Saturday, December 06, 2008

Iceland's prosperity meets reality

Due to its name, it's a land that is more likely known for its glaciers. But it seems the perpetual lava flows are winning the day.

If you think the US has it bad, read about the meltdown being experienced by Iceland.

Jointly owned by the NYTimes and WaPo, the International Herald Tribune* reported on December 1:

Thousands of Icelanders marked the 90th anniversary of their nation's sovereignty with angry protest Monday, and several hundred stormed the central bank to demand the ouster of bankers they blame for the country's spectacular economic meltdown.

Tiny Iceland has seen its banks and currency collapse in just a few weeks while prices and unemployment soar — leaving a country regarded as a model of Scandinavian prosperity in a state of shock...

Further into the article:

Anti-government protests have been growing larger and angrier since Iceland's three main banks collapsed in October under the weight of huge debts amassed during years of rapid economic growth.

And does this remind anyone of America?

Since then the value of the country's currency, the krona, has plummeted. Icelanders who grew used to buying houses and cars with easily available foreign-currency loans now struggle to repay them.

How long before this happens here?

The cost of everyday goods is skyrocketing — furniture retailer Ikea hiked its prices by 25 percent last month.

Brace yourselves! I still agree with Ol' Blue Eyes. The best is yet to come. But I'm expecting a bit of turbulence before we get there.

Tim White

* The IHT was a staple for me when I studied in Paris in the spring of '93.

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