Iceland’s Gov’t Resigns

icelantisRecent protests in Iceland over the economic catastrophy there have drawn blood.

Do you really think it’s impossible for something like this to happen in the US? Later this summer, perhaps?

REYKJAVIK, Iceland – Iceland’s coalition government collapsed on Monday under the pressures of a financial meltdown and Prime Minister Geir Haarde said he would hand in his resignation to President Olafur Ragnar Grimsson.

“I will go to the president and hand in the government’s resignation. Then I will have a meeting with the opposition leaders to discuss the possibility of a national unity government,” Haarde told reporters.

Foreign Minister Ingibjorg Gisladottir, the Social Democrat leader who had been considered a potential replacement for Haarde, announced she would not seek to be prime minister and would take a leave of absence for one or two months. [more]

 

See also: Iceland Burns

Iceland Burns

Iceland began its historic collapse Oct 9 (when they closed their stock market after the failure of their three largest banks). Through November and December the normally genteel Icelanders organized weekend protests against their government.

Now things have gotten seriously violent, for the first time in 60 years.

Late Wednesday night, as thousands of protesters re-lit a large bonfire in front of the Parliament, the Reykjavik chapter of the Progressive Party… called for new elections in May 2009.

As the night wore on, though, matters descended into violence.

Around 1:30 am, police dispersed the crowd with tear gas, the first time tear gas had been used against Icelanders in 60 years. The crowd soon reformed and pelted riot police with stones. One officer was severely injured by a cobblestone.

This is what it’s like when a 1st world country slips into economic oblivion.

iceland-burns

My heart goes out to the people of Iceland, with whom I feel we in the US and Europe share a fraternal bond. This is not  the demise of a banana republic.

Wednesday morning began with angry protesters throwing paint at the government building and surrounding Prime Minister Geir Haarde’s car. They banged on the vehicle’s windows and pelted it with eggs for several minutes before his bodyguards and police pushed them away.

The protesters gathered in front of the Parliament building banged on pots and pans while shouting “Unfit government!” “You’re fired!” and more creative insults. [more]

A full 1% of Iceland’s populace is in the streets protesting. If 1% of the US population took to the streets there would be 3 million of us agitating for change.

Bet that’d be enough for a declaration of martial law!

Read up on Iceland, follow this story. It may be a foreshadowing of what’s to come our way late summer 2009.

Please be prepared!

Iceland’s Gov’t Resigns
Iceland Warns of Bankruptcy
Krona Dies: Tuff Times in Iceland (Update 1)

Krona Dies: Tuff Times in Iceland (Update 1)

Update from Jim Sinclair 10/14/2008:
“Iceland’s collapse is no small event. It is not something meaningless that cannot be applied to a broke giant like the USA whose debt to non US entities are enormous problem from banks to government.

“This morning the stock market in Iceland, after a three day stop, opened up down 77%. The Krona is in the tank.

“The very few in Iceland that survived their crisis are those that, against all advice from every corner, held gold. They are sound and solvent. When this happens to a country their distribution means melts down. Then it is a rush to buy everything you will need for a minimum of 90 days, maybe much longer.”

Coming soon to the US?

What’s happening in Iceland today is due to the collapse of their currency, the krona. This gives you an idea what it will be like in the US if/when the dollar goes belly up.

Oct. 13 (Bloomberg) — Icelanders are flooding the supermarkets, stocking up on food as the collapse of the banking system threatens to cut the island off from imports.

“We have had crazy days for a week now,” said Johannes Smari Oluffsson, manager of the Bonus discount grocery store in Reykjavik’s main shopping center. “Sales have doubled.”

Bonus, a nationwide chain, has stock at its warehouse for about two weeks. After that, the shelves will start emptying unless it can get access to foreign currency, the 22-year-old manager said.

Iceland’s foreign currency market has seized up after the three largest banks collapsed and the government abandoned an attempt to peg the exchange rate. Many banks won’t trade the krona and suppliers from abroad are demanding payment in advance

The crisis is already hitting clothing retailers. A short walk from Bonus in the capital’s Kringlan shopping center, Ragnhildur Jonsdottir, owner of the Next Plc clothing store, said she can’t get any foreign currency to pay for incoming shipments.

“We aren’t getting new shipments in, as we normally do once a week,” Jonsdottir said. “This is the third week that we haven’t had any shipments.”

Bankrupt
“There is absolutely no currency in the country today to import,” said Andres Magnusson, chief executive officer of the Icelandic Federation of Trade and Services in Reykjavik.

Shortages By End of Week
Magnusson said last week that one of Iceland’s largest supermarket chains was unable to get any foreign currency to make purchases abroad and another retailer’s electronic payment didn’t go through. Iceland will begin to see shortages of “regular goods” by the end of the week if nothing changes, he said.

“We are struggling to make the economy survive from hour to hour,” Magnusson said. “There is an enormous amount of capital that wants to get out of the country.”

Sedlabanki told lenders on Oct. 10 that residents who want foreign currency should first prove they need the money for traveling by providing documentation for their trip.

No One Trusts Us
Wholesalers are demanding that importers pay before any goods are shipped, said Knutur Signarsson, head of the Reykjavik-based Federation of Icelandic Trade. Under normal circumstances, wholesalers abroad would extend credit for 30 to 90 days, he said.

“Many of them ask us to pay cash before they send the goods to Iceland,” Signarsson said. “Because of the situation, Iceland has become a country that no one trusts any longer.”

Bogi Thor Siguroddsson, owner of Johan Roenning, an import and retail business which has about 7 billion krona ($71 million) in annual sales, says he’s instructed his purchasing managers to only import the core goods, including light bulbs, lamps and electrical cables, they need to serve their customers.

“It’s enough to have the credit crisis,” he said. “Then you have the currency crash. Unfortunately, we have shown that we can’t handle it ourselves.”

Food Inflation
Icelanders, whose per capita gross domestic product is the fifth highest in the world, will have to tighten their belts.

Shoppers are paying more for the goods they do get. The cost of fruits and vegetables have gone up about 50% in recent months, said Steinunn Kristinsdottir, a 33-year-old Reykjavik resident who was leaving the Bonus store with her cart full.

“This situation really has been a bit troubling for people,” she said. “They don’t know what’s going to happen.” [more…]

◊◊◊◊ Now: Gold @ $832.40, Silver @ $10.69, USDX @ 81.61 ◊◊◊◊
◊◊◊◊ Now: DJIA 9,387.61

Iceland Warns of Bankruptcy

Imagine if/when our President makes an announcement like this…

Icelandic Prime Minister Geir Haarde addressed the nation as the country faced its worst economic crisis in modern times.

Fellow Icelanders…

The entire world is experiencing a major economic crisis, which can be likened in its effects on the world’s banking systems, to an economic natural disaster.

The Icelandic banks have not escaped this banking crisis. Under all normal circumstances larger banks would be more likely to survive temporary difficulties, but the disaster which is now engulfing the world is of a different nature, and the size of the banks in comparison with the Icelandic economy is today their main weakness.

The effects of this chain of events have turned out to be more serious and wide ranging than anyone had expected.

In recent weeks the world’s financial system has been subject to devastating shocks. The effects have been that large international banks have stopped financing other banks and complete lack of confidence has developed in business between banks. This has caused the position of Icelandic banks to deteriorate very rapidly in the last few days.

There is a very real danger, fellow citizens, that the Icelandic economy, in the worst case, could be sucked with the banks into the whirlpool and the result could be national bankruptcy.

The position has today altered completely and for the worse. Major credit lines to the banks have been closed and it was decided this morning to suspend trading with the banks and with the savings funds in the Icelandic Stock Exchange.

If there was ever a time when the Icelandic nation needed to stand together and show fortitude in the face of adversity, then this is the moment. I urge you all to guard that which is most important in the life of everyone of us, protect those values which will survive the storm now beginning.

The task of the authorities over the coming days is clear: to make sure that chaos does not ensue if the Icelandic banks become non-operational. Both in politics and elsewhere it will be important to sheathe our swords. It is very important that we display both calm and consideration during the difficult days ahead.

[full text of his speech]