Iceland's interest rate up to 18%

[Michael]

Iceland's central bank has raised its key interest rate to 18% from 12% as the country battles against a complete financial collapse.

The increase comes less than two weeks after it cut rates from 15.5%.

News of the rise came as Iceland's prime minister said the country needed another $4bn (£2.6bn) in loans.

Iceland has been struggling to avoid collapse since it was forced to take over its three biggest banks, which had been hit by the credit crunch.

Source (http://news.bbc.co.uk/2/hi/business/7694785.stm)

Yikes! :eek:

This is a harbinger of where the world's economy is heading right now...

[Americano]

Source (http://news.bbc.co.uk/2/hi/business/7694785.stm)

Yikes! :eek:

This is a harbinger of where the world's economy is heading right now...

There's a definite problem when a country's banks have potential liabilities three times the size of that country's GDP.

[Michael]

Rising unemployment and rising interest rates is a deadly combination. We used to call that "stagflation" back in the late 1970's.

This is the direction the west is heading in right now.

The alternative is to adopt a loose money policy (like the Federal Reserve is doing) and try to create a new inflationary asset bubble (to replace the one they lost).

It is to be noted that the USA has always used high inflation policy to deal with such issues in the past...

[JHC]

Source (http://news.bbc.co.uk/2/hi/business/7694785.stm)

Yikes! :eek:

This is a harbinger of where the world's economy is heading right now...
Yep. My husband told me about this several weeks ago. Apparently they are effectively bankrupt. Didn't make headlines...strange.

[SMadsen]

Needless to say, it's made headlines here. As well as worries.

Some large companies here have been bought by Icelandic investors during the last decade (I always wondered how the hell they could afford 'shopping sprees' like that) and many jobs are at stake.

[Michael]

I was reading about the 'impending' danger in the Icelantic economy for over a year. No surprise there at all.

Interesting diplomatic row between Iceland and UK right now. UK used 'anti-terrorism' laws to freeze Icelantic assets in UK last week - in order to cover Icelantic bank loses in UK. Iceland's bank bailout package leaves all non-Icleantic customers high and dry and UK didn't take kindly to that.

[JHC]

WOW!! Somthings ringing in the back of my mind about the law of unintended consequences in regard to the use of terrorism laws.
And also...can't squeeze blood from a turnip.

[Michael]

WOW!! Somthings ringing in the back of my mind about the law of unintended consequences in regard to the use of terrorism laws.
And also...can't squeeze blood from a turnip.
Indeed, that's always been my argument against the US Patriot Act.

Governments can and will always abuse every legal power we give them.