America Must Learn From Iceland
Iceland’s financial system has collapsed. The government seized control of all of Iceland’s banks, guaranteeing the banks deposits and helping manage the troubled companies. The problem is that the government does not have enough money to cover the debt of these banks. The debt, $62 billion, is 12 times the size of the economy. That is a huge amount of debt for a country of 320,000.
Next to go is the countries currency. The Iceland Krona is trying to be stabilized, but the government had to ditch and effort to peg the krona to the Euro yesterday. As the currency depreciates and inflation skyrockets, the country is going to be in serious trouble. Fortunately, the country is small enough that the International Monetary Fund, or Russia, or whoever ends up stepping up to the plate in the end, may allow the country to survive.
Nobody is big enough to save the American economy from the same troubles. China could help, as they have cash on hand, but it would probably not be enough. We must watch this event of Iceland and study it as a micro-collapse that America cannot let happen.
*image source: nytimes.com
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