Sunday, October 12, 2008

Iceland denies the airbase link

It did not take long. Iceland has denied the airbase link.

But it is clear the Russians have an agenda. What it is is unclear.

Iceland however needs the foreign currency desperately and should take it.

Welcome to the 21st century...


Anonymous said...

don't need tanks anymore....they got money now! Annexure with a smile :)

John Haskell said...

if you thought the Cuban Missile Crisis was fun... in 1940 the British just sent troops to Iceland and occupied the place. In 1941 (even before declaration of war against Germany) the British asked the US to send troops there (so British troops could be moved elsewhere) and informed the Icelanders post factum.

A banking crisis and recession are bad. Adding a war to the mix would not help. Those of us who don't live in Iceland find it easy to forget Iceland's recent history; I think the Icelanders will probably have a sharper memory.

In any event, burying themselves with foreign debt right now is not an answer. A radical cut in the ISK refinancing rate (I'd try 1%, down from 15%) and a 75% or so cut in the ISK/EUR will set the economy on the road to recovery.

Ironically, this is exactly what the Russians did in 1998. Perhaps instead of refueling Russian bombers they could ask for the Russians to second some officials from their Ministry of Finance to advise.

(another couple of clues- when the IMF arrives, serve them tea and cookies and make sure they catch their flight out without making any commitments, and don't peg your currency to any others unless you want the crisis to last all decade, as in Argentina).

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