Till debt us do part

"An island victim of the global credit crunchICELAND'S central-bank governor, David Oddsson, recently gave a gloomy speech, calling conditions ?harsh and often stormy?. He said the ?headwinds? were not going to ?wash away on the outgoing tide?. Mr Oddsson's meteorological metaphors came at a moment when Iceland's much trumpeted foray into world markets was tainted by reports of financial disaster. In brief, the Icelandic economy is in trouble, thanks to a huge amount of foreign debt incurred by its banks. The population of Iceland is just over 300,000. Except for sheep, fish and dairy products, virtually everything consumed on the island is imported. The current-account deficit is enormous (though the government's budget is in large surplus). To finance it, the island's three big banks?Landsbanki, Glitnir and Kaupthing?have borrowed freely on the international capital markets, stretching themselves far beyond their modest depositor base at home. ..." (2008-4-24)

Read more...