wow, Iceland is in trouble

[smileyeagle1021]

Icelandic Shoppers Splurge as Currency Woes Reduce Food Imports

The Icelandic currency is so depreciated due to their bank failures that they may not have enough money to keep food on the supermarket shelves... past the end of this week

Really scary to think that the nation that used to have the 5th highest GDP per capita now doesn't have enough money to import food for longer than a week

[Evil Queen]

Holy Crap, what's going to happen next?

[Pedersen]

Well, I know what I'm afraid will happen next.

Iceland is seeing their "dollar" worthless. The US is seeing their dollar devalue. Zimbabwe is already experiencing hyperinflation. Other countries are seeing similar. Devalued currency means it costs more to buy the same thing. This leads to inflation. Which means people need to make more money. Which means the dollar is worth less. Which makes it cost more to buy the same thing.

Wash, rinse, repeat, ad infinitum.

The only times I've heard of out of control inflation have had warfare shortly thereafter.

No links to back it up, unfortunately. But logically: When people are unable to afford to live, they resort to using any tactics, including violence, to get what they need. If this crisis does not get to a stable state soon, we could well see a very big, very bad, war break out. And with the weapons that are now available, and the tensions in the world being what they are...

Yeah, I'm worried. A lot.

[smileyeagle1021]

Well Pederson, a counter possibility for Iceland (this is one my econ teacher suggested) is that if the IMF can't save them that they will the greatest mass exodus of refugees ever... that basically the country will cease to exist.
It actually wouldn't take that much to assimilate their population into the rest of the developed world... they have just barely larger population than Washoe County Nevada.

And sense TSO can't post (his computer is halfway to Mass. by now, and he'll be leaving shortly too) I'll post his reaction to me showing him this story for you

[Pedersen]

You are correct. Especially with the timing of it: Iceland is now heading into winter. Lack of food in summer is bad enough, but it's especially hard in winter, when most food can easily be buried under the snow.

I did ponder the exodus, too. It really wouldn't be too much to handle. Heck, this country could absorb them, and give them the homes that are foreclosed upon. That might do some good, anyway.

But my major concern is not just Iceland. Look around the world: Other countries banks are struggling suddenly, with many of them teetering on the edge of failure. Iceland just happens to have been hit first and hardest by this. If other countries start to follow suit, we could be headed towards another Great Depression.

And that, it is believed, was a primary factor in starting up WW2.

Look at my post history. You'll see that I've said on numerous occasions that there is always money to be made. I still stand by that. But that doesn't change that many people (in a depression) will have a very hard time making that money. Follow the cycle of poverty, and look what happens next.

And then look what happens when whole nations find themselves poor for years on end. It happened in Germany. It can happen here.

I'm normally very happy-go-lucky. I figure I'll land on my feet sooner or later. I'll be okay. And the people around me will be as okay as I can keep them.

Not right now. Right now, I'm very worried. I see some very dark clouds on the horizon. And they only seem to be getting bigger.

[SG15Z]

I know what you guys mean. And I must say I wasn't expecting a country like Iceland to be among the first to collapse. I've been worried for a while now but these last two weeks, I've noticed the word 'depression' entering more of my conversations these days.

The DOW going up nearly 1000 points was nice, but I know that it won't last long and will come back down. Usually I'm optimistic about such things but now I'm truly worried. And I think it'll be years before we get back to normal again.

[draggar]

What if Iceland decides to join another country (Canada, Greenland, EU etc..)? That could save it and prefent the mass exodus.

No links to back it up, unfortunately. But logically: When people are unable to afford to live, they resort to using any tactics, including violence, to get what they need. If this crisis does not get to a stable state soon, we could well see a very big, very bad, war break out. And with the weapons that are now available, and the tensions in the world being what they are...

I think the flashpoint will be a major terrorist attack in the US, possibly during the World Series.

Things are bad across the world. Governments need to look at what has worked in the past and get to it now. One of the actions that got the US out of the great depression is that the government hired people to build up infrastructure (bridges, roads, etc...). The governments needs to get started on that now.

[crazylegs]

What if Iceland decides to join another country (Canada, Greenland, EU etc..)?

<pedant> The EU isn't a country </pedant>

[draggar]

<pedant> The EU isn't a country </pedant>

I know, but I think people understand what I meant.

[PhotoChick]

Right now there are talk of Iceland joining the EU, to have access to their currency. Lets hope the IMF helps.

[protege]

No links to back it up, unfortunately. But logically: When people are unable to afford to live, they resort to using any tactics, including violence, to get what they need. If this crisis does not get to a stable state soon, we could well see a very big, very bad, war break out. And with the weapons that are now available, and the tensions in the world being what they are...

That's *exactly* how the Nazis got started. After WWI, the German people were not only humiliated, but their country was literally in ruins. The economy was gone, their currency worthless (I've seen photos of people using the bills to fuel their stoves, as well as coins being weighed for scrap). In short, they were desperate to survive...just the right conditions for a certain asshole to exploit...

Getting back on topic, the reason they're in trouble now...stems from the growth that they created. For their economy to grow, they had to borrow heavily. Up to 213% of disposable income in some cases Eventually, the Central Bank couldn't guarantee the payment on the loans, which meant that the smaller banks failed. Throw in the devaluation of their currency, and they're truly fucked

[Kiwi]

kinda makes you want to stock up on a mucho load of canned food....

*eyes her costco card pensively*

[Pedersen]

That's *exactly* how the Nazis got started. After WWI, the German people were not only humiliated, but their country was literally in ruins. The economy was gone, their currency worthless (I've seen photos of people using the bills to fuel their stoves, as well as coins being weighed for scrap). In short, they were desperate to survive...just the right conditions for a certain asshole to exploit...

That is the situation I was hinting at, but I haven't been able to find evidence to back it up. Thank you for posting. I do seem to recall, right before WWII, the cost of a loaf of bread in Berlin being something like 77,000 marks, but am not positive.

All of which only strengthens my worry. If banks fail worldwide, then the value of currency also fails. If the value of the currency fails, then mass poverty occurs. And that leaves us in a position which is ripe for another major war.

Add in the weapons that we now have available to us. Add in the overall tensions and reductions in tolerance that have happened around the world. Add in the fact that many believe that continuing life in this world is futile (for various reasons, including economic, social, and religious), and they therefore have nothing to live for.

The attitudes are primed for a major war that will have long lasting and devastating effects on the human population of this world.

Getting back on topic, the reason they're in trouble now...stems from the growth that they created. For their economy to grow, they had to borrow heavily. Up to 213% of disposable income in some cases Eventually, the Central Bank couldn't guarantee the payment on the loans, which meant that the smaller banks failed. Throw in the devaluation of their currency, and they're truly fucked

Not necessarily just them. Right now, they're seeming more of a symptom to me. The real problems we are facing are only growing in severity while the world leaders seemingly do nothing more than protect their own interests.

I'm very afraid of what's coming up in the next ten years. And I hope that my fears are completely unfounded, I really do. But I don't expect them to be.

[protege]

That is the situation I was hinting at, but I haven't been able to find evidence to back it up. Thank you for posting. I do seem to recall, right before WWII, the cost of a loaf of bread in Berlin being something like 77,000 marks, but am not positive.

Here's something you might find interesting. Note the denominations on the stamps. 200 million marks just to mail a letter! At the time, the currency was devaluing so fast, that most of those stamps were blank, and simply overprinted. Many older stamps were modified as well. These are actually pretty common from that period, and aren't worth very much.

That's not the worst case though--Hungary's 1945 inflation was much worse! At that time, the total value of *all* Hungarian banknotes in circulation amounted to one-thousandth of one US dollar

More recent though, was Russia's inflation of *813%* in 1993, and the subsequent devaluation of the ruble to 30,000 per US dollar in '99.

[XCashier]

Things are bad across the world. Governments need to look at what has worked in the past and get to it now. One of the actions that got the US out of the great depression is that the government hired people to build up infrastructure (bridges, roads, etc...). The governments needs to get started on that now.

Agreed. Imagine how our world would be if we all concentrated on infrastructure instead of war. Let's build up instead of tearing down.

I think the US government should've restarted the WPA a while ago. Gives people jobs and corrects aging, failing infrastructure, a win-win situation.