Who's Going To Be The First Country To Go Bust?
4/7 fav Iceland...not so much a country as one giant hedge fund gone wrong. The value of its economic output, its GDP, is about $20bn, but its big banks have borrowed some $120bn in foreign currencies. Now that's what I call leverage - and remember that's just the overseas liabilities of its commercial banks.
If the Icelandic Government were to formally underwrite all these liabilities - which it might just have to do, given that other banks and financial institutions no longer want to touch Iceland with the longest barge-pole ever constructed - well its national-debt-to-GDP ratio would be at a level that makes the UK in the 1970s look like a model of prudence.
Reports are now circulating Monday that Iceland has suspended share trade in its hard-hit banks as the government scrambles to avert a full-fledged market meltdown sparked by the global crisis.
The island-nation's top financial regulator has called for trade to be halted in all of the main banks and financial firms.
The Icelandic crown's freefall showed no sign of abating as the currency lost another 7 percent after steep declines last week. The currency slide exacerbates an already precarious situation for local banks as it makes their large foreign debts more expensive to finance.
The country's prime minster told state television late Sunday night the country's authorities had not agreed any specific crisis measures "at this time".
I think that must be what you call burying your head in the ice.
If the Icelandic Government were to formally underwrite all these liabilities - which it might just have to do, given that other banks and financial institutions no longer want to touch Iceland with the longest barge-pole ever constructed - well its national-debt-to-GDP ratio would be at a level that makes the UK in the 1970s look like a model of prudence.
Reports are now circulating Monday that Iceland has suspended share trade in its hard-hit banks as the government scrambles to avert a full-fledged market meltdown sparked by the global crisis.
The island-nation's top financial regulator has called for trade to be halted in all of the main banks and financial firms.
The Icelandic crown's freefall showed no sign of abating as the currency lost another 7 percent after steep declines last week. The currency slide exacerbates an already precarious situation for local banks as it makes their large foreign debts more expensive to finance.
The country's prime minster told state television late Sunday night the country's authorities had not agreed any specific crisis measures "at this time".
I think that must be what you call burying your head in the ice.