Monday, January 26, 2009

Financial Crisis' First Casualty?

. Monday, January 26, 2009

News agencies are reporting that the Icelandic ruling coalition resigned on Sunday, thus incapacitating the government, "three months after the collapse of the country's currency, stock market and several major banks, and following months of public protests."

Iceland's financial system and currency collapsed in October following a series of bank failures, forcing the International Monetary Fund to intervene.

Iceland sought IMF help after its government was forced to nationalize three banks to head off a complete collapse of its financial system. Trading on the country's stock market was suspended for nearly a week, and inflation jumped to more than 12 percent.

The IMF announced in November it would pump about $827 million into the Icelandic economy immediately, with another $1.3 billion coming in eight installments. Iceland's Nordic neighbors -- the governments of Finland, Norway, Denmark and Sweden -- announced they would lend Iceland another $2.5 billion.
I believe this is the first direct government casualty as a result of the ongoing financial crisis, although one could argue that the American elections in November could also count as a casualty. I won't officially count it, as I think there are too many other reasons to point to that caused the collapse of Republican rule.  

Will mentioned Great Britain as another possible future candidate in an earlier post. Are there any other governments that could fail? Are there any other financial systems that could unravel?


Financial Crisis' First Casualty?




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