US Financial Crisis: Iceland’s Unintended Consequences
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Code : ECC0009
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Region : US,Iceland |
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Abstract: The Economist observed, "Iceland's banking collapse is the biggest, relative to the size of an economy, that any country has ever suffered. There are lessons to be learnt beyond its shores." Blame it on globalisation – financial structures of many countries collapsed due to the mayhem caused by the recent US Financial Crisis. The fallout of one economy has its repercussions on the operations of other countries across the world as a result of globalisation. Iceland, an otherwise oblivion nation from Europe, got the attention of global media. The case study examines how Iceland was struck by the US Financial Crisis and how as a result it stood on the verge of national bankruptcy. The case also helps to understand the economic history of the country. Finally, it poses two important questions: (1) Was Iceland an unintended consequence of globalization or was it a case of definite fall out of globalization? (2) What should Iceland do reconstruct its financial structure and resurrect its economy – both in the short run (the immediate steps to be taken) and in the long run? |
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Pedagogical Objectives:
Keywords : Financial Crisis, Subprime Market, Iceland, Globalisation, IMF, Capital Markets, Offshore Investments, Trade Flows, Surplus Reserves, Arbitrage, Orphan Bank
Contents :
» Globalisation: Is the Whole World One Nation?
» Economic History of Iceland's Financial System: Built on External Debt
» US Crisis: Impact on Iceland's Financial System
» Iceland on Brink of National Bankruptcy: A Result of Crossing Limits?
