Geopolitics and financial crisis
Dopeyness warning. Whilst I was familiar with the Icelandic bank balance sheets relative to GDP (Iceland is the second most bank revenue to GDP in the world after Switzerland which tells you something) I was simply sure - and wrong - about Iceland being an EU member state.
They are not - as many comments have pointed out. My mistake.
I was also familar with Kauthing Edge and Ice Savings - and indeed had mentioned them in the comments - and was concerned about the effect of the Icelandic banks on the Norwegian deposit market. (If you look back at past posts I found some Norwegian readers to confirm to me what DNB Nor management was saying).
I am a dope. I thought that there was no way the UK would allow the Icelandic banks to raise 5 billion pounds plus in deposits at high rates in the UK unless they were forced to under EU rules.
Something else went wrong with UK policy here. Either way its very problematic.
J
I am short Swedbank. It’s a call on the collapse of the Baltic States – something I regard as almost inevitable.
The risk with that short is a bail-out because the Baltic States are geopolitically significant.
But then I am wondering how dumb American foreign policy is becoming. Russia is now lending Iceland 4 billion euro. A lot of money to be sure – but the Spectator is speculating (probably with reason) that the quid-pro-quo is allowing Russia to use the former US military bases in Iceland.
The Spectator also reports that the US were asked for the loan first and declined.
Some questions: what is political union in Europe if Europe will let a member state have an Argentina type default event? Where is the Committee to Save the World?
Who is in charge here?
Is it an enormous geopolitical decision to allow Russia to have a refuelling base in the middle of the Atlantic? Hey – a failed adventure in Iraq is a 1000 billion plus experiment. This one is cheap.
I have a question for the conservatives: would Ronald Reagan have allowed it?