ICELAND PART 2 Crisis struck hard because of poor handling of the banks

geir-kosningamynd

Geir Haarde, Prime minister of Iceland

“Iceland’s IMF-supported programme is advancing well,” said Poul Thomsen, heading the International Monetary Fund mission to the country, in December. Still, people are regularly protesting in the streets against the Parliament and the Prime minister.

The financial crisis first began in USA and struck Iceland hard in October as a result of the Icelandic banks willingness to give too big loans during the last years. Many Icelanders had built up their lives on loans. All major Icelandic banks Glitnir, Kaupthing and Landsbanki were taken over by the government. The country was bankrupt.

Article about the financial crisis from Businessweek

Article about Icelandic bankrupcy in Herald Tribune

Disastrous consequences

The before so expensive Icelandic krona became worthless over night. Over-sea companies and several private savers in other countries had also deposited money in Icelandic banks because of the high interest given by the banks, money that now was frozen. According to experts the Icelandic banks had long been run in a very un-professional way and so the anger against the banks directors quickly rose.

As a result of the bankrupt the economy will according to International Monetary Fund go in to a deep recession in 2009. Un-employment will increase to around 5.7 per cent from being nearly zero. The government soon took action and started asking for help from foreign countries. The Nordic countries offered Iceland a loan worth 2.6 billion dollars in November along with the 2 billion dollars IMF offered.

Recent events in Part 1.

video about Iceland and the financial crisis

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One Response to “ICELAND PART 2 Crisis struck hard because of poor handling of the banks”

  1. ICELAND PART 1 Two policemen hurt in riots – were hit by rocks « EU and Finland Says:

    […] and Finland Just another WordPress.com weblog « MOT journalist sentenced ICELAND PART 2 Crisis struck hard because of poor handling of the banks […]

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