Looks like the current Global Recession has now added Iceland to its “wall of shame”. Iceland’s government topples amid financial mess – at least that’s how the Associated Press describes it. Public dissent has caused the government to disband itself.
Iceland has been mired in crisis since October, when the country’s banks collapsed under the weight of debts amassed during years of rapid expansion.
The value of the country’s krona currency has plummeted, hitting many Icelanders who took out special loans denoted in foreign currencies for new homes and cars during the boom years. In addition, Iceland must repay billions of dollars to Europeans who held accounts with subsidiaries of collapsed Icelandic banks.
Haarde’s government has nationalized banks and negotiated about $10 billion in bailout loans from the International Monetary Fund and individual countries.
Wow, quite a stark picture of what happens when too much debt is amassed during “expansion years”. Sounds familiar? Yep, lets hope it doesn’t happen here.