Iceland’s application to join the European Union is being threatened by new quotas involving Iceland’s largest industry, the fishing industry. The new fish that is booming the industry in Iceland is the mackerel, and Ireland, Norway, and other European members are debating over how much mackerel Iceland should be able to fish. Scientists believe that mackerel are migrating to Icelandic waters in greater numbers, and since fishing accounts for forty percent of Iceland’s exports, the mackerel are now a vital part of Iceland’s economy. These fish led to the rebound from the crisis Iceland was going through, and if the stock allowed is increased, they will be able to lift the economy further.
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One of the quirkier tools used to examine the Purchasing Power Parity between two currencies has been the Big Mac hamburger, responsible for being the basis of The Economist’s Big Mac Index, which compares the price of Big Mac hamburgers in each country. It may be difficult, however, to apply the Big Mac index to Iceland’s króna, as the hamburger giant has pulled out of the country. Don’t pity Iceland, however. Fast Company’s Robert Walcott and Michael Lippitz visited Iceland in December, and are quite optimistic regarding its potential.
Traditionally, Iceland has been one of Europe’s priciest vacation destinations. However, following the recent financial collapse, vacationing in Iceland has become much more affordable. Since the financial crisis, the Icelandic króna is worth less than half its value a year ago, which, as economics tells us, increases the value of other currencies being used in that country. Some multi-night deals are starting at $400, a sign of both the depressed Icelandic economy as well as the desire of attracting foreign currency in order to help jump-start the economy.
Many agree, times are tough right now. Yet, no country right now is suffering the level of crisis that Iceland is. A small number of investors in Iceland have essentially turned the country’s banking system into one giant hedge fund. In response, many concerned Icelanders have taken to the streets, especially in the capital of Rejkjavic, to protest these “financial Vikings” and call for re-regulation to come to the banking industry.
You may be shocked to learn that the liabilities of Iceland’s colossal banks are several times larger than the country’s GNP. Prime Minister Geir Haarde recently addressed the nation and warned that in the worst case scenario, Iceland “could be sucked with the banks into the whirlpool and the result could be national bankruptcy”. You certainly weren’t beating around the bush with this statement, were you Mr. Haarde? The very fact that the country’s leader made a comment with this strong language points to the gravity of the present situation.
Unfortunately things did take a turn for the worse this morning, with major credit lines to Icelandic banks being closed. Trading at the Iceland Stock Exchange was suspended due to the crisis. Citizens around the world are justifiably worried about their financial security, but it seems that Icelanders may have the most to worry about.
The credit crisis that has been a major issue in the