It promptly collapsed 77%. And Iceland's currency collapsed as well, to the point that it's practically untradeable.
Britain, whose pensioners, city councils, and universities had so much invested in Icelandic banks with attractive interest rates, are now stuck reading the small print of their contracts, while their accounts are frozen and inaccessable. Meanwhile, Iceland's bankers blame the British for triggering a run on the banks.
Back in Iceland, the locals are taking this opportunity to buy up all the foreign goods from the stores that they can get their hands on, because this country which imports so much of its items, is soon about to find themselves living off of obscure, unpalatable salted and pickled bits of fish and sheep that no other sane individual would touch.
It's fortunate for them, perhaps, that these are their national delicacies.
So, the big question is, how will this change the party? Where young Icelanders were once able to hold rich, lavish affairs in their spare time... now many of them will find themselves out of work, with time on their hands, and prone to partying just because... assuming they can afford to do so. Will we see Icelanders turning to homebrewed potato landabrugg, or perhaps to Brennivin? Or will they go overseas to work, returning home rich, with money that's actually worth something?
Somehow, I can't see the Icelanders starving to death... but shifting towards a future with greatly reduced imports will be a huge mess, I'm sure, and cause a massive shift in how they've lived their lives recently. Will Iceland be indebted forever? Will things ever be the way they were again? *Should* they be?!
As an example of how nuts things are right now, we can peek in on stelpa</lj>'s reality...
Watching news. Today's news includes:
* Iceland is being classified by the UK government as terrorists. For serious. By doing this they can draw on provisions from the anti-terrorism laws to seize assets. I guess this means I should go blow something up..?
* The last big Icelandic bank has collapsed. It has been taken over by the government.
* The oldest, biggest import company in Iceland is on the verge of going under. My brother works there. I'm worried. . . .
Everything is falling apart.. . . The current exchange rate changes literally by the hour, so I couldn't give you an exact number. The Icelandic Federal Bank has frozen the Icelandic krona's value at a point that most countries refuse to accept. For my boy, who needs to withdraw his earnings through his Icelandic credit card, the loss of income is enormous, as the bank buys the dollars undervalued and sells it back in pounds at a monstrous difference.
As an example, if you were to buy Icelandic kronas with your 10.000 pounds right now, you would get the buy rate of 162,70 kr per pound. If you then changed your mind and bought pounds back with your kronas, the sale value is 211,98. Meaning you would only get 7.675 pounds back. That's without any banking fees or exchange commissions. Both of these values are based on the current (13:47 on oct. 8, 2008) exchange rate of my commercial bank, and not the international values.
It's an odd experience to enter my credit card number onto a site and be refused.
We are not accepting credit cards from this country. Please contact billing support...
News in Iceland... ... is piece after piece on what to do if you're about to succumb. The television hammers home information about the suicide hotline, emergency reception at the psychiatric ward, local GPs and talk about how important it is to talk to friends and family in this crisis. Celebrities give little pep talks and stress that no unhappiness is so great and no problem so insurmountable that there is no possible solution, no faint glimmer of hope.
Because the fact is that there is no such thing as national bankruptcy. As long there are people left alive, someone is producing *something*, and so the state, which is its people, can't go bankrupt. And so there is no way out. The idea of living in a slavery of debt and destitution with no hope for the future or their children's future has people killing themselves. Go figure....
One former Icelandic tourist either wants to help, or appreciates the dark humor of the situation, such as it is...