The International Herald Tribune - "Some ordinary Icelanders face a similar problem to the one that brought down the banks. In recent months, many mortgages were taken out in foreign currencies - marketed by the banks as a way to benefit from lower interest rates abroad, as rates in Iceland rose into the double digits.
Now, with the Icelandic krona plunging, homeowners suddenly have to pay back far more expensive euro or dollar values of their mortgages. At the same time, house prices are falling."
Banks lent into a crumbling "Krona," which is the denomination of Iceland's currency. If you earn money in Iceland and get paid in "Kronas," and it turns into toilet paper, you can't even HOPE to pay back your mortgage. You aren't TIGHT, you can't dig into your savings to bail yourself out, you're dead in the water.
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2 comments:
I'm sure the Icelanders will do just fine. They're vikings remember? Tough as nails. They've been one of the richest countries in the world with one of the highest standards of living. There's fewer than a million of them, and I'm sure they're all highly educated. The Nordic countries are known for staying at the cutting edge of technology, so it's no surprise that in their leading position, they'll take a few falls. But they have good genes, and they'll rise again. The people themselves have high worth.
They fish for cod. Their other activity was playing the world financial markets.
Ok, they fish for cod.
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