just discovered your blog and i love it! (as maybe you can tell from the posts i left here in recent days)

i just read a newspaper article that said that, with all the confusion around the krona being linked with the euro, some credit card companies now trade at 1:350! one euro equals 350(!) krona. Last year arond this time it was 85isk for a euro and for a country that imports more than 80% of its food…. that spell disaster!!! That means that inflation is out of hand. Importing would be near to impossible. Maybe with christmas on the way we should start looking into charity from abroad!

Marc – as it happens, Iceland gave Bush their full backing in the Iraq war. Against the will of the majority of the population.

Is Iceland The Canary In The Mineshaft of Global Financial Contagion?
http://my.opera.com/richardinbellingham/blog/show.dml/1856200

Kristjan, most of the foreign liabilities of the Icelandic banks were outside of Iceland´s borders, only a fraction of the borrowing was for use in Iceland so it is a very difficult situation that Iceland finds itself in now.

I love your blog and it is with great interest that I read how this crisis is being portrayed in Iceland. Western Europe has already made up its mind about Iceland: bankrupt. I must add that a prime minister saying on national television that his country is at risk of bankruptcy is really the dumbest thing I’ve ever heard of. In case you’re wondering, that has been the headline all over the world, and even if the situation was not rosy before, it certainly is hopeless now.
It saddens me that a small and delicious country like yours has to go through such hard times right now. Especially because only a few happy people made handsome profits during the bubble and everyone will have to pay right now.
I am also sad to have to agree with reader Dave on the possible roads ahead. A crisis like this in the financial system will leak into the normal economy. This is something that cannot be isolated and contained.
A likely outcome will be that the Iceland Crown will continue to decline, and even the fact that the national debt is in crowns will not give you sufficient shelter. Most likely holders of crowns (national and international) will swap it for euros, yens, dollars and swiss francs in an attempt to preserve their wealth. Thus bankrupting Iceland effectively.
Holders of government bonds (at 15% interest! no less) are worse off. If they see back their money, it will not make them whole. Luckily a lot of the despised hedge funds will suffer. I’m hoping not too many old age pensioners in Iceland invested in them.

After all this doom and gloom I would like to point you at a glimmer of hope for your economy. Though it will be at some expense to your splendid culture. Tourism. Iceland should embark on a massive add campaign to promote tourism to Iceland, maybe even (part)-nationalising the airlines, given their own troubles at the moment.

But it should be managed carefully, so as not to create the next bubble.

Sack your PM!

Marc

On the swap issue: it is my opinion that the Bush administration has kept tabs of all countries that resisted their Iraq invasion and has been settling the scores when the opportunities presented themselves. I’m sure they have a kind of cell of vindictive operations.