Iceland close to bankruptcy(timesofindia.indiatimes.com)
timesofindia.indiatimes.com
Iceland close to bankruptcy
http://timesofindia.indiatimes.com/After_banks_nations_Iceland_close_to_bankruptcy/articleshow/3572258.cms
77 comments
What kind of rates were you getting? I heard tell of 10+%.
Of course, if you lose the principal, it's not likely to pay off now, but still impressive.
Of course, if you lose the principal, it's not likely to pay off now, but still impressive.
If someone offers you 10% interest, it is practically a given that the whole thing is not very trustworthy. I assume therefore that people investing in Iceland only did so with superfluous money that won't be missed too much.
It was about 6%. Not market leading but competitive. The main reason why I opened the account was that it was one of the few ISA providers accepting transfers in.
They have more of my money than I would be happy losing but I consider myself to be more fortunate than most. I believe my position, and salary, to be secure for the next two years and icesave only has about one-quarter of my savings.
They have more of my money than I would be happy losing but I consider myself to be more fortunate than most. I believe my position, and salary, to be secure for the next two years and icesave only has about one-quarter of my savings.
I've just read that ING has bought the British savings accounts from Landsbanki and another Iceland bank. That means your money is safe.
Don't want to get all diggity here, but...perhaps instead of trusting suits with your money, you might want to put them in a special kind of atoms that don't rust...or decay radioctively...It's kind of retro, but throughout history, it's been a sound thing to do.
Are you talking gold? That's just silly. you know how little Gold there is compared to the needs of the world? And you know that a gold based economy basically puts all the power in the hands of those who physically own the gold - what happens to countries like Chad and so on?
#1 -- Well he didn't suggest that everyone do it.
#2 The actual amount available at any given time is not so important as over time whatever amount there is reflects whatever "amounts" of goods, services, value and labour "exist". You have the same the other way around with the paper money supply. Increase it, and "over time" there's just as much "inflation" (not a price increase BUT a money devaluation) to cover that. So how much gold Chad has compared to other countries matters exactly zero.
#2 The actual amount available at any given time is not so important as over time whatever amount there is reflects whatever "amounts" of goods, services, value and labour "exist". You have the same the other way around with the paper money supply. Increase it, and "over time" there's just as much "inflation" (not a price increase BUT a money devaluation) to cover that. So how much gold Chad has compared to other countries matters exactly zero.
If you are actually arguing in favor of a fractional reserve system, I fail to see any logical support for that.
A fractional reserve system has two truths, two facts:
1) The debt will always become greater in a country, because the money is debt in the first place.
2) The income disparity will always increase, meaning you will never be able to overcome poverty, sickness, or even war. The very way the fractional reserve system works is by nature transferring wealth from the lower and middle-class to the upper, and from there it goes to a few very wealthy, very elite.
A fractional reserve system has two truths, two facts:
1) The debt will always become greater in a country, because the money is debt in the first place.
2) The income disparity will always increase, meaning you will never be able to overcome poverty, sickness, or even war. The very way the fractional reserve system works is by nature transferring wealth from the lower and middle-class to the upper, and from there it goes to a few very wealthy, very elite.
Can we leave the batty economics discussions to other forums? This one is about hacking and startups.
jmtame, perhaps besides taking "Money, Media and Power" classes (http://news.ycombinator.com/item?id=317659) you should consider taking some actual economics courses.
jmtame, perhaps besides taking "Money, Media and Power" classes (http://news.ycombinator.com/item?id=317659) you should consider taking some actual economics courses.
Sure, it'd be better than witch hunting (http://news.ycombinator.com/item?id=305192)
I don't know what "Money, Media and Power," is, but there are actual economists who are critical of the fractional reserve system. Mostly, they are of the Austrian School, but there are some Neo-Classicists (mainstream) economists who see problems with a system that allows banks to loan out money that they don't have.
You are right. His comment was off in left field though: "fractional reserve banking invariably increases inequality" - something he even goes so far as to label a "fact" (citation needed!). I think if you run the data, you would not find such a correlation, and that things like taxation and redistribution policy are more correlated to the gini coefficient. In any case, there are appropriate forums for the discussion of these things (like peer-reviewed journals) where knowledgeable people can comment.
If you ever looked at the projections of the gini index you would already know that the middle class will soon be a thing of the past. That's an obsolete argument, my friend, and I would encourage you to not participate if you don't want to encourage a debate on the economics (considering this thread was voted up by the HN community and has to do with economics and not startups).
Thanks for playing though!
Thanks for playing though!
Look at the debt list of the world. Very few countries in the world are seriously in debt, only about 15 or so. The rest have positive cash balances.
What I know is that the age of Gold was the age of aristocracy. The age of paper money was the age of democracy. I prefer to learn from history than believe what some guy on a message board tells me.
What I know is that the age of Gold was the age of aristocracy. The age of paper money was the age of democracy. I prefer to learn from history than believe what some guy on a message board tells me.
Well, sure, if everyone starts shorting paper, then that's not so good. But if a small part of Hacker News does, what's the big deal?
Have you seen the US debt lately?
Yeah, it's pretty much on par with what you'd expect:
http://www.nationmaster.com/graph/eco_cen_gov_deb_tot_of_gdp...
http://www.nationmaster.com/graph/eco_deb_ext-economy-debt-e...
http://www.nationmaster.com/graph/eco_cen_gov_deb_tot_of_gdp...
http://www.nationmaster.com/graph/eco_deb_ext-economy-debt-e...
That's a useful link. U.S debt is perfectly within normal bounds for its income.
Things have changed a bit since 2005.
http://www.youtube.com/watch?v=-DJIVQIRIHs
http://www.youtube.com/watch?v=-DJIVQIRIHs
Not really. It's now closer to 60%. It's not off the charts, and is a lower percentage of the GDP than the next two largest economies (Japan and Germany, based on current CIA World Factbook numbers).
Well you're getting warmer:
1) Yes, 2007 is a little closer to 2008. 2) Yes, the debt increased to 60% of GDP in 2007, up from 47% in 2005.
Can you extrapolate that, especially considering our current situation?
Anyway, we've deviated a bit. You can't refute the fact that our fractional reserve system is debt-generating by nature. I really question your intelligence if you think we're going to stop invading countries anytime soon.
I'm not trying to argue about how bad our debt is relative to our GDP (even though we know that's the case). Re-read what I originally stated at the very top.
1) Yes, 2007 is a little closer to 2008. 2) Yes, the debt increased to 60% of GDP in 2007, up from 47% in 2005.
Can you extrapolate that, especially considering our current situation?
Anyway, we've deviated a bit. You can't refute the fact that our fractional reserve system is debt-generating by nature. I really question your intelligence if you think we're going to stop invading countries anytime soon.
I'm not trying to argue about how bad our debt is relative to our GDP (even though we know that's the case). Re-read what I originally stated at the very top.
This is still silly. You're starting with some true things:
- The US has a fractional reserve systems and debt is a pseudo-currency within fractional reserve systems
- The US has a significant national debt
- The US invades foreign countries and has problems with class structure and poverty
However, your attempt to link them fails horribly in light with the last point not being true of countries which have proportionally more debt. There's not even correlation, much less a reasonable argument for causation. Honestly, I don't really care one way or the other about the fractional reserve system. I'm not starting with a particular viewpoint and trying to defend it. I'm just pointing out that your argumentation is flawed.
- The US has a fractional reserve systems and debt is a pseudo-currency within fractional reserve systems
- The US has a significant national debt
- The US invades foreign countries and has problems with class structure and poverty
However, your attempt to link them fails horribly in light with the last point not being true of countries which have proportionally more debt. There's not even correlation, much less a reasonable argument for causation. Honestly, I don't really care one way or the other about the fractional reserve system. I'm not starting with a particular viewpoint and trying to defend it. I'm just pointing out that your argumentation is flawed.
The debt became that way when the U.S switched to a father-son, husband-wife presidential system.
[deleted]
http://news.bbc.co.uk/1/hi/business/7658417.stm
Not only that but apparently good old Alistair has my back.
Not only that but apparently good old Alistair has my back.
I'm not worried. All this is just hype, things are quite fine in the world. Money does not disappear until value does, and people are still producing a lot of value.
Wow.
It just occurred to me that folks here younger than 28 have never seen an actual recession (I'm assuming that under-12s could not care less about business news and missed the early 90s bust). It's just been one long boom for you, right?
I suspect the world is about to surprise you in a very unpleasant way.
It just occurred to me that folks here younger than 28 have never seen an actual recession (I'm assuming that under-12s could not care less about business news and missed the early 90s bust). It's just been one long boom for you, right?
I suspect the world is about to surprise you in a very unpleasant way.
Heh, I think the same thing every time this topic comes up here on HN.
I don't think it's just the young though. I think a lot of people have forgotten how bad things can get. The last real recession was in the early 90's for most. Unless you were heavy into tech stocks or worked in the industry, the only thing that you noticed about the dot com boom was the superbowl commercials.
It's amazing how people believe that things will stay the same forever. When we're booming, it will always be that way, when it's bust, life will never get better.
I for one am looking to profit as much as possible on people's ignorance, but I know that won't be easy when I'm having to make my own cut backs.
I don't think it's just the young though. I think a lot of people have forgotten how bad things can get. The last real recession was in the early 90's for most. Unless you were heavy into tech stocks or worked in the industry, the only thing that you noticed about the dot com boom was the superbowl commercials.
It's amazing how people believe that things will stay the same forever. When we're booming, it will always be that way, when it's bust, life will never get better.
I for one am looking to profit as much as possible on people's ignorance, but I know that won't be easy when I'm having to make my own cut backs.
You want to bet? I say there will be no recession, you say there will be a recession.
Sure, I've never seen a recession, but that does not mean that I am unable to differenciate a real problem from a manageable problem.
McCain was right - the fundamentals of the economy ARE strong. A recession starts at the bottom - it starts when people stop spending. It does not start at the top. What is happening right now is just a restructuring. A flesh wound, one could say.
Sure, I've never seen a recession, but that does not mean that I am unable to differenciate a real problem from a manageable problem.
McCain was right - the fundamentals of the economy ARE strong. A recession starts at the bottom - it starts when people stop spending. It does not start at the top. What is happening right now is just a restructuring. A flesh wound, one could say.
Believe whatever you want. It doesn't make it true.
Do you know that Detroit was once one of the wealthiest cities in the United States? Things change.
What you're seeing now is a period of dramatic change. Approach it as you'd like.
Do you know that Detroit was once one of the wealthiest cities in the United States? Things change.
What you're seeing now is a period of dramatic change. Approach it as you'd like.
Sorry, I don't know much about Detroit. From Wikipedia, it seems like Detroit is fine. But I have no real idea how it looks like in the city.
Executive summary: it is a shit hole.
Try searching for, "Detroit urban decay", "Detroit empty lots", or "Detroit vacant".
I'm sure Detroit's residents will be happy to know that Wikipedia gave them a sound bill of health.
If you'd like to buy some property in Detroit and tell 'em yourself, you can get it reeeeeeeaaaally cheap: http://www.lewrockwell.com/blog/lewrw/archives/022350.html
I'm sure Detroit's residents will be happy to know that Wikipedia gave them a sound bill of health.
If you'd like to buy some property in Detroit and tell 'em yourself, you can get it reeeeeeeaaaally cheap: http://www.lewrockwell.com/blog/lewrw/archives/022350.html
Your country has never looked as bad economically, ever.
That includes the great depression. While controls are still in place (thank god) to prevent bread lines, how well you Americans adapt (and how the rest of us react) to the very real possibility that you cease to be a superpower remains to be seen.
All I can say is that Russia was not a fun place to live in in the early 90's.
That includes the great depression. While controls are still in place (thank god) to prevent bread lines, how well you Americans adapt (and how the rest of us react) to the very real possibility that you cease to be a superpower remains to be seen.
All I can say is that Russia was not a fun place to live in in the early 90's.
Please point me to these strong fundamentals. All the fundamentals that I see: national debt, incredibly low treasury rate, whacked out LIBOR rate, and inflation tell me otherwise.
National Debt : $9 Trillion. National GDP: $13 Trillion. Science and Research - #1. Innovation - #1. It took 8 years to create this debt. It will take a while to get it off, but it's a freakin powerhorse we're talking about here. It's not South Africa, it's the biggest economy in the world.
All these things you speak about are momentary things. They react to short term events.
The problems right now are due to the gambling nature of many American businesses - but it's that same nature that makes American #1 in so many ways.
This is just a correction. It's not a recession. America has been living above it's means and will drop down a notch or two, but the fundamentals are very strong.
Education - good Science & Research - good Investment & Risk Taking - good Intellectual Capital - good Natural resources - good
America is fine, people are just using this bubble cycle as propaganda for an election, and you guys are panicking. Take it easy - go scoop up some stocks at rock bottom prices like the richest man in the world is doing.
All these things you speak about are momentary things. They react to short term events.
The problems right now are due to the gambling nature of many American businesses - but it's that same nature that makes American #1 in so many ways.
This is just a correction. It's not a recession. America has been living above it's means and will drop down a notch or two, but the fundamentals are very strong.
Education - good Science & Research - good Investment & Risk Taking - good Intellectual Capital - good Natural resources - good
America is fine, people are just using this bubble cycle as propaganda for an election, and you guys are panicking. Take it easy - go scoop up some stocks at rock bottom prices like the richest man in the world is doing.
I'm curious- do you know what the economic definition of a recession is?
Do you know any other country with such a debt to GDP ratio? Do you know what the significance of having that much debt is?
Do you realize that's equivalent to someone who makes $100k a year having ~$70k in credit card debt? That's not "normal"- that's the person that has the Dr. Phil intervention on Oprah.
To you, things may look okay. I'll tell you what's actually happened though, as you've looked outside at your normal life. Over a million people this year have lost their homes. Over a million people are projected to lost their homes next year.
Education: More and more of our jobs are being taken up by H-1 foreigners. I'm the son of immigrants- this isn't meant to be xenophobic- we're not producing graduates capable of tomorrow's challenges. Too many college students are too focused on how they're going to get their next handjob and not on their D in calculus.
Research: Bush has cut funding for science and research dramatically. Don't just make assumptions, look it up. Most academics and professors hate Bush. There's a reason why most schools are liberals now.
Intellectual Capital: Our best asset. Slowly being trickled a way by a generation worrying about what happened on Gossip Girls and Lindsay Lohan's lesbian relationship.
Natural resources: what resources? Timber? grass? food? The only one that matters, oil, is in short supply. We only produce 3% of the world's oil supply, and use 25% of it. Meanwhile, rather than eliminate oil entirely, half the population thinks drilling more oil and adding 4% to our supply 15 years from now will fix our energy woes.
This is not a rant, and I'm not some bitter curmudgeon. I'm a young, healthy 24 year-old, and this is reality.
Do you know any other country with such a debt to GDP ratio? Do you know what the significance of having that much debt is?
Do you realize that's equivalent to someone who makes $100k a year having ~$70k in credit card debt? That's not "normal"- that's the person that has the Dr. Phil intervention on Oprah.
To you, things may look okay. I'll tell you what's actually happened though, as you've looked outside at your normal life. Over a million people this year have lost their homes. Over a million people are projected to lost their homes next year.
Education: More and more of our jobs are being taken up by H-1 foreigners. I'm the son of immigrants- this isn't meant to be xenophobic- we're not producing graduates capable of tomorrow's challenges. Too many college students are too focused on how they're going to get their next handjob and not on their D in calculus.
Research: Bush has cut funding for science and research dramatically. Don't just make assumptions, look it up. Most academics and professors hate Bush. There's a reason why most schools are liberals now.
Intellectual Capital: Our best asset. Slowly being trickled a way by a generation worrying about what happened on Gossip Girls and Lindsay Lohan's lesbian relationship.
Natural resources: what resources? Timber? grass? food? The only one that matters, oil, is in short supply. We only produce 3% of the world's oil supply, and use 25% of it. Meanwhile, rather than eliminate oil entirely, half the population thinks drilling more oil and adding 4% to our supply 15 years from now will fix our energy woes.
This is not a rant, and I'm not some bitter curmudgeon. I'm a young, healthy 24 year-old, and this is reality.
"Do you realize that's equivalent to someone who makes $100k a year having ~$70k in credit card debt? That's not "normal"- that's the person that has the Dr. Phil intervention on Oprah."
The debt of our federal government is different than the 70k credit card debt of a person who makes 100k in two ways that somewhat cancel.
First, the interest rate that the federal government can get is remarkably low. In fact, if we include inflation (which seems to be hard to peg right now), I would almost venture to guess that the interest rate might be negative.
On the other hand, it makes me uncomfortable that people compare the federal debt to the GDP because the GDP is a sort of total income for the nation. What ought to matter is the relevant part of the income of the federal government. I haven't found good data on what this income is (anyone?) but I think it is on the order of about 3 trillion. It was about 2.5 trillion in 2006 according to Wikipedia.
Anyway, if we wanted to compare the national debt to consumer debt in terms of a debt load, this is about like having a person who owes about three times his annual income on a mortgage. There are still two main differences. One the one hand, there is no home that this mortgage has enabled us to enjoy. On the other hand, the interest rates on federal debt are lower than the rates on just about any mortgage.
The debt of our federal government is different than the 70k credit card debt of a person who makes 100k in two ways that somewhat cancel.
First, the interest rate that the federal government can get is remarkably low. In fact, if we include inflation (which seems to be hard to peg right now), I would almost venture to guess that the interest rate might be negative.
On the other hand, it makes me uncomfortable that people compare the federal debt to the GDP because the GDP is a sort of total income for the nation. What ought to matter is the relevant part of the income of the federal government. I haven't found good data on what this income is (anyone?) but I think it is on the order of about 3 trillion. It was about 2.5 trillion in 2006 according to Wikipedia.
Anyway, if we wanted to compare the national debt to consumer debt in terms of a debt load, this is about like having a person who owes about three times his annual income on a mortgage. There are still two main differences. One the one hand, there is no home that this mortgage has enabled us to enjoy. On the other hand, the interest rates on federal debt are lower than the rates on just about any mortgage.
you are right about the interest rates, but I don't like using mortgages, because they're no underlying asset for our creditors to seize when we default (which is why I used credit cards).
Maybe we can use auto loans and cars.
Maybe we can use auto loans and cars.
Um, lots and lots of countries have this Debt to GDP ratio. It's not unusual, look it up.
The biggest economy in the world is European Union, not US (as measured by GDP.)
Except that the European Union is not an integrated economy, it is a federation of inter-dependent economies that share a common currency, as the clusterfuck regarding how it will respond to the current crisis is showing.
Well, people have stopped spending: http://www.nytimes.com/2008/01/14/business/14spend.html
The irony of your statement, for me, is that just yesterday my local newspaper ran a front-page feature on some local businesses worried about Christmas spending: http://www.theunion.com/article/20081007/NEWS/810079993&...
Even McCain has reversed his stance on the economy (according to his website).
The irony of your statement, for me, is that just yesterday my local newspaper ran a front-page feature on some local businesses worried about Christmas spending: http://www.theunion.com/article/20081007/NEWS/810079993&...
Even McCain has reversed his stance on the economy (according to his website).
If you really are confident and want to bet, you can actually do it at Intrade (and others).
Right now the betting market is strongly weighted toward recession in 2009. Taking the other side of that bet will be quite profitable if it pays off.
Right now the betting market is strongly weighted toward recession in 2009. Taking the other side of that bet will be quite profitable if it pays off.
So long as the factories run, miners mine, and farmers farm, it's true, society will see this through. But you must understand that what's at stake is our very ability to do these things.
Merely producing goods is not enough; we need to get them to consumers and consumers need to be able to compensate the producers. To this end, we need a financial system through which wealth can easily and painlessly be transfered. Without a healthy financial system, simple things like employment, commerce, shopping, become difficult if not impossible.
Key point: write all the code you want; without a financial system nobody will be able to pay you for it.
True, we'll get through this eventually, the financial system will change and adapt to new circumstances, such is the nature of the market, (It would happen faster if the government wasn't so insistent on propping up the very institutions that were failing.) but it will take a while, and in the meantime, jobs, commerce, industry, all will suffer, especially those elements dependent on easy liquidity and cheap credit, like startups.
Long story short: You should be very worried. Protect your assets. Focus on tangible goods and increase your productivity. Realize that excessive 'trust' is what got us into this mess in the first place, and weather the storm accordingly.
Merely producing goods is not enough; we need to get them to consumers and consumers need to be able to compensate the producers. To this end, we need a financial system through which wealth can easily and painlessly be transfered. Without a healthy financial system, simple things like employment, commerce, shopping, become difficult if not impossible.
Key point: write all the code you want; without a financial system nobody will be able to pay you for it.
True, we'll get through this eventually, the financial system will change and adapt to new circumstances, such is the nature of the market, (It would happen faster if the government wasn't so insistent on propping up the very institutions that were failing.) but it will take a while, and in the meantime, jobs, commerce, industry, all will suffer, especially those elements dependent on easy liquidity and cheap credit, like startups.
Long story short: You should be very worried. Protect your assets. Focus on tangible goods and increase your productivity. Realize that excessive 'trust' is what got us into this mess in the first place, and weather the storm accordingly.
Think of the value (real wealth) in the system (the farmers farming, etc) like ships. The financial system (the money, the credit, etc) like water.
We need both. If all of the water freezes, the ships are still technically there. The wealth still exists, but there's shit-all the boats can do but wait for the spring thaw if they're frozen in the ice.
We need both. If all of the water freezes, the ships are still technically there. The wealth still exists, but there's shit-all the boats can do but wait for the spring thaw if they're frozen in the ice.
Yes, but don't forget all the men standing round with hot water hoses. You think they'll just wait for nature to come thaw things out when they just need to turn on the hose?
What caused this problem was excessive liquidity and the tendency of people to gamble. The U.S needs to get more material, and this correction is part of that.
What you should worry about are two things, regarding value:
1) You should worry when your country produces significantly more "money" than your country produces value. See Bailout Bill (I fail to see the value produced in writing up $700 billion taxed on firefighters and teachers).
2) You should worry when organizations like IMF and the World Bank extend loans to these other countries, jack up in the interest and take up more than half of the country's budget on the interest instead of the principal. Most of the countries we "help out" end up becoming more impoverished after we extend a loan to them, and much of what we build ends up doing more harm than good. Worse, the money does not even exist in the first place.
1) You should worry when your country produces significantly more "money" than your country produces value. See Bailout Bill (I fail to see the value produced in writing up $700 billion taxed on firefighters and teachers).
2) You should worry when organizations like IMF and the World Bank extend loans to these other countries, jack up in the interest and take up more than half of the country's budget on the interest instead of the principal. Most of the countries we "help out" end up becoming more impoverished after we extend a loan to them, and much of what we build ends up doing more harm than good. Worse, the money does not even exist in the first place.
It's not my country - harr harr! The U.S may not produce as much money as it produces value, but it still produces more value than any country in the world! That value is not going anywhere.
Seriously, don't be afraid. This is a media recession. If this were a real economic problem, companies would be tightening their belts, buying shares, merging, selling off stuff, and the vultures would be there pecking at carcasses. It's not happening. The papers make things sound bad, but imagine you didn't read the papers. When you go out, things are pretty much the way they always where.
Seriously, don't be afraid. This is a media recession. If this were a real economic problem, companies would be tightening their belts, buying shares, merging, selling off stuff, and the vultures would be there pecking at carcasses. It's not happening. The papers make things sound bad, but imagine you didn't read the papers. When you go out, things are pretty much the way they always where.
Please name which products that the world relies on the US to produce.
Exactly.
Exactly.
Google, Boeing, Ford, Windows XP, iPhone, Nike, Levis, McDonalds, Coke. That's just by looking around the room I am sitting in.
Nike, iPhone, are all made in China. Levis are made in Latin America. I am not sure that will be counted as "made in U.S.A"
But I am sure we have made a lot of pornos because U.S. constitution protects them for the freedom of speech. And it is really risky for any people in Middle East to shoot porns than in U.S.A. . So probably this is one of few things that we make that poor men outside U.S. truly rely on.
But I am sure we have made a lot of pornos because U.S. constitution protects them for the freedom of speech. And it is really risky for any people in Middle East to shoot porns than in U.S.A. . So probably this is one of few things that we make that poor men outside U.S. truly rely on.
Google is trans-national with development done worldwide
Boeing is trans-national with production worldwide
Ford is trans-national with production worldwide
Microsoft is trans-national with development worldwide
Apple is predominantly US based but trans-national
Nike manufactures in China or anywhere sufficiently cheap
Levi is the same
McDonalds gets its meat from Brazil and is trans-national
Coca-Cola is trans-national - in WWII Coca-Cola in germany was scarce, so the local franchisee developed Fanta as an alternative which made its way back after the war.
Boeing is trans-national with production worldwide
Ford is trans-national with production worldwide
Microsoft is trans-national with development worldwide
Apple is predominantly US based but trans-national
Nike manufactures in China or anywhere sufficiently cheap
Levi is the same
McDonalds gets its meat from Brazil and is trans-national
Coca-Cola is trans-national - in WWII Coca-Cola in germany was scarce, so the local franchisee developed Fanta as an alternative which made its way back after the war.
He said "relies".
I could do without all of those during hard times.
I could do without all of those during hard times.
If you're talking about the kind of hard times where your economic needs are reduced to 1400 calories/day, a lump of coal to cook your millet gruel, and some shoes made of old tires, the US is at least a major food exporter.
I don't expect times to get that tough.
I don't expect times to get that tough.
You could do without airplanes? Clothes? Soft drinks? If you are doing without those, then what do you need from China?
There are less-expensive alternatives for all of the examples you provided. Take a look at what happened to each of those companies (which existed) back in the early 90s.
For planes, there's already a nice inventory of used aircraft backing up thanks to the latest airline bankruptcies. Do you think an airline will be buying new (or any?) aircraft if vacation and business travel drops off a cliff?
For planes, there's already a nice inventory of used aircraft backing up thanks to the latest airline bankruptcies. Do you think an airline will be buying new (or any?) aircraft if vacation and business travel drops off a cliff?
So you really think in a time of globalisation and opening markets, a country will suddenly become an island because people are too poor to travel?
Anyone who believes this is seriously believes this needs to read some books.
Anyone who believes this is seriously believes this needs to read some books.
People were producing a lot of value in every previous recession and depression too.
There are simply too many people deeply in debt, and for the majority of them there's no possibility to balance their financial situation -- and their number is increasing continuously...
Yes, many people are in debt, but they converted the debt to assets. And those assets are still around. They have to produce value to be able to finance those assets, and so in all, it balances itself out. In economic terms, I don't see how population debt is bad for an economy. If this 'debt' was paid from money that was excess in the economy anyways, then for the country, there is no direct loss.
Let me explain.
A bank has $10.000. The government gives then $2000 for free.
You come to the bank and ask for $1500. They give it to you. Over the next 4 years you work for an employer, giving him about $4000 of value. Of that, you pay $500 in taxes, payback $2000 to the bank and keep §1500 for yourself. The bank makes more money, the government makes more money, and you had to work harder to stay in the same spot.
Debt is a way to make slaves of citizens, but for the economy, it is good because it forces productivity out of people.
Let me explain.
A bank has $10.000. The government gives then $2000 for free.
You come to the bank and ask for $1500. They give it to you. Over the next 4 years you work for an employer, giving him about $4000 of value. Of that, you pay $500 in taxes, payback $2000 to the bank and keep §1500 for yourself. The bank makes more money, the government makes more money, and you had to work harder to stay in the same spot.
Debt is a way to make slaves of citizens, but for the economy, it is good because it forces productivity out of people.
You do understand that the reason the economy sucks right now is that people are defaulting on their mortages? There's a lot of debt out there that will not get paid back... much more than anyone was willing to admit.
The PR skills of Iceland's government are terrible. They keep saying OMG we are going to go bankrupt. Surely then no one is going to lend them any money.
I don't think other countries aren't asking for debts to be repaid. Then it's just the creditor of the banks which are asking for their money. Presumably the savers want to take their money out. So it's a run on all the banks of the country. But since they already nationalized the banks, surely they just have to print more currency. The currency takes a hit and it feels like Russia in the 80s, but it's probably still better than other outcomes.
I don't think other countries aren't asking for debts to be repaid. Then it's just the creditor of the banks which are asking for their money. Presumably the savers want to take their money out. So it's a run on all the banks of the country. But since they already nationalized the banks, surely they just have to print more currency. The currency takes a hit and it feels like Russia in the 80s, but it's probably still better than other outcomes.
Actually no, they are not saying we are going bankrupt, the world media is.
There's not a chance the Icelandic government will actually go bankrupt. It would be historic. Sovereign states do go bankrupt once in a while, but I've never heard of one choosing to bankrupt itself in order to partially pay off the bad debt of a corporation.
If Iceland has obligations to some of these companies, they'll likely just default on the debt. The end result would be the same, but perhaps with somewhat less political turmoil.
If Iceland has obligations to some of these companies, they'll likely just default on the debt. The end result would be the same, but perhaps with somewhat less political turmoil.
I couldn't get a handle on what assets were falling away from the Icelandic banks. The article says that they weren't mixed up in the now toxic subprime assets, so is it just the credit crunch that is inhibiting Iceland banks from making short run payments, or are their assets crumbling in other ways? Anyone care to explain?
When I was in school taking econ courses every day I was always so informed about this stuff. I feel so ignorant now!
When I was in school taking econ courses every day I was always so informed about this stuff. I feel so ignorant now!
I have heard they have too much debt denominated in foreign currencies. Their recently-deregulated banking has been a major economic growth area for Iceland (read: levered to their eyeballs). The global instabilities pretty much pulled the rug from under their feet, and their productive economy is not large enough to be likely to pay off the debts; so their currency gets dumped. That makes it harder to pay the foreign debts, and each failure to pay further damages the currency.
I think they will almost certainly have to default.
I think they will almost certainly have to default.
My interest rate at Landsbankinn was around 14%, which is normal because of the high interest rate from the Central Bank (15.5%).
doh, i actually was hoping that iceland was more shielded from this than japan.
maybe, if they go through this first, they will be the first to succeed post Credit Crisis.
maybe, if they go through this first, they will be the first to succeed post Credit Crisis.
Hey, as long as EVE Online (CCP) doesn't go under, I'm straight.
I'm guessing they're actually doing pretty well in this situation. I'd hazard to guess that a lot of their revenue comes from subs in the US and Europe (aka dollars and euros). As inflation goes crazy on Icelandic krona, you figure the salaries they're paying to their people takes up less and less of the cash they pull in each month.
Another indicator that the USA made a great job at selling their debts to other countries, where entire states have now to pay for the greed of a few people.
Each cent that is missing now (which went to american banks when they were selling these products) has to paid by the entire world now.
Each cent that is missing now (which went to american banks when they were selling these products) has to paid by the entire world now.
"Missing"? "Money itself isn't lost or gained, it's simply transferred."
Or printed.
> Each cent that is missing now (which went to american banks when they were selling these products) has to paid by the entire world now.
This leads to a fantasy bailout scenario: the whole world who has lent America money agrees to forgive 50% of America's debt (or any other large percentage) in return for America's military getting out of other countries (and staying out for at least 10 years).
This leads to a fantasy bailout scenario: the whole world who has lent America money agrees to forgive 50% of America's debt (or any other large percentage) in return for America's military getting out of other countries (and staying out for at least 10 years).
Personally I have a significant sum of money in an icesave, part of Landsbanki, account. With the Icelandic government talking about every-country-for-itself the guarantee they have in place on the first £16k doesn't look that secure any longer.