Wow. I don’t know how many of you already heard of this but, Iceland is bankrupt!
“…the Icelandic government shut down the stock market and seized control of its last major independent bank. That brought trading in the country’s currency to a halt, with foreign banks no longer willing to take Icelandic krona, even at fire-sale rates.”
“Iceland is bankrupt,” said Arsaell Valfells, a professor at the University of Iceland. “The Icelandic krona is history. The IMF has to come and rescue us.”
This is scarry stuff folks, and I wonder how the people of Iceland are coping through this difficult financial turmoil.
You may be wondering how this country got itself into this mess. Well, Iceland’s economic disaster was apparently caused by a “decade-long, debt-fueled binge by the country’s banks, businesses and some private citizens. The banks, while avoiding the toxic mortgage securities that have humbled Wall Street, expanded aggressively at home and abroad. When credit tightened and the krona fell this year, they were unable to finance their debts.”
I think peoples and government better heed the old saying of never stretching beyond your means.
Oh, and before I forgot, just to keep things into perspective we must keep in mind that Iceland’s total population is roughly 320,000. When bigger nations with millions of people go bust then I would be safe to say that Iceland going bankrupt was not just an isolated case. The way I understand it is that Iceland collapsed due to the disproportion between its GDP and external debt.
For more details I’d suggest you checkout this International Herald Tribune article: