Icelandic Meltdown -- BU TodayFinancial crisis puts Nordic nation on edge of bankruptcy
It’s been a dramatic couple of weeks for tiny Iceland. The land of free-wheeling multimillionaires (even a billionaire), low-interest loans, and high-yield savings accounts tumbled into financial ruin and was branded a terrorist nation by the United Kingdom — all in the space of 10 days.
Some 600 miles northwest of the United Kingdom, Iceland, which had rapidly transformed itself from one of the world’s poorest nations to one of the wealthiest, is pretty much bankrupt, the first national victim of the global credit crisis.
Iceland’s troubles started when the financial crisis emanating from the United States caused two of the country’s three private banks to collapse. At the time, the assets of these banks totaled more than 10 times the country’s gross domestic product. In other words, since the government was unable to guarantee loans, they were exposed.
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My Comment: The key phrase for Iceland's credit crisis .... It’s over extension. The same can also be said about us when it comes to military interventions, political commitments and promises, and economic programs.
Over extension always brings about grief and pain when reality settles in.