harpers.org/archive/2008/10/0082200
October 5th, 2008 at 2:55 pm
Rather than invade, maybe China could use a sovereign wealth fund to buy the country. They got trillions of US dollars they’ve got to use somehow, right?
Only problem is they might have to outbid the various Arab petro-sheiks.
October 5th, 2008 at 3:05 pm
Dubai should buy Iceland cause if this global warming thing proves true it could be a great escape. You might even be able to flood various parts of the country with rising seawaters to replicate that palm tree thing. However some people have suggested that it is very vulnerable to zombie infestation so that would need to be factored in the price.
October 5th, 2008 at 3:31 pm
Sigur Rós can save Iceland’s economy.
October 5th, 2008 at 3:49 pm
More seriously, this may drive Iceland into the arms of the EU finally. So far they’ve enjoyed the benefits of associating with the EU without becoming a member. A crisis like this might tip them into the Euro-zone as a refuge. (If thinga get really bad, Norway and Switzerland, the other EU holdouts, could follow as well.)
October 5th, 2008 at 9:45 pm
Sigur Rós can save Iceland’s economy.
I recall that at one point ABBA was the leading contributor to Sweden’s trade balance, bigger than Volvo.
October 5th, 2008 at 10:51 pm
If I recall correctly Iceland basically treated the U.S. enlisted personnel at Keflavik like caged animals; something about cultural purity (i.e. keeping the non-white folks out of the local gene pool). Too bad we don’t need your stinking base anymore!
October 5th, 2008 at 11:12 pm
Actually, when the Norse first came to Greenland during the Medieval Warm Spell, Greenland probably was greener than Iceland. (Most of Iceland is volcanic wasteland.) Birch forests once existed on Greenland and Iceland, but over-cutting and the Little Ice Age wiped out most of Iceland’s forests and all of Greenland’s. Iceland’s climate was less affected since it’s warmed by the Gulf Stream.
October 6th, 2008 at 12:57 am
Bob Weber – when the Norse arrived about 60% of the land was covered with vegetation. Only 25% is now. Most of the degradation came from over-grazing – the Norse reliance on sheep and goats destroyed the the plant life and permitted the thin topsoil to wash away. Much of what now appears to be volcanic waste was once covered in heather.
October 6th, 2008 at 5:03 am
This weekend the economic crisis gripped Europe.
On Thursday Ireland became the first state to guarantee deposits in all its six major banks. It may extend that to foreign banks operating here. There’s been some push-back from the EU over competition law – obviously this makes the Irish banks an attractive proposition.
Ironically, this assertion of national sovereignty by Ireland may make the public more trusting of the government and increase support for the Lisbon Treaty.
Anyway, over the weekend the German government did something similar for savers in that state to prevent the collapse of a major mortgage lender. The French back BNP Paribas took over the Belgian and Luxemburg operations of Fortis (the tottering Benelux bank). The Netherlands had already nationalized its operations there. There was a meeting of the big EU players over the weekend, pledging to establish a world regulatory system.
The British are talking about recapitalization of their banks with state money, someting akin to the US bailout I suppose.
Iceland is only a symptom of a larger problem. Probably most European states will follow Ireland’s lead.
October 6th, 2008 at 7:07 am
If there is one country in the world the Bush admin cannot be accused of wanting to take over, it’s Iceland. The Bush admin closed the US base there in 2006.
The Icelanders didn’t want us to go, and are a little annoyed about it.
October 6th, 2008 at 3:26 pm
Why does everybody mention Bjork and not the much more talented and aurally pleasing Sigur Ros?
October 6th, 2008 at 7:53 pm
Late on this subject…
I just watched the sigur ros heima video.
My god.
The band playing in iceland locales, a perfect marriage of sound and vision.
Se Lest!
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