Monday, October 26, 2009

Would you like fries with that or eat your Kronas

You know you are in trouble when your economy is so bad that McDonalds packs up and leaves. Iceland, that was until recently the darling of the Chicago School of economics; a philosophy where anything goes if some rich guys want to do it. They were among the first to have their banking system completely collapse leaving the country with a debt so big that its entire GDP could not keep up the interest payments.

This time last year the island was within thirty days of running out of food since they couldn’t import anything and the still of the night was regularly interrupted by the explosion of burning SUVs. Today Iceland is struggling to recreate a real economy again after the fairy land of international banking has evaporated. The McDonalds restaurants will stay open with a new name and with locally grown food on the menu.
Iceland has negotiated its debt from the banking scandal down to about 9 billion Dollars, this for a country of 320,000 people. The US equivalent would be 9,000,000,000,000 (9 trillion). What are they whining about? That’s much less than we owe. Of course the American frog was brought to boil slowly, Iceland thought they were rich a little more than a year ago and now find themselves in the frying pan.

Iceland doesn’t have much of a real economy, fishing doesn’t have much future with the oceans dying, but they hope to be a shipping hub in a couple of years with unrestricted passage across the arctic ocean thanks to global warming. Oh, and so far, no rich guys have gone to prison for the massive fraud and it doesn’t really look like they will. They apparently imported our justice system as well as our ponzi schemes.

Our own dead economy continues to lurch along looking for brains to eat. The USD spiked up unexpectedly today pushing down oil and gold or maybe it was the other way round. It’s hard to keep the market manipulation straight from the plain old fashioned panic. Either way this pushed the DOW industrials further below 10,000. A stronger Dollar means the stuff at Walmart will be cheaper, at least until the Dollar goes the way of the Krona.