http://www.nakedcapitalism.com/2008/11/first-casualty-of-crisis-iceland.html
Iceland just goes to show....
Yeah.....it can happen........
Iceland just goes to show....
Yeah.....it can happen........
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Is the US....A Giant Iceland ?
- Thread starter libertad
- Start date
Is the US ... a giant Iceland?
In a word .... NO
Population = 300K plus a bit.
Icelanders are principally fishermen with a little storekeeping thrown in and of late a bit of tourism has been added to the mix.
In a sense it is a small partner to New Zealand, Uruguay and several other lightly populated commodity countries trying to live beyond their abilities.
It is fair to say that if any one of them slipped of the planet, they would not be missed economically.
They are ripe for the picking by the large carry trade hedge funds.
Arrogance and stupidity are natural traveling companions.
If you can spot one in a crowd then you will soon find the other.
And this is the area of commonality between US and Iceland.
It is arrogant to believe that trade deficits do not matter and it is stupid to base your economy and lifestyle upon this premise.
Equally it is both arrogant and stupid for a tiny gov to allow pissant local banks to advance enormous loans to offshore strangers ... it tends to piss them off when things go eventually sour , even although the fools have no one to blame but themselves.
It brings Argentina and Turkish bonds to my mind, but that is another story of stupid borrowers becoming all self righteous when their greed and stupidity precede their brain and their retirement account turns into duck soup.
Anyway, back to US and Iceland.
US will never follow in the direction of Iceland, simply because it cannot.
US will take it's own course as desperate people make desperate decisions.
It can easily slide gracefully into a partial depression ( it missed the recession whilst people argued as to whether they would have one or not) and slowly watch it's assets deflate along with the dollar.
Of course, the nice foreigners can come along and buy up large and save the day but if you believe this then you are assuming that they do not need their own reserves to solve their own problems first.
Only time will tell, and time as often or not will prove most of us incorrect and wrong footed in the future.
But so far, I see very little in the emergency packages to prevent this mess from sliding into a bigger mess, but I try to keep an open mind as events change.
regards
f9
In a word .... NO
Population = 300K plus a bit.
Icelanders are principally fishermen with a little storekeeping thrown in and of late a bit of tourism has been added to the mix.
In a sense it is a small partner to New Zealand, Uruguay and several other lightly populated commodity countries trying to live beyond their abilities.
It is fair to say that if any one of them slipped of the planet, they would not be missed economically.
They are ripe for the picking by the large carry trade hedge funds.
Arrogance and stupidity are natural traveling companions.
If you can spot one in a crowd then you will soon find the other.
And this is the area of commonality between US and Iceland.
It is arrogant to believe that trade deficits do not matter and it is stupid to base your economy and lifestyle upon this premise.
Equally it is both arrogant and stupid for a tiny gov to allow pissant local banks to advance enormous loans to offshore strangers ... it tends to piss them off when things go eventually sour , even although the fools have no one to blame but themselves.
It brings Argentina and Turkish bonds to my mind, but that is another story of stupid borrowers becoming all self righteous when their greed and stupidity precede their brain and their retirement account turns into duck soup.
Anyway, back to US and Iceland.
US will never follow in the direction of Iceland, simply because it cannot.
US will take it's own course as desperate people make desperate decisions.
It can easily slide gracefully into a partial depression ( it missed the recession whilst people argued as to whether they would have one or not) and slowly watch it's assets deflate along with the dollar.
Of course, the nice foreigners can come along and buy up large and save the day but if you believe this then you are assuming that they do not need their own reserves to solve their own problems first.
Only time will tell, and time as often or not will prove most of us incorrect and wrong footed in the future.
But so far, I see very little in the emergency packages to prevent this mess from sliding into a bigger mess, but I try to keep an open mind as events change.
regards
f9
Good post...as always....
The focus right now is to make obvious to the world....what is at the root cause of both Iceland and the US in terms of the current financial problems....
We can give these people the name .."The Chipsters"...
What this means is that you have people of influence which cause financial havoc between the government and corporations....
The view of short term gains for a few individuals...clouds over what is good in the long run for the population...
The perfect example of this today is the Sec Treas of the US ....Henry Paulson....Paulson is a "Chipster"...
When you check out the background in Wiki about Paulson....you can quickly realize how governments are put in positions of collapse....because of the rewards of the few which are on the corporate side....
After you review this....then quickly review the actions he tried to impose...and those he has imposed......Now review his personal millions he has banked...that were directly from the promotion of the cause of the US problems.....now look where he is ....and the tax relief to the tune of over $100 million to sit out in his position for a couple of years on the government side.....He is a straightforward classic "Chipster"....
This is what has caused Iceland's downfall....
And the downfall of the US....
Governments all over the world....need to get rid of the "Chipsters"......
The SEC is full of them.....
The focus right now is to make obvious to the world....what is at the root cause of both Iceland and the US in terms of the current financial problems....
We can give these people the name .."The Chipsters"...
What this means is that you have people of influence which cause financial havoc between the government and corporations....
The view of short term gains for a few individuals...clouds over what is good in the long run for the population...
The perfect example of this today is the Sec Treas of the US ....Henry Paulson....Paulson is a "Chipster"...
When you check out the background in Wiki about Paulson....you can quickly realize how governments are put in positions of collapse....because of the rewards of the few which are on the corporate side....
After you review this....then quickly review the actions he tried to impose...and those he has imposed......Now review his personal millions he has banked...that were directly from the promotion of the cause of the US problems.....now look where he is ....and the tax relief to the tune of over $100 million to sit out in his position for a couple of years on the government side.....He is a straightforward classic "Chipster"....
This is what has caused Iceland's downfall....
And the downfall of the US....
Governments all over the world....need to get rid of the "Chipsters"......
The SEC is full of them.....
Quote from libertad:
Good post...as always....
Governments all over the world....need to get rid of the "Chipsters"......
The SEC is full of them.....
I am unfamiliar with the term "chipster" but I have Hank on my "rogue persons" list as a god-bothering teetotaler amongst other things.
Quite frankly he is going to have to work hard to remove his name from the list before I can declare him "employable"
Once on the list (also known as "dickheads of mass stupidity" it is very difficult to get off.
I imagine we are living through a period of "death to democracy" although what follows quite frankly, I have no idea.
The election of O on Nov 4 brought tears of joy to tens of millions of people even though no one seemed to know what O would/could do to improve their lives.
They just wanted an end to W.
Well, I say be very careful what you pray for ...................
I know that O has released hope for Latinos and African Americans.
But when you look at the modern history of Latin/Central America and Africa and small measure of caution might be appropriate.
Anyway, it is a brave new world and so long as humans will bet a weeks wages on two flies crawling up a window, there will always be something to trade.
regards
f9
Quote from zdreg:
"US will never follow in the direction of Iceland, simply because it cannot."
above is a false statement.
considering the population makeup , the educational system and the culture of dependency it is well on its way to an implosion.
since 1965, we've stuffed the country full of 3rd world people
and now we're well on our way to being a 3rd world country
imagine that
but diversity is our strength?
Quote from zdreg:
"US will never follow in the direction of Iceland, simply because it cannot."
above is a false statement.
considering the population makeup , the educational system and the culture of dependency it is well on its way to an implosion.
You may well be correct, but US road to failure is quite different to that taken by Iceland.
I am very surprised that you made this statement
"above is a false statement."
since the first steps to failure involved the unwinding of the carry trade.
The Krona lost more than half it's value and the USD rose as a result.
There are as many paths to failure as there are to success, but I can assure you that US and Iceland do not share the same road even if the eventual outcomes share a dismal similarity
regards
f9
Quote from libertad:
http://www.nakedcapitalism.com/2008/11/first-casualty-of-crisis-iceland.html
Iceland just goes to show....
Yeah.....it can happen........
no, it is equivalent to pre WW II Germany:
Think about manufacturing having shifted from the cities to further away made possible by trucks and telephone ( = cheaper labour)
Think the "easy money" of that having worn thin = everyone started to do it so the "cream" had gone.
Think steel companies dictating the government what they want.
Think starting wars in neighbouring countries on pretences of "safeguarding the country"
Now roll forward:
- container shipping
- air shipping
- internet
- oil companies dictating the government what to do
- war against "terrorists" (by the way: one will label it a "terrorist" anonther a "freedom fighter", just depends on which side of the fence you stand)
hmmmm....
Quote from fearless9:
You may well be correct, but US road to failure is quite different to that taken by Iceland.
I am very surprised that you made this statement
"above is a false statement."
since the first steps to failure involved the unwinding of the carry trade.
The Krona lost more than half it's value and the USD rose as a result.
There are as many paths to failure as there are to success, but I can assure you that US and Iceland do not share the same road even if the eventual outcomes share a dismal similarity
regards
f9
It are those very carry trades that are at the root of this and cause that the "old rules" of lowering / raising interest rates no longer work. Cannot understand why "the powers in charge" were ever so stupid to implement the free currency trade.
Scenario: Japanese house wives borrowing money in Japan at 1% and putting it in the bank in New Zealand at 8%. Big demand for NZ dollar: exchange rate goes up and NZ economy looks like booming. Now "times are getting tough" , lets lower the rate to "stimulate the economy". Some Japanese housewives pull money out => currecny goes down => more pull money out => currecny goes down. "Oh we are now really having a difficult time, imports are soooo expensive, lets stimulate the economy a lot, lets drop the interest rates even more"
Same in the US: who is having the biggest savings and financial GDP? Now if the US dollar goes down and you get 1% or so interest then you are still in real terms negative. Then you might as well have the money under the mattress so better bring it home to China=> no more money available to lend in US.....
Bad......
Quote from bali_survivor:
It are those very carry trades that are at the root of this and cause that the "old rules" of lowering / raising interest rates no longer work. Cannot understand why "the powers in charge" were ever so stupid to implement the free currency trade.
Scenario: Japanese house wives borrowing money in Japan at 1% and putting it in the bank in New Zealand at 8%. Big demand for NZ dollar: exchange rate goes up and NZ economy looks like booming. Now "times are getting tough" , lets lower the rate to "stimulate the economy". Some Japanese housewives pull money out => currecny goes down => more pull money out => currecny goes down. "Oh we are now really having a difficult time, imports are soooo expensive, lets stimulate the economy a lot, lets drop the interest rates even more"
Same in the US: who is having the biggest savings and financial GDP? Now if the US dollar goes down and you get 1% or so interest then you are still in real terms negative. Then you might as well have the money under the mattress so better bring it home to China=> no more money available to lend in US.....
Bad......
Sir, I don't know you, but your sense of logic is quite keen. Kudos.