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The Financial Crisis . A Comparison between the Plight of Iceland and African countries.
Before reading this article, please spare some time (11 minutes) to listen to, and view the video by Jonathan Jarvis, at the bottom of this paragraph. It is a perfect illustration of the financial crisis's causes and effects
Dr. Bienvenu-Magloire Quenum
Everything exposed in Jonathan Jarvis's video at the left side of this paragraph is valid, to explaining the economic situation prevailing in Iceland since 2008's fall.
As briefly explained
at the beginning of this article, Iceland banking system harnessed itself to Wall Street and the financial center of the City of London, to indulge in and promoting unbelievable financing schemes - exposed in the video, in order to maximize profits, not only for the benefit of locals but also for foreign investors - particularly in the United kingdom and in the USA.
That is, the growth rate of the economy progressively shifted from a sound "manufacturing" base, to relying on volatile financial services.
Indeed, as shown on the graph here available, the country Per Capita Parity Purchasing Power steadily increased to stratospheric amount - not in line with produce generated by the traditional economy that is based on fisheries industries, and the exploitation of mineral resources.
And, suddenly the system started breaking apart when Wall Street and the City of London were hit hard by the subprimes crisis. Overnight, in October 2008, Iceland's economy collapsed, and now is melting down day after day, the Very High income "enjoyed" by Icelanders gone - not to be seen again in the near future.
Iceland became the first nation in Western Europe since the 1970s to receive a loan from the International Monetary Fund, amounting to $2.1 billion. Iceland received bailout loans from other nations as well, which together with the IMF funding totaled some $10 billion. Keep in mind that $10 billion corresponds to more than half of Iceland’s GDP - the equivalent for the U.S. would be $7.2 trillion worth of loans. [Source]
- Iceland Submitted to Structural Adjustment Programs (SAP)
In fact, Iceland, is right now submitted to Structural Adjustment Programs - sponsored by the World Bank, the IMF and the European Union. All the conditionalities attached to SAP applied to developing world countries included.
That are, briefly stated for African nations, the state not to get involved in companies that produce and sell commodities, energy, utilities and so on; to disband state-run companies and sell them to private investors - that most of the time are from the developed countries; to devaluate national currencies, to stop subsidies to food stuffs and to scale back civil servants's numbers. Etc.
African countries government, searching desperately to overcome the downturn of the economy were told that they have no alternative but to choose free enterprise, free trade and accept Globalization as the sole and unique way to develop. 
- African nations accepted and carried out these drastic conditionalities. Icelanders are resisting!
Right now, the Icelanders are brainstorming hard to find viable solutions to everturn the demise of the economy. They are particularly pondering if "debts should be paid [...] If they can’t be, then trying to pay will only shrink economics further, preventing them from becoming viable". [Source]
This is a very interesting move undertaken by the Icelanders. Read the sourcing link above outlined, to see what all this means. Would creditors from the United Kingdom, France, Germany and the United States of America, the IMF and the World Bank accept to curb and bypass SAP drastic conditionalities in favour of the Icelanders? That would be very interesting to watch in the near and long term.
Indeed, as known to observers of the world political stage, African nations were forced to accept and applied these crippling conditionalities, which, under the false flag of Globalization, are further impoverishing the populations of the developing world, and destructuring the economy at high speed - as exposed by Michel Chossudovsky's, "The Globalization of Poverty and the New World Order".
That is the rule imposed on African countries, "Apply it (SAP) or leave it. At your own peril. But you have no choice. Otherwise, you would be left sweating for ever!" For more on the matter visit this link
In case SAP's drastic conditionalities rules are bent to suit Iceland's "sovereign" requests, that would highlight, once again, the double standard applied by the international community to the developing countries.
Africabiz Online will keep a sharp eye on the evolution of the economic situation in Iceland, and scrutinize the attitude of the international community to assist Icelanders overcome the huge burden of debts that is destroying the standard of living and sending people emigrating en masse to better shores.
About the author: Dr.
Bienvenu-Magloire Quenum is the principal/
managing director of Dr.
Quenum & Associates, IBC; an experienced Investment & Business
Planner with 30 years consulting practice in African countries;
author of Africans,
Stop Being Poor! and the editor in chief of Africabiz
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|MORE ON THE FINANCIAL CRISIS
|1- Financial Shock: A 360º Look at the Subprime Mortgage Implosion,
and How to Avoid the Next Financial Crisis
by Mark Zandi (Hardcover - Jul 19, 2008)
2- The New Paradigm for Financial Markets:
The Credit Crisis of 2008 and What It Means
by George Soros (Hardcover - May 5, 2008)
3- Manias, Panics, and Crashes:
A History of Financial Crises (Wiley Investment Classics)
by Charles P. Kindleberger, Robert Aliber, and Robert Solow (Paperback - Oct 4, 2005)
4- Chain of Blame:
How Wall Street Caused the Mortgage and Credit Crisis
by Paul Muolo and Mathew Padilla (Hardcover - Jul 8, 2008)
5- Understanding Financial Crises
(Clarendon Lectures in Finance)
by Franklin Allen and Douglas Gale (Hardcover - May 17, 2007)
6- The Subprime Solution:
How Today's Global Financial Crisis Happened, and What to Do about It
by Robert J. Shiller (Hardcover - Aug 24, 2008)
| 7- The Trillion Dollar Meltdown:
Easy Money, High Rollers, and the Great Credit Crash
by Charles R. Morris (Hardcover - Mar 3, 2008)
8- Empire of Debt:
The Rise of an Epic Financial Crisis
by William Bonner and Addison Wiggin (Paperback - Oct 6, 2006)
9- Financial Crisis, Contagion, and Containment:
From Asia to Argentina
by Padma Desai (Hardcover - April 21, 2003)
10- America's Financial Apocalypse:
How to Profit from the Next Great Depression
by Stathis (Paperback - Nov 14, 2006)
11- Crash Proof:
How to Profit From the Coming Economic Collapse (Lynn Sonberg Books)
by Peter D. Schiff and John Downes (Hardcover - Feb 26, 2007)
12- Bad Money:
Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism
by Kevin Phillips (Hardcover - April 15, 2008)
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