Iceland

[John]

Poor, sweet l'il ol' Iceland is facing a major crisis right now, as
the British, the Europeans and the IMF turn the screws on Iceland, as
vengeful punishment for the same debauched, depraved, abusive use of
credit as everyone else. The only difference is that Iceland got
caught, when its banks defaulted last October, following the collapse
of Lehman Brothers.

The vengeance being delivered to Iceland gives us an idea of the kind
of vengeance that China will deliver on the U.S., when the continuing
exponential growth of public debt finally causes some kind of
international financial and U.S. dollar currency crisis.

** Iceland begs for mercy as Europe turns the screws.
** http://www.generationaldynamics.com/cgi ... 15#e090815

Here are some previous articles related to Iceland:

** Can a country go into default on its debt? Can the US?
** http://www.generationaldynamics.com/cgi ... 01#e090201

** One, Two, Three ... Infinity
** http://www.generationaldynamics.com/cgi ... 25#e081125

** We're all Icelanders now, as markets rocket 10% around the world
** http://www.generationaldynamics.com/cgi ... 14#e081014

** Country of Iceland may be close to financial default
** http://www.generationaldynamics.com/cgi ... 31#e080331

** Sudden collapse of Iceland krona portends bursting of 'carry trade' bubble
** http://www.generationaldynamics.com/cgi ... 27#e060227

** Comments and questions from readers
** http://www.generationaldynamics.com/cgi ... 09#e050209

John

[mannfm11]

I am not sure I understand much of any of the stuff about how the Icelandic banks were allowed to do what they did. I have read the MIchael Lewis article published in the past winter and what went on was almost laughable if it hadn't been so ignorant. The 2 banks were like the gang that couldn't shoot straight. If anything, the Europeans were dealing with them only because they knew they were dealing with incompetents who could easily be fleeced.

On the other subject John, China, I think there is more to what went on there than just trade. I have read something put out by a group including James Galbraith, son of the economist, that was supposed to indicate that much of China's trade surpluses weren't surpluses at all, but instead smuggled investment to get around rules, disguised as investment. Thus, the $2 trillion in China might instead of earnings be foreign investment. This, of course would create a mess as big as any caused by the other way, from a US collapse. What happens if this is true and suddenly this money is needed by those that invested it, clearly connected people? Of course it is illiquid. You make a good point with the Bubble that Broke the World in that what transpired there was no only did the European countries owe the US, but they took their investment out of the US at a crucial time, creating an international financial crisis on top of the crisis already in motion. I don't believe I really ever understood what went on in the depression that made it such a mess and why FDR had to devalue the dollar and confiscate gold until I read that book. It was clear that the US, a creditor nation was in trouble, not over what it was owed, but who it owed.