Sunday, January 25, 2009

Iceland's Financial Crisis

Iceland enjoyed a fantastic party. Now it is having a huge hangover.

The island of 319,000 inhabitants is in the heart of the financial storm. Today, share trading in six of Iceland's biggest financial firms was suspended while waiting for an official announcement. The government is under hard pressure to come up with an economic bailout to rescue the country's financial system. Some analysts argue it won't be able to.

Just last week the authorities were forced to nationalise the nation's third-largest bank, Glitnir, taking a 75% share in the firm for 600m euros (£464m). Iceland's currency, the krona, is plummeting against the euro and the dollar. It is rated the world's third-worst performing currency – just above Zimbabwe's and Turkmenistan's. Inflation is at a whopping 14% per year, with some suggesting it could soar to 20%.

Iceland's problems come after booming times. For the past decade, it was one of the fastest growing economies in Europe, making Icelanders the sixth wealthiest people among OECD economies. It was an incredible achievement for a country that, just 50 years ago, was a poor nation surviving mainly on fishing. - Guardian

Wait...they have more than one financial firm in Iceland?

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