Iceland's Interest Rate Up To 18% (Jimmy Carter Misery Index Is Back Alert)

BBC News ^ | 10/28/2008 | BBC News

[goldstategop]

Iceland's central bank has raised its key interest rate to 18% from 12% as it battles against financial collapse.

The rise comes less than two weeks after Iceland cut rates from 15.5%.

The central bank governor said the increase was part of its agreement with the International Monetary Fund, from which it borrowed $2bn (£1.3bn).

Iceland's prime minister said the country needed another $4bn in loans and had approached the European Central Bank and the US Federal Reserve.

Currency slump

Central bank governor David Oddsson said that he hoped the rise in rates would only last for a short time and added that the move was designed to stabilise the currency.

[goldstategop]

Remember the Jimmy Carter Misery Index? Disco, rock and roll? The 70s? 18% interest rate is back - in bankrupt Iceland!

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[mysterio]

Iceland should just cut the rate to zero like we’re doing. It’s working great!

[EagleUSA]

This is an example of what Obama socialism and radicalism will do to the USA. Hey you moron libs....this is what you want???

[GQuagmire]

Does that rate apply to savings accounts?

[GQuagmire]

Does that rate apply to savings accounts?

[americanophile]

I would say the Icelanders are beyond foolish, but then half of this country is hellbent on electing a socialist that promises to raise taxes during a recession.

[penowa]

"Does that rate apply to savings accounts?"

LOL! Exactly what I thought when I saw the headline. Made a lot of $ on CD's without any risk back in the late '70's.

[TruthConquers]

Their currency is now questioned, and they need a currency with which to buy the imports, like food

[ABQHispConservative]

I think it does. The intent of this move is to attract capital from outside, and stop capital from leaving the country. So that it appears that Iceland has a severe liquidity crisis on its hands.

[TruthConquers]

I have read the Iceland ran themselves like a hedge fund. Lots of those blowing up. It could be our future, because we seem to be turning our Fed into a kind of hedge fund as well.

[VU4G10]

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Sex Scandal Hits IMF

The sex and abuse of power scandal that has hit IMF chief Dominique Strauss-Kahn couldn’t have come at a more difficult time for the financial world. International Monetary Fund and the World Bank are supposed to provide leadership in such troubled times. And here we have the IMF leadership battling a personal scandal when he should be focusing on negotiating the world economy out of troubled waters.

Several countries, reeling from the current financial meltdown, are desperately seeking the IMF help in dealing with the crisis. Iceland, Ukraine, Hungary and possibly even Pakistan have queued up for the Fund’s controversial bailout packages, as a last resort measure to resurrect their economies. Strauss-Kahn’s alleged sexual liason with his subordinate and abuse of his position have shaken the IMF and dented its image at a time when the organisation needs a strong leader and the world needs strong institutions like IMF. The entire matter bears an uncanny similarity to the scandal involving ex-chief of World Bank, Paul Wolfowitz, who resigned after being found guilty of promoting his subordinate and love interest. But Strauss-Kahn is no Wolfowitz, whose Iraq war legacy always overshadowed his association with WB. Since his appointment in November 2007, Strauss-Kahn has made an effort to overhaul the IMF to boost its functioning. He enjoys popularity amongst IMF board members and has won accolades for revamping the voting structure of the fund to give greater say to developing countries.

Unfortunately, the Strauss-Kahn affair is diverting the IMF attention from far more pressing matters. Jeane-Claude Trichet, the Governor of the Central Bank, has given his vote of confidence to Strauss-Kahn, claiming that he is convinced that the latter is not guilty. We only hope Trichet’s optimism is justified.

[CE2949BB]

<sarcasm>You two are vultures! How dare you try to exploit this horrible situation!</sarcasm>

[NVDave]

Iceland is raising the rate to attract foreign deposits.

If they don’t, the country is in danger of insolvency and currency collapse.

[oblomov]

Yes, the rate one gets in a savings account would be close to it. But if the kronor falls another 25% against the USD, that 18% wouldn’t look so good.

[TruthConquers]

Aren’t they already in a currency collapse?

No one is taking their money, and they do need foreign currency to open lines of credit so that they can buy food. Lamb only goes so far.

If that is not a currency collapse, what is? I am not being flippant. I would just like to know and understand.

[GQuagmire]

I don’t have enough to prop up their currency.LOL

[sharkshooting]

Quick easy money! Take one of those 0% introductory rate CC’s that flow in every day or two. Max it out on a CD and set it so that it matures just before the first interest rate kicks in on the CC. You may not get 18% but maybe 10% or so. WTH, we may need extra to pay for all the unemployed that are coming if Obama is elected.

[Red Badger]

I fear that ICELAND MAY BE A HARBINGER OF A FUTURE OBAMERIKA............

[TruthConquers]

How’s it going in Iceland?

I went to Icelandic Review but not very much about what is really happening.

[AlexW]

For my pastime I work as a tutor of English here in Slovakia.
I am fortunate to have three guys in the money trading department of one of the major Slovak banks.

We meet once a week and talk about economic conditions.
One put Iceland in perspective using Slovak crowns.
The percapita debt in Slovakia is 150,000 crowns.
The percapita debt in Iceland is like 6,000,000 crowns.

I keep asking why the dollar keeps going up but not one person can explain it to me.
Just in the last four months the dollar has gone from 19 crowns to almost 25 crowns.