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horgad
1000+ Penny Miser Member
USA
1641 Posts |
 Posted - 11/09/2008 : 07:26:43
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My comment: So far the US is having a deflationary bust, but how long will it last? Is this our future?
November 9, 2008
Stunned Icelanders Struggle After Economy’s Fall
By SARAH LYALL
REYKJAVIK, Iceland — The collapse came so fast it seemed unreal, impossible. One woman here compared it to being hit by a train. Another said she felt as if she were watching it through a window. Another said, “It feels like you’ve been put in a prison, and you don’t know what you did wrong.”
This country, as modern and sophisticated as it is geographically isolated, still seems to be in shock. But if the events of last month — the failure of Iceland’s banks; the plummeting of its currency; the first wave of layoffs; the loss of reputation abroad — felt like a bad dream, Iceland has now awakened to find that it is all coming true.
It is not as if Reykjavik, where about two-thirds of the country’s 300,000 people live, is filled with bread lines or homeless shanties or looters smashing store windows. But this city, until recently the center of one of the world’s fastest economic booms, is now the unhappy site of one of its great crashes. It is impossible to meet anyone here who has not been profoundly affected by the financial crisis.
Overnight, people lost their savings. Prices are soaring. Once-crowded restaurants are almost empty. Banks are rationing foreign currency, and companies are finding it dauntingly difficult to do business abroad. Inflation is at 16 percent and rising. People have stopped traveling overseas. The local currency, the krona, was 65 to the dollar a year ago; now it is 130. Companies are slashing salaries, reducing workers’ hours and, in some instances, embarking on mass layoffs.
“No country has ever crashed as quickly and as badly in peacetime,” said Jon Danielsson, an economist for the London School of Economics.
The loss goes beyond the personal, shattering a proud country’s sense of itself.
“Years ago, I would say that I was Icelandic and people might say, ‘Oh, where’s that?’ ” said Katrin Runolfsdottir, 49, who was fired from her secretarial job on Oct. 31. “That was fine. But now there’s this image of us being overspenders, thieves.”
Aldis Nordfjord, a 53-year-old architect, also lost her job last month. So did all 44 of her co-workers — everyone in the company except its owners. Some 75 percent of Iceland’s private-sector architects have been fired in the past few weeks, she said.
In a strange way, she said, it is comforting to be one in a crowd. “Everyone is in the same situation,” she said. “If you can imagine, if only 10 out of 40 people had been fired, it would have been different; you would have felt, ‘Why me? Why not him?’ ”
Until last spring, Iceland’s economy seemed white-hot. It had the fourth-highest gross domestic product per capita in the world. Unemployment hovered between 0 and 1 percent (while forecasts for next spring are as high as 10 percent). A 2007 United Nations report measuring life expectancy, real per-capita income and educational levels identified Iceland as the world’s best country in which to live.
Emboldened by the strong krona, once-frugal Icelanders took regular shopping weekends in Europe, bought fancy cars and built bigger houses paid for with low-interest loans in foreign currencies.
Like the Vikings of old, Icelandic bankers were roaming the world and aggressively seizing business, pumping debt into a soufflé of a system. The banks are the ones that cannot repay tens of billions of dollars in foreign debt, and “they’re the ones who ruined our reputation,” said Adalheidur Hedinsdottir, who runs a small chain of coffee shops called Kaffitar and who sells coffee wholesale to stores.
There was so much work, employers had to import workers from abroad. Ms. Nordfjord, the architect, worked so much overtime last year that she doubled her salary. She was featured on a Swedish radio program as an expert on Iceland’s extraordinary building boom.
Two months ago, her company canceled all overtime. Two weeks ago, it acknowledged that work was slowing. But it promised that there would be enough to last through next summer.
The next day, everyone was herded into a conference room and fired.
Employers are hurting just as much as employees. Ms. Hedinsdottir has laid off seven part-time employees, cut full-time workers’ hours and raised prices. The Kaffitar branch on Reykjavik’s central shopping street, was perhaps half full; in normal times, it would have been bursting at its seams.
While business is dwindling, costs are soaring. When the government took over the country’s failing banks in October, Ms. Hedinsdottir’s latest shipment of coffee — more than 109,000 pounds — was already on the water, en route from Nicaragua. She had the money to pay for it, but because the crisis made foreign banks leery of doing business with Iceland, she said, she was unable to convert enough cash into foreign currency.
“They were calling me every day and asking me what the situation was, and they got really nervous,” Ms. Hedinsdottir said of her creditors. They got so nervous, in fact, they sent the coffee to a warehouse in Hamburg, Germany, where it now sits while she tries to find the foreign currency to pay for it.
Her fixed costs are no longer fixed. Five years ago, the company built a new factory, borrowing the 120 million kronur — about $1.5 million — in foreign currencies. But the currency’s fall has increased her debt to 200 million kronur. This summer, her monthly payments were 2.5 million kronur; now they may be double that — the equivalent of $38,500 in Iceland’s debased currency.
“My financial manager is talking to the banks every day, and we don’t know how much we’re supposed to pay,” Ms. Hedinsdottir said.
In a recent survey, one-third of Icelanders said they would consider emigrating. Foreigners are already abandoning Iceland.
Anthony Restivo, an American who worked this fall for a potato farm in eastern Iceland and was heading home, said all its foreign workers abruptly left last month because their salaries had fallen so much. One man arrived from Poland, he said, then realized how little the krona was worth and went home the next day.
At the Kringlan shopping center on the edge of Reykjavik, Hronn Helgadottir, who works at the Aveda beauty store, said she could no longer afford to travel abroad. But the previous weekend, she said, she and her husband had gone for a last trip to Amsterdam, a holiday they had paid for months ago, when the krona was still strong.
They ate as cheaply as they could and bought nothing. “It was strange to stand in a store and look at a bag or a pair of shoes and see that they cost 100,000 kronur, when last year they cost only 40,000,” she said.
In Kopavogur, a suburb of Reykjavik, Ms. Runolfsdottir, the recently fired secretary, said she had been worried for some time that Iceland would collapse under the weight of inflated expectations.
“If you drive through Reykjavik, you see all these new houses, and I’ve been thinking for the longest time, ‘Where are we going to get people to live in all these homes?’” she said.
The real estate firm that used to employ Ms. Runolfsdottir built about 800 houses two years ago, she said; only 40 percent have been sold.
According to Icelandic law, Ms. Runolfsdottir and other fired employees have three months before they have to leave their jobs. At the end of that period, she will start drawing unemployment benefits.
Meanwhile, her husband’s modest investment in several now-failed Icelandic banks is worthless. “They were encouraging us to buy shares in their firms until the last minute,” she said.
She feels angry at the government, which in her view has mishandled everything, and angry at the banks that have tarnished Iceland’s reputation. And while she has every sympathy with the hundreds of thousands of foreign depositors who may have lost their money, she wonders why the Icelandic government — and, in essence, the Icelandic people — should have to suffer more than they already have.
“We didn’t ask anyone to put their money in the banks,” she said. “These are private companies and private banks, and they went abroad and did business there.”
Despite all this, Icelanders are naturally optimistic, a trait born, perhaps, of living in one of the world’s most punishing landscapes and depending for so much of their history on the fickle fishing industry. The weak krona will make exports more attractive, they point out. Also, Iceland has a highly educated, young and flexible population, and has triumphed after hardship before.
Ragna Sara Jonsdottir, who runs a small business consultancy, said she had met for the first time with other businesses in her office building. “We sat down and said, ‘We all have ideas, and we can help each other through difficult times,’ ” she said.
But she said she was just as shocked as everyone else by the suddenness, and the severity, of the downturn. When the prime minister, Geir H. Haarde, addressed the nation at the beginning of October, she said, her 6-year-old daughter asked her to explain what he had said.
She answered that there was a crisis, but that the prime minister had not told the country how the government planned to address it. Her daughter said, “Maybe he didn’t know what to say.”
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fb101
Administrator
USA
2856 Posts |
Posted - 11/09/2008 : 12:13:46
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Coming soon to a country near you! |
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Nickelless
Administrator
USA
5580 Posts |
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 11/09/2008 : 17:33:00
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You must be logged in to see this link.
hoarding is pointless. The new government will just take it from you.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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Nickelless
Administrator
USA
5580 Posts |
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 11/09/2008 : 18:51:31
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How about just passing a law that says owning gold or silver is treason against the state?
Then just doing random checks of actual houses. Are you going to keep your gold if catching you with it is punishable by death? No one is going to trade for it under those conditions. They just destroyed demand and likely will get most of the supply handed to them.
With their current goals of taking from those with it and giving to the poor, then nothing is safe.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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Nickelless
Administrator
USA
5580 Posts |
Posted - 11/09/2008 : 19:28:21
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quote:
Originally posted by swusc
How about just passing a law that says owning gold or silver is treason against the state?
Then just doing random checks of actual houses. Are you going to keep your gold if catching you with it is punishable by death? No one is going to trade for it under those conditions. They just destroyed demand and likely will get most of the supply handed to them.
With their current goals of taking from those with it and giving to the poor, then nothing is safe.
-SWUSC
And when was the last time that owning PM was punishable by death?? |
Visit my new preparedness site: Preparedness.cc/SurvivalPrep.net
--Latest article: Stocking up on spices to keep food preps lively
---------------
Be prepared...and prepared to help: http://www.survivalblog.com/charity.html
Are you ready spiritually for hard times? http://www.jesusfreak.com/rapture.asp |
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fb101
Administrator
USA
2856 Posts |
Posted - 11/09/2008 : 19:43:24
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| I still don't worry about that. Too many rich coin collectors, and we must never p*** off the rich. |
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Nickelless
Administrator
USA
5580 Posts |
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Nickelless
Administrator
USA
5580 Posts |
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 11/09/2008 : 20:57:04
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quote:
Originally posted by Nickelless
quote:
Originally posted by swusc
How about just passing a law that says owning gold or silver is treason against the state?
Then just doing random checks of actual houses. Are you going to keep your gold if catching you with it is punishable by death? No one is going to trade for it under those conditions. They just destroyed demand and likely will get most of the supply handed to them.
With their current goals of taking from those with it and giving to the poor, then nothing is safe.
-SWUSC
And when was the last time that owning PM was punishable by death??
I would say late 1930s and early 1940s, when Nazi Germany killed off the savers, but they blamed it on religion.
If they are willing to take that many assets from people, then why do you think they would stop at point x?
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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Bluegill
1000+ Penny Miser Member
USA
1964 Posts |
Posted - 11/09/2008 : 21:00:02
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quote:
Originally posted by Nickelless
quote:
Originally posted by swusc
You must be logged in to see this link.
hoarding is pointless. The new government will just take it from you.
-SWUSC
They can do whatever they want to the electronic fiat money in our retirement accounts, but do you really think they have the manpower and the know-how at this point to ransack our homes for any wealth such as PM that we might (or might not) be hiding? I like David Morgan's example that almost two COMEX contracts (more than 9,500 ounces) can fit in a one-cubit-foot space? And for those of us who don't necessarily put all our PM in one place, you could hide it just about anywhere and nobody would know you have it:
You must be logged in to see this link.
This would be one of many ways... This is only the tip of the iceberg.
You must be logged in to see this link.
They could mandate that all PM's be registered... Outlaw them and make them contraband, (remember 1933?)... Mandate sale to the government... Pass a PM tax... Use your imagination...
The government has a propaganda machine Hitler and Stalin could only dream of. They will escalate the class warfare, pit groups against each other. Enact anti hoarding laws. With the right incentives your neighbors and coworkers will report you.
Our schools have already been succesful in brainwashing our children to turn in their parents who own firearms. Why couldn't they do that with PM's?
PM's, guns, cash, extra food, firewood, anything else they don't want you to have. The sky is the limit.
And don't forget, Rockefeller was completely serious when he said he wanted all citizens implanted with RFID chips...
Never say never. Welcome to the new Amerika.
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Inflationary Bust
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