Tuesday, 7 October 2008

"Close to the edge"

British savers with £4.5 billion invested in the online Icelandic bank Icesave which is
owned by Landsbanki, were unable to access their accounts and told they could not withdraw their money.

Iceland’s slide towards bankruptcy has cast a huge shadow over some of the best-known names on the high street. Businesses regaining from Hamleys to French Connection have all been acquired by Icelandic capitalists in a remarkable spend, spend, spending spree over the last decade.

The Icelandic government desperately wrestles with the biggest financial crisis in the country’s history; tens of thousands of workers wait anxiously to see if their jobs are safe.

Iceland’s Althingi parliament accepted a bill last night on an emergency law enabling the government to stage an extensive intervention in Iceland’s financial system—The most radical economic measures that have ever been taken in the country’s history.

Iceland’s Prime Minister Geir H. Haarde addressed his parliament yesterday evening with the bill, explaining that the emergency law is necessary to prevent the nation from falling into crippling debt or even national insolvency in the coming decades.

“The danger is real, dear countrymen, that the Icelandic national economy—if the situation develops in the worst possible way—would get sucked with the banks into the furious surf and the consequent would be nation-wide bankruptcy."

In the meantime Russia has granted Iceland a EUR 4 billion (USD 6 billion) loan.
The loan will be to three or four years and the interest rates between 30 and 50 points.
The decision has been confirmed by Russia’s Prime Minister Vladimir Putin.

Iceland with a population of just 300,000 and a national economy of £11 billion but foreign debts of £80 billion, is in grave danger of national insolvency.

High Street Names with major icelandic shareholdings:

All Saints
Karen Millen
The Show Studio
Blooming Marvellous
Jones the Bootmaker
Hardy Amies
House of Fraser
Moss Bros
French Connection

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