ICELAND, NO LONGER THE BUTT OF JOKES!

Iceland was bankrupt and a total mess in 2008 but not anymore. Its currency, the kroner was abandoned by most people in the world. Iceland lost two thirds of its former value and purchasing power. Iceland is a nation that throughout its long history of 1100 years has been extremely poor, depending on fishing for its only real source of income. Obviously, Iceland had no financial or investing experience. It knows how to catch fish.  Looking at the Wall Street bubble, Iceland’s three biggest banks, with assets of a few billion dollars, made it grow to $140 billion in three and a half years. It was called “The most rapid expansion of a banking system in the history of mankind.”


These three banks were following Wall Street like a shadow, and lending money to buy stocks and real estate. While the US stock market was doubling, the Icelandic stock market went up 900%. By 2006, real estate prices doubled, and the average Icelandic family was three times as wealthy as it was in 2003. All this supposed ‘wealth’ was tied to the investment banking industry. Sound familiar? Naturally, the whole thing collapsed with a huge thud, when the three investment banks went bust.


Fishermen quit fishing, and the craze was to buy and sell stocks and real estate. For the past few years, many Icelanders engaged themselves in speculation and seeming to be successful, they did what Americans and the rest of the world did. They bought things they couldn’t afford…on time. Since interest on their kroner was 15.5%, why not buy euro or yen at a 3% interest rate and clean up? So they made huge loans of euro and yen. Then their Krona collapsed and they still owe for the euro and yen they bought. They now own houses worth $500,000 on which they owe $1.5 million and $35,000 Range Rovers on which they still owed $100,000. There were a lot of fires in Iceland to pay the bills. Those poor insurance companies had to pay up. It has happened here in the states, to a small degree, but often is not properly investigated and the culprits charged.


Iceland has lots of wonderful glass, steel office towers and apartment buildings, which are unfinished and empty, with gobs of money owed on them. Sort of like the rest of the world now but it happened in Iceland far quicker. The bomb went off in Iceland quickly because it is so small and its speculation went to such extreme heights. If you walked around Manhattan today you would see empty stores, streets, and taxis which are evident and the same thing is obvious in other big cities and small towns everywhere. The bomb has exploded, only later in these places outside of Iceland later, Iceland however was the prototype. What is different is that Iceland’s President let the bomb explode while our government is now determined to cover their misdeeds when they bailed out the banks. Now we have more government spending to make us all feel good that they have stolen everything from us. They have instituted infrastructure spending programs, new social programs and mass money creation attempting to mask the mass problems which ultimately will only prolong the inevitable.


Icelanders discovered that trading bits of paper isn’t a productive enterprise. A handful of guys, who fancied themselves as financial experts, were taking out tens of billions of dollars in short term loans from abroad.  They were then re-lending this money to themselves and their friends to buy assets, such as soccer teams, cars, homes, etc.  Since the entire world’s assets were rising; thanks to people of like mentality paying crazy prices for everything, the Icelanders appeared to be making money. One non-Icelandic fund manager said that it is like, “You have a house and I have a house. We agree that they are each worth a billion dollars.  You sell me your house for a billion, and I sell you my house for a billion.  Now, we are no longer home owners, but Icelandic banks with a billion dollars in new assets.” They created fake capital by trading assets among themselves at inflated values.” DOESN’T THAT SOUND LIKE THE REST OF THE WORLD’S FINANCIAL GENIUSES?


EVERYONE THOUGHT ICELAND WAS SIMPLY THE EXTREME OF WHAT HAD GONE ON IN THE REST OF THE WORLD AND THAT THE MORTGAGE CRISIS CAME HOME TO ROOST IN ICELAND FIRST BECAUSE OF THEIR EXTREMES.  ACTUALLY ICELAND’S ECONOMY WAS THE FIRST TO FAIL BECAUSE THEY “ALLOWED THEIR BANKS TO FAIL”!  When traders got a whiff of what was going to happen in Iceland, guess what they did?  They went short and made a lot of money. Do you think that if the insiders at A.I.G., Citibank, and the rest of the bankruptcies knew in advance of what troubles loomed ahead? Of course they did! Can we possibly imagine that they shorted their own companies in advance of the collapses and made tons of money? And those bonanzas are carefully guarded in the sacrosanct walnut paneled board rooms of this holy of hollies?  I think there’s no doubt about it.


Iceland looked so good to the rest of the world…for a time anyway…just like Maddoff that they ‘invested’ heavily in Iceland, with its 15.5% interest. German banks put $21 billion into Iceland banks.  The Netherlands gave them $305 million. Sweden kicked in $400 million. U.K. investors forked over $300 billion from various pension funds, hospitals, universities, and other public institutions.  Oxford University lost $30 million.  It’s so sad that 99% of the world believes things to be true, which couldn’t possibly be true. That “experts” can do no wrong and are to be trusted with wealth and surplus assets.


See, gold and silver does not require trust in someone or expertise to own. No degrees or licenses from experts are required to decide to buy gold and silver, which after all, has been historic money throughout the ages. Gold and silver are simply a way of protecting ones assets from the criminal inflating of the world’s currencies. The dollar is not alone. Don’t be fooled by the “strength” of the dollar. It is strong, only in comparison to other pieces of paper, which are all being printed with merry abandon by the world’s governments. People who brag about their CD making 1/2% rather than 1/4%, is like bragging that your boat has a smaller leak in it than your neighbor’s, and is sinking slower.  Now get busy, I invite you to protect your family before it’s too late!