Iceland Facing Bankruptcy

It's bad enough when you read about a person or a business going bankrupt. As bad as that news is you figure it's as a result of the economy and usually it doesn't affect you directly. But when a country like Iceland appears to be going bankrupt it makes one sit up and take notice. Iceland shouldn't have that much overhead. But the news seems to indicate Iceland's bankruptcy is a possibility.

The Independent in its article "Meltdown: Iceland on the brink," says that Iceland up until recently was "the" place to go. Their city of Reykjavik was a favorite place to visit by the well-to-do and they had year-'round sun. It was a place where people looking for culture were lured.

So, what happened to Iceland?

The United States closed its navel air station in Keflavik and the business people of Iceland felt as though they had come out from under American domination.

As a result businessmen began to try high-risk ventures. Further, people spent money like it was water. They bought the best food, the best clothes and the best cars. They also borrowed money at the same pace. That is a problem for them today.

Due to the inflated methodologies used the banks gave away too much money and as a result have a problem.

The situation with Iceland is not unlike the Stock Market Crash of 1929 with a steep climb and no thought of the future as well as a steep dive that no one was looking for.

As a result of Iceland's lack of self-preservation they have had to nationalize three banks and declare them bankrupt as well.

Icelander's who purchased land, fancy vehicles and businesses with foreign money find themselves in a mess because the Icelandic money has dropped to 25% of its original value.

The truly sad thing about this situation is that conservative Icelander's are paying just as much of a price.

The people in Iceland who were the aggressive big spenders were referred to as "Vikings" as in the re-emergence of the Vikings.

It doesn't seem unlike our country where we are all paying a huge price for the poor business decisions major companies have made.

Reference:

http://www.independent.co.uk/news/world/europe/meltdown-iceland-on-the-brink-1515753.html