Wednesday, October 15, 2008

Another day, another krona

The market opened today finally in Reykjavik and it was a road runner moment....down 77%. In the Hekla auto showroom, the nation's largest, not a car to be seen. The Central Bank lowered interest rates, it's so called policy rate from 15.5 to 12%. That should give a boost to the currency which still isn't being traded except under unusual circumstance. I read that income taxes will likely be raised. The young lady to the right is in the country's famous Blue Lagoon, a giant hot spring.The vapor over her head is the Icelandic Krona evaporating. I have been scouring the internet for online communique's from the beautiful country and some of the posts are almost heartrending even amid the banking delamination. Icelandonline and are two samples of what is really going on away from the national media. As you would expect, folks are pretty sore but as befits a country of stoic sturdy souls, no one is in a panic. The poor folks who took out car and house mortgages in Euros because the interest rates were lower are looking at huge resets on their payments and barring a miracle, many expect to lose their homes and cars. Many have lost all their savings. Their prime minister on TV seems stolid and calm, a far cry from the jerky A.D.D spectacle of bush every time he steps up to the mike. ECS, a blogger in Reykjavik of course voices the common metaphor of Iceland being a canary in a coal mine, showing the rest of the world its possible future. It does look like Hungary, Ukraine and some of the former Soviet Republics may be facing a similar fate. The S&P is down 6.5% as I speak and oil is off as well which means we can now go out and fire up our Hummer again for a trip to the convenience mart for a pack of Camels. The bad news is that we just moved up Peak Oil a little closer. I have faith that the Icelanders will get through this. I don't have the same faith in my countrymen.

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