Iceland Shrinks 8% as Prices Increase 11% in Deepest Recession

[Joanne98]

Source: Bloomberg

Oct. 12 (Bloomberg) -- Arni Hallgrimsson lost his job as a public relations consultant when Iceland’s three biggest banks collapsed last year, putting him out of work for the first time since 1980. After a stint cleaning the docks at a whaling station during the summer hunt, he’s unemployed again.

“Nightmares come to an end when you wake up, but this one just goes on and on and on and on,” the 53-year-old father of three said at his home in Reykjavik, Iceland’s capital. “I’ve applied for many jobs that fit my profile. Sometimes I’ve been on the short-list, but eventually not been offered the job.”

A year after the banking crisis brought Iceland to the brink of bankruptcy, the island nation is mired in the deepest recession among advanced economies. The stock market has lost 97 percent of its value, and more than 780 companies have buckled under the weight of foreign currency loans as the krona plunged. Consumers refuse to borrow at Europe’s highest interest rates, and international banks reject requests for new financing.

Prime Minister Johanna Sigurdardottir, who took office in February, pinned hopes for a recovery on the International Monetary Fund after Kaupthing hf, Landsbanki Islands hf and Glitnir Banki hf racked up $80 billion in debt, 16 times Iceland’s economic production. Now she says the economy may implode again as a dispute over Icelandic savings accounts held by overseas depositors delays a promised $5.1 billion bailout.

“It’s been a year since all hell broke loose and there hasn’t actually been much done to ease the situation,” said Almar Gudmundsson, secretary general of the Federation of Icelandic Trade, which represents importers, exporters, wholesalers and retailers. “We don’t think that we as a nation are doing enough to make the wheels get going again.”


Read more: http://www.bloomberg.com/apps/news?pid=20601109&sid=awXzaHHx8T6M

[GodlessBiker]

1. The country is shrinking 8%? Is it global warming or something?

[rfranklin]

2. This is another sign that points toward another downturn in the U.S.

while the U.S. Treasury still has the ability to paper over the panic of '08 with Monopoly money printed at an exponential rate, it's only a matter of time before someone pulls back the curtain to expose this Oz-like deception. Kablooey! and we are all screwed.

[xchrom]

3. i feel bad for us -- and i feel bad for iceland. nt

[paulsby]

14. icelend is a very cool country

no pun intended.

i love their warrior mentality. they still take great pride in viking ancestry.

some of the greatest strength athletes in the world are scandinavian and icelandic.

magnus ver magnusson comes to mind.

or magnus samuelson (swedish)

the latter would famously scream "I AM A VIKING" upon completing some tremendous feat of strength.

i also think it's kewl that there are so many kick-ass strength athletes from sweden, which puts a lie to any rightwinger that tries to claim socialism creates a society of mushy, weak people.

VIKINGS RULE.
http://www.youtube.com/watch?v=3G2zPqjFi88


disclaimer: i'm a competitive strength athlete, so i have a special love for these guys. but not in a gay way. not that there's anything wrong with that :)

[Lydia Leftcoast]

4. Iceland basically turned itself into a casino for European investors

Unfortunately, while it has a highly educated population, it has no industries except fishing, farming, and tourism, so there was really nothing to back up its economy.

In other words, it drank the neoliberal, free trade Kool-Aid and neglected its domestic economy in favor of get-rich-quick schemes involving "paper entrepreneurism."

[adamuu]

6. This matches my understanding as well.

ty for posting.

[wuushew]

10. They also have aluminum smelting

n/t

[alfredo]

11. I guess they should melt down that Milton Friedman statue and

use the metal for something worthwhile.

[Hawkowl]

5. No difference between Iceland and the US

Our economy is very much on the same tragictory (sp) as Iceland's. Our banks are insolvent and Bernake is printing money fast enough to melt the printing presses. However, since our banks are the source of this criminal tsunami, it will take a little more time for the tsunami to return to shore. Right now there has been an enormous earthquake (fall of 2008) and the tide of economic destruction has rolled out of the epicenter of NYC towards distant shores, sucking the waves away and leaving us all to marvel at the unprecedented low tide in front of us. This is the most dangerous time when the imprudent are wandering heedlessly on the beach unawares that the unprecedented outflow will return in unmitigated fury as the tsunami finally returns with Trillions upon Trillions of dollars of loan defaults wiping away our banking system.

The earthquake has happened. The tsunami has been released. Its return is imminent.

[Blue_Tires]

7. +1

[Mudoria]

17. There really is no difference...

Other than a larger, wealthier, more diverse economy, major exporter, still one of the largest manufacturing nations in the world. Other than that, there is no difference :eyes:

[apnu]

8. If Iceland gets money from the IMF then they're gonna be fucked forever. Look at Jamaica. (nt)

[Lydia Leftcoast]

9. Yes, if past trends hold, the IMF would probably tell Iceland

to slash its social safety net, open its markets to cheap imported fish and agricultural products, and let U.S. companies set up sweatshops to make Icelandic sweaters by machine.

I hope the people and government of Iceland are smart enough to tell the IMF where to go.

[many a good man]

12. You forgot about their secret weapon

Bjork to the rescue!

[Selatius]

13. In the past, the IMF would rape entire nations by demanding they privatize their resources.

They demanded that as conditions for IMF loans.

Iceland is in a vulnerable position. The IMF could easily crush what remains of Iceland's economy; it has that country in the palm of its hand at this point.

[JVS]

15. It's like the poetic edda says

Among Fitjung's sons saw I well-stocked folds,--
Now bear they the beggar's staff;
Wealth is as swift as a winking eye,
Of friends the falsest it is.

Cattle die, and kinsmen die,
And so one dies one's self;
But a noble name will never die,
If good renown one gets.

Cattle die, and kinsmen die,
And so one dies one's self;
One thing now that never dies,
The fame of a dead man's deeds.

[eilen]

16. The Eddas Rock nt