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Economic recovery in Iceland - the illusion

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posted on Jul, 17 2010 @ 09:36 PM
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www.businessinsider.com...

Here's What REALLY Happened After The Iceland Stimulus Package

"Part of Iceland’s economic progress may be attributed to a massive currency devaluation and "technical defaults", which seems to be what Krugman is intimating as the “solution” to “a really, really bad crisis.”

However, in Iceland’s case, the devaluation has not resolved its fiscal mess. Now, the island could face a second round of bank failures. The government, already on $4.6 billion life support from the IMF, recently warned that a second bank bailout would be a “severe blow” to its finances."




posted on Jul, 17 2010 @ 10:06 PM
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reply to post by leo123
 


Was anyone expecting their economy to recover by now. Their whole monetary system collapsed. You dont get over that in a few years.



posted on Jul, 17 2010 @ 10:17 PM
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Originally posted by ZuluChaka
reply to post by leo123
 


Was anyone expecting their economy to recover by now. Their whole monetary system collapsed. You dont get over that in a few years.



Zulu:

The key here is that they attempted the age old solution of devaluing their currency and technical defaults on their sovereign debt.

This will soon begin to scan the globe and will lead to nowhere.

Outright sovereign debt default will be the likely solution, they cannot create inflation.



posted on Jul, 17 2010 @ 10:31 PM
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Iceland is a very interesting case.

Many other countries would have been gutted and layed to waste by now ... and had their resources plundered while the population occupied itself with civil war.

But Iceland's key resources are geothermal and hydroelectric energy ... 2 things you can't really export (steal?) off an island nation.



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