Springtime for Iceland and Germany, winter for Athens and Spain “Four countries, one policy, half a year…”
In 2001, the banks were deregulated in
Iceland. This set the stage for banks to upload debts when foreign
companies were accumulated. A major crisis unfolded when banks became
unable to refinance their debts.The debts were bonkers, but the advisers
all said “Nooooo, nothing to worry about, just offer very high savings
rates.” However, it is a fact that the three major banks held foreign
debt in excess of €50 billion, or about €160,000 per Icelandic resident.
But a funny thing happened after the Icelandic fiscal collapse of
2008. The Government let most of the banks fail, told the bondholders to
whistle for their sovereign debt, didn’t sell any assets, ringfenced
the social security budgets, and hunkered down to rebuild the country.
The slump was arrested by late 2010, and growth was under way again by
mid 2011. One sign of the success of the Icelandic efforts is the fact
that the government was successfully able to raise $1 billion with a
bond issue on 9 June 2011.
Today, Iceland is regarded as one of Europe’s recovery success
stories.
Submitted by Tyler Durden: While the highly "sophisticated" traders that
make up the gold market continue to buy or sell the precious metal based
on whether the Fed will or will not do the NEW QE tomorrow (or just
because, like Bruno Iskil, they have a massive balance sheet, and can
create margin position out of thin air with impunity), China continues
to do one thing. Buy. Because while earlier today we
were wondering (rhetorically, of course) what China is doing with all
that excess trade surplus if it is not recycling it back into Treasurys,
now we once again find out that instead of purchasing US paper, Beijing
continues to buy non-US gold, in the form of 68 tons in imports from
Hong Kong in the month of June. The year to date total (6 months)? 383 tons. In
other words, in half a year China, whose official total tally is still a
massively underrepresented 1054 tons, has imported more gold than the
official gold reserves of Portugal, Venezuela, Saudi Arabia, the UK, and
so on, and whose YTD imports alone make it the 14th largest holder of
gold in the world. Realistically, by now China, which hasn't provided an
honest gold reserve holdings update to the IMF in years, most certainly
has more gold than the IMF, and its 2814 tons, itself.
Of course, the moment the PBOC does announce its official updated gold
stash, a gold price in the mid-$1000 range will be a long gone memory.
