In the Dark

Another day, another bank failure.

Further to my post about the crisis in the Icelandic banking system, it now appears the third major private Icelandic bank, Kaupthing, has also been taken into admininistration over concerns about its liquidity (or lack of it). The UK-based online subsidiary Kaupthing Edge has, however, been taken over by ING Direct, another direct savings bank. ING claims that all the deposits it has acquired are now safe, but something tells me this crisis is far from over and I interpret “safe” as meaning “for the time being”. This is all coming very close to home, as I have savings in Kaupthing Edge.

At least I’m in a better position than someone who had savings in Icesave which was the second Icelandic bank to fail. The scary thing about this one was that the Icelandic government had given guarantees to protect depositors, but has now thrown away those guarantees leaving the UK government to step in to compensate those who have lost their savings. For once, I actually agree with Prime Minister Gordon Brown’s reaction to this. I hope Britain seizes any Icelandic assets it can to compensate the UK taxpayer. That is if Iceland actually has any assets left at all.

Iceland has also today suspended all dealings in its shares as its economy rapidly melts down.  Apparently the country now has debts totalling 12 times its Gross Domestic Product which makes it as near as dammit to being bankrupt.

Meanwhile despite massive intervention from central banks around the world, stocks and shares have continued to lurch around violently above and below a steady downward trend. All this seems totally irrational to me. And they have the nerve to award a Nobel prize to economists!

If only everything in life were as simple as the Cabibbo-Kobayashi-Maskawa theory.

This entry was posted on October 9, 2008 at 6:39 pm and is filed under Uncategorized with tags Iceland. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.