Ho-hum

out of my box

I am still trying to cram the concept of viscous flow in pipes into my brain so I can have at least a decent score in the Fluid Mechanics exam tomorrow at 10 am. Unfortunately, the progress is slower than expected (sigh). In between trying to figure out buoyancy, I decided to take a break and busy myself with reading Yahoo’s headines.

Although I am often guilty of not caring about anything outside the four conrners of my confines, the worry that echoes through all the channels of communication has become to loud to simply ignore. Of course, I have seen on TV and read somewhere about individuals declaring bankruptcy… I’ve been not so lucky to see a few of our family owned corporations declare bankruptcy… Over the past few months, I have heard (and tried to feign interest) about large financial institutions declaring bankruoptcy — but I didn’t anticipate ever reading about a country possibly declaring “national bankruptcy”. I suddenly felt so small amidst the whole global financial meltdown.

The end of the article caught my attention…

As regular Icelanders begin to blame the government and market regulators, Haarde said the banks had been “victims of external circumstances.”

Richard Portes of the London Business School agreed, noting the banks were well-capitalized and had not bought any of the toxic debt that has brought down banks elsewhere.

“I believe it is absolutely wrong to say these banks were reckless,” said. “Quite the contrary. They were hugely unlucky.”

Hugely unlucky. 😦 Aren’t we all?

Iceland teeters on the brink of bankruptcy

By JANE WARDELL, AP Business Writer Tue Oct 7, 3:40 PM ET

REYKJAVIK, Iceland – This volcanic island near the Arctic Circle is on the brink of becoming the first “national bankruptcy” of the global financial meltdown.

Home to just 320,000 people on a territory the size of Kentucky, Iceland has formidable international reach because of an outsized banking sector that set out with Viking confidence to conquer swaths of the British economy — from fashion retailers to top soccer teams.

The strategy gave Icelanders one of the world’s highest per capita incomes. But now they are watching helplessly as their economy implodes — their currency losing almost half its value, and their heavily exposed banks collapsing under the weight of debts incurred by lending in the boom times.

“Everything is closed. We couldn’t sell our stock or take money from the bank,” said Johann Sigurdsson as he left a branch of Landsbanki in downtown Reykjavik.

The government had earlier announced it had nationalized the bank under emergency laws enacted to deal with the crisis.

“We have been forced to take decisive action to save the country,” Prime Minister Geir H. Haarde said of those sweeping new powers that allow the government to take over companies, limit the authority of boards, and call shareholder meetings.

A full-blown collapse of Iceland‘s financial system would send shock waves across Europe, given the heavy investment by Icelandic banks and companies across the continent.

One of Iceland’s biggest companies, retailing investment group Baugur, owns or has stakes in dozens of major European retailers — including enough to make it the largest private company in Britain, where it owns a handful of stores such as the famous toy store Hamley’s.

Kaupthing, Iceland’s largest bank and one of those whose share trading was suspended last week to stop a huge sell-off, has also invested in European retail groups.

Thousands of Britons have accounts with Icesave, the online arm of Landsbanki that regulators said was likely to file for bankruptcy after it stopped permitting customers to withdraw money from their accounts Tuesday.

To try to wrest control of the spiraling situation, the government also loaned $680 million to Kaupthing to tide it over and said it was negotiating a $5.4 billion loan from Russia to shore up the nation’s finances.

The speed of Iceland’s downfall in the week since it announced it was nationalizing Glitnir bank, the country’s third largest, caught many by surprise despite warnings that it was the “canary in the coal mine” of the global credit squeeze.

To continue reading “Iceland teeters on the brink of bankruptcy”, click here

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s