Nordic banks step in to back Iceland

Mr_Mumble

Ian, just because you think the Telegraph is quoting rubbish doesn't mean it is rubbish. An awful lot of people worry about the Icelandic economy. Your conspiracy theories about hedge fund managers shorting the currency are backward imho, it was the unwinding of the carry trade (getting 10%+ on the Krona while borrowing in Japanese Yen at 0.5%) that has caused the Krona's devaluation.

Iceland has double digit inflation, interest rates at 15.5% and a GDP of $19bn. These are not the statistics of a country that could support any of its major 3 major banks if they got into trouble.

If Kaupthing or Icesave/Heritable went under deposit takers will be reliant on the UK government to get them out of the mess, that is one less safety net than you have from other international banks.

Moody's just downgraded Iceland from AAA to Aa1, still higher than the other ratings agencies. Bloomberg's report (*warning* quotes from analysts!):
http://www.bloomberg.com/apps/news?pid=20601087&sid=aFl7vJNYqhgU&refer=home

Griffboy

All this gets me very worried, I must say. Should I be worried?

Oblivion

Griffboy wrote: »

All this gets me very worried, I must say. Should I be worried?

As someone who has previously suffered from high blood pressure (now under control) worrying is not a state of mind I'd recommend to anyone.

Just keep your eye on the ball, learn to roll with the sensationalistic press, and use your own judgement.

Dave.

ianmr65

Mr_Mumble wrote: »

Ian, just because you think the Telegraph is quoting rubbish doesn't mean it is rubbish. An awful lot of people worry about the Icelandic economy. Your conspiracy theories about hedge fund managers shorting the currency are backward imho, it was the unwinding of the carry trade (getting 10%+ on the Krona while borrowing in Japanese Yen at 0.5%) that has caused the Krona's devaluation.

Iceland has double digit inflation, interest rates at 15.5% and a GDP of $19bn. These are not the statistics of a country that could support any of its major 3 major banks if they got into trouble.

If Kaupthing or Icesave/Heritable went under deposit takers will be reliant on the UK government to get them out of the mess, that is one less safety net than you have from other international banks.

Moody's just downgraded Iceland from AAA to Aa1, still higher than the other ratings agencies. Bloomberg's report (*warning* quotes from analysts!):
http://www.bloomberg.com/apps/news?pid=20601087&sid=aFl7vJNYqhgU&refer=home

I don't think the telegraph articles are rubbish i know they are, search Iceland, on mse for the pages and pages of evidence, you will find many much more highly respected commentataors and economists, than the clowns who write for the torygraph, who agree with me.

The devaluation was caused by hedge funds shorting the cds spread and spreading rumours, as well as by carry trade. The hedge funds had positions in the currency and on the stock price of the banks.

Iceland is an economy contracting after a massive boom.. of course they have double digit inflation...and high intrest rates.. :rolleyes:

But if you think the uk gov is in a better position to support b&b a&l and hbos with a £100bn budget defecit, i think you are living in cloud cookoo land. We have had one bank collapse, and one teeter. If a major bank were going to crash here, there is nothing the uk gov could do about it. other than beg on their hands and knees for hsbc to arrange a rescue.

Read the posts following martin's excellent investigations, into the FSCS compensation scheme. A scheme which has no money in it, and which is frankly not worth the paper it's printed on.

As to the rating agencies... these are the people who rated subprime toxic derivates as AAA and are partially reposnsible for the credit crunch, so we should def listen to what they have to say from now on!!!

I don't even know why i'm debating with you. :mad: