The stresses strains, and imbalances in the global economic system are working their way to the surface.
Iceland was forced to raise it's interest rate .75% to over 11% 2 days ago but it's probably to little too late to prevent financial collapse. Ireland is in a similiar boat but can't raise it's rates because the ECB control them so Ireland's economy will continue overheating until it implodes.
The UK and US are also in trouble as are many other countries as this report from Fitch Ratings indicates ............
How can they be in a similar boat whan one is collapsing and one expanding? Anyway, I'm sure this will be as reliable as your last forecast. You cant get whats going to happen in the next week right, let alone months or years ahead.
If nothing is done about it then it is not okay but Iceland has in fact a very robust economy and these things are being watched carefully. Great investments in hydro and geo-thermal power stations and other building projects have both caused an increase in trade deficit and caused one of the worlds´ lowest rates of unemployment (1.5%) The Króna had been rising steadily for the last couple of years and was considerably over-valued. This caused hardship for the export industries and tourism and the fall of the Króna is much better for the economy than the artificially high rate that we had around the end of last year. So the end result? Yes, it is quite OK.
Didn't you bother to read the report I linked to : quote ......... "Six countries (previously 2) now exhibit the highest level of macro-prudential vulnerability (MP1 3) Of these Iceland is the most extreme case, with huge credit growth amd major real exchange rate, equity and property price increases. The picture in Ireland is
*similiar in nature* though not in degree........"
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Geddit ? That's why they're in the 'same boat'....... only difference being that Iceland has already fallen overboard and is in danger of drowning while Ireland is yet to fall in, but fall in it will though it doesn't seem to realise it yet as the borrow-to-spend frenzy is still continuing.
My forecast for a house price crash is still many months away.
As for 'weekly forecasts', I haven't made any. You must be getting me confused with that scribbler from the Times worrying about a sterling collapse after the Fed raised rates last week. Journo's love the 'drama queen' stuff, but you have to sift the facts (if there are any) from the hyperbole.
My only 'currency prediction' is that if central banks worldwide continue to raise their rates and the Bank of England fails to follow suit they risk an eventual run on the pound. Even a pollyanna like you surely couldn't disagree with such a reasonable proposition though I'm sure you're about to show otherwise :-)
Here's some housing market cartoons for your amusement ..............
Iceland is nowhere near an economic collapse, the economy is in fact quite good and the currency has just been stabilising itself after having been over-rated for the last year or so. The Icelandic banks are operating abroad for ca 70% of their income so it is only natural that most of their borrowing is done abroad and you cannot include money that the banks borrow abroad in the total national debt of Iceland (as most of that money is being spent abroad by the foreign branches of the banks) If you exclude the foreign debt of the banks then the picture looks actually very different.
Yes, and it is the banks that are operating internationally so it is not a part of the Icelandic economy. Most of the borrowing done by the public is to buy property.
I wouldn't say 'booming' exactly but it's certainly waking from the doldrums at long last as, it appears, is the German economy also. Excellent news :-)
Sig. Another gloomy piece out today on the Icelandic economy. What's your take on this ? Is it mainly a problem for Iceland's banks or could it impinge on the rest of the economy ....
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The Sunday Times April 02, 2006 British firms face chill as Iceland crumbles
Icelandic raiders have bought large stakes in UK firms. With their economy now in trouble, will they be forced to bale out? Richard Fletcher reports ......................... snip .........
Buoyed by a booming economy at home, Icelandic raiders have bought dozens of British companies in recent years - from food producers and retailers to stockbrokers and airlines (see below). Icelandic-owned firms now employ 65,000 people in Britain......
But now Iceland's economy is in trouble. Interest rates are soaring
- rising to 11.5% last week - and the stock market and the currency are sliding amid warnings that the country is facing a debt crisis.
Questions are being asked about Iceland's economy and a number of analysts are wondering whether the fallout will spread to Britain............. continued ...................
Icelenaders used to wander in to Ireland with no coats on their backs and no luggage, then decend on Brown Thomas en masse and buy up all the leather goods in the place. Looked like a pimp's convention going back to the Burlo or Westbury or wherever.
People who lived off the fat of the land for so long must have learnt a thing or two about an economy. I suspect they'll turn it around soon enough. Meantime, please do us all a favour and focus on the real reason the world economy faces potential disaster;-
The multi-trillion deficit beign run up by the Americans to finance their foreign adventures under this congenital idiot puppet president.
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