Wednesday, October 29, 2008

Where's Bjork?

By Michael J.W. Stickings

Think things are bad here, financially speaking (not so bad here in Canada, but pretty bad south of the border)? Well, be thankful you don't live in Iceland*:

Iceland's central bank upped its key interest rate by 6 percentage points to 18 percent on Tuesday, two weeks after it had eased policy to soften the impact of the country’s financial meltdown.

The move, which one economist called extreme, was the latest by authorities to prop up the country's frozen currency and markets, offering investors a high return for putting money back into the North Atlantic island's crippled financial system.

*****

The island nation's financial system has all but collapsed since the country was forced to take over three of its biggest banks earlier this month.

Its currency has crumbled, raising the specter of inflation, which is already in double digits, soaring still further.

Ouch.

(Here in Canada, our currency is sagging, but our banking system remains fairly robust. There aren't many sub-prime mortgages to be had, and the credit crunch is being felt, but the lending rate isn't bad.)

* To our Icelandic readers -- I'm sure we've had some over the years -- I'm sure you have a lovely country otherwise. I hold Bjork against you, as many do, but I quite like Sigur Ros, and your films, some of which I've seen at the Toronto Film Festival, are generally excellent (Kieslowskian, I would call your cinema, which is high praise coming from me, I assure you). And it also seems to be an extremely beautiful country. I've never been, but I'd love to visit sometime. Oh, and Reyka vodka is very nice. But, yeah, uh, sorry about the whole financial collapse and the soaring inflation.

Seriously, 18 percent?

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