Thursday, 3 April 2008

Iceland's Economy 'under attack' ?

"Credit ratings agencies Fitch and Standard & Poor's have signalled concern about the health of Iceland's economy and its three main banks - Kaupthing, Glitnir and Landsbanki. "

"The highly-indebted banks have been found it hard to borrow on jittery credit markets over fears that they could default on debt. "

"The ratings agencies have expressed concern that Iceland may have to support the country's banks to avert a possible financial crisis. "

These are rumours, so no one can tell whether we are going to have a "Nothern Rock" style bank run for those banks. These rumours speculators that want to cash in millions if their stock price fall by using options - a method call shorting a stock - known in the investor community as "making a killing". This happened to Bear sterns.

Now don't be fool , if rumours are founded (especially when you know the amount of debt thay have accumulated and the risks they have taken), then just be carefull not to put all your savings in those banks or at least limit it to less than 25.000 euro , the amount that is guaranted if the bank goes "belly up"...

1 comment:

Anonymous said...

" “About 200 drivers drove in circles around the House of Parliament, sounding their horns”, said Klemens Thrastarson to Helsingin Sanomat by telephone on Wednesday.
The motorists were demanding cuts in the tax on fuel. Petrol and other imports have grown more expensive as the Icelandic currency has weakened by 30 per cent against the euro since the beginning of the year."

That's what could happen if the Euro start to weaken or/and if Asia/middle east reevaluate their currency