If you think our credit market conditions are tight, get a load of what’s happeningin Iceland. The exchange rate of the Iceland krona against the U.S. dollar has plunged in recent weeks. Eachdollar now buys about 113 krona, up from 58 back at the recent low in November 2007. The krona has dropped 22%this week alone to the lowest level against the buck since at least 1992.
What’s going on? A full-fledged capital exodus/credit crunch/flight from risk. Thegovernment had to step in and purchase 75% of the country’s third-largest bank Glitnir Bank a few days ago after itsshort-term funding went “poof.” S&P and Fitch have cut the country’s sovereign debt ratings,triggering a massive run on the country’s bonds and currency.
So before you freak out about paying more for a jumbo mortgage or auto loan, just be glad you’re not trying to buy acar in Reykjavik.
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Great, maybe I ought to move to Iceland to feel rich, seeing as how my precious metal mining companies got whacked 16-17% today…..