hm, so there is this country, facing a declining currency, rising inflation, turmoil in the stock market with large fluctuations in key indices on short terms, real estate market bubble that looks like it might be popping, and concern that risk perception is leading to an acute credit crunch
so... the central bank calls an emergency meeting and does what one should, as they have done before (though never quite so drastically)
Iceland raises interest rates to 15%
inflation is driven by increasing commodity costs and devaluing currency, although, unlike the US, Iceland is seeing some wage inflation to compensate
action worked, for now
- Log in to post comments
More like this
The US financial crisis is causing an implosion in Iceland, which is forcing a cascade into the European financial system.
Serious talk of a bank holiday and food hoarding has been heard.
Head of largest oil company says oil imports may cease because of lack of US dollars.
Last week one of Iceland…
Anyone who has traveled in Europe before and after the introduction of the euro can appreciate how easy tourism is made by the common currency (haggling with the guys in money change booths was never my idea of vacation). But a recent paper by Benn Steil in Foreign Affairs goes even further,…
Bill Mitchell smacks down some silliness from Peggy Noonan about the supposed looming insolvency of the U.S. (italics mine):
She [Noonan] should hang her head in shame for providing further myths that will certainly agitate all the ignorant - uneducated (despite long lists of credentials) - and…
so what happened in Iceland, where are things headed, and is it a one-off microsystem gone off the rails, or a bellwether for the developed world
Iceland was a dirt poor fish+agriculture economy, under external Danish rule until 1944 when it unilaterally declared independence, the Danes being…
Interesting times, eh? Of course, what we have (as a commodity exporter) is a very strong currency with high inflation, but without (so far) rising wages.