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I think Iceland is a great study of what may occur here. For those of us that are young and in the US or Europe, you and I have never endured a great failing o
by bprater 18y ago
I think Iceland is a great study of what may occur here.
For those of us that are young and in the US or Europe, you and I have never endured a great failing of the system. Our brains can't contemplate "it" happening. But the reality is -- it can, and is, happening now in Iceland.
Icelandic folks were riding very high until the tightly wound kronas started to unfurl, and I'm guessing many are still in shock and denial. Eventually, it gives way to anger, which is what we see now with the protests.
Prepare for the worst folks, keep hoping for the best. But don't live in a state of denial, it'll only serve to hurt you.
- hapless 18y agoThe best lesson to draw is that Iceland is still there. Their national bank, their currency, and their financial sector failed in the most dramatic way possible. Most people still have their jobs. There are no breadlines. The world didn't end. Everything is more or less OK in Iceland. It's not a pretty picture, but no one could expect it to be so.
- mynameishere 18y agoIceland was bailed out. That can't happen with the US.
- ojbyrne 18y agoWhy not?
- mynameishere 18y agoBecause it would be like bailing out 1000 Icelands.
- hapless 18y agoThe IMF bailout was just enough to continue the most basic operations. It's nowhere close to enough to get them out of their present predicament.
- lionheart 18y agoI don't know about that. It could. But the US dollar is basically the world's reserve currency. If was devalued as much as the krona, I have no idea what would happen to the entire world, not just us.
- daniel-cussen 18y agoIt's the world's reserve currency, true. But how hard is it to turn dollars into gold? It takes like two days and is practically free. It's not like there's anything stopping countries from going off the dollar and onto gold. It could happen in a week, and no individual country shorting the dollar would incur any cost.
- jhickner 18y agoThat seems true but it's not. If any country with large dollar holdings were to begin dumping them, they'd saturate the market and devalue the rest of their own dollars. For instance, if China were to begin dumping dollars, it's estimated they could sell maybe 25% of their holdings before the remaining 75% were worthless.
- david927 18y agoSo, with the same reasoning, no one with many shares of a company would dump them? China's been divesting dollars for a while and will dump to get that 25% if it has to.
- daniel-cussen 18y agoTrue, this might not be an option for China, Japan or Saudi Arabia, but Egypt, Switzerland, and Hong Kong are small enough not to get ruined.
- nradov 18y agoThat wouldn't work. Any large-scale move to switch from US Dollar reserves into gold would quickly drive the gold price through the roof. There just isn't much gold available. http://moneyaswealth.blogspot.com/2008/12/not-enough-gold.html http://moneyaswealth.blogspot.com/2008/12/not-enough-gold.ht...