5 march 2010, iceland votes no

Saturday 6th March 2010

OK, by popular request, here’s a slightly fuller version of the iceland=uk+3 years scenario. Firstly, iceland banks lend out masses more than the entirety of the country’s worth, measured, as all ultimately is, in foreign currency. London has done that too. Yes, iceland was 9x over the limit, whereas uk is 4.5, but both are ludicrous. Secondly, should the usa (or the ecb) find itself in a similar pickle, it has a virtually inexhaustible supply of cash to provide liquidity to banks courtesy of its management of a global reserve currency. Iceland rapidly found its ability to act as lender of last resort to its own banking sector was limited. So is ours. Iceland was forced to nationalise its banks, so were we (alright less foreign debt ridden and a smaller part of the whole). Iceland’s currency crashed, making its assets worth even less. Iceland’s economic survival is now totally in the hands of others, be that the imf or the eu. Both are probably dependent on iceland agreeing to repay its debts to britain and others that lost billions in the crash, which the referendum will reject. Where to go now for icelanders. Well, you wouldn’t want to start there, would you. Yes, I'll move on to something else now, I promise...