RWE “redux” – 10/20/08 (Global Financial Crisis – Foreign Country)

ICELAND

Real World Economics (redux) provides you an opportunity to add points to your RWE presentations on a weekly basis. Every week we do a (S-Option) Student Option choice in RWE I’ll choose one article from all student assignments. I will link that article to the blog and I will post a question or series of questions that you must answer. You may earn up to ten points extra credit on the previous week’s RWE assignment. This work will count individually – you do not have to work with your partner. I will post the due date and time, however expect that it will be at 11:00 PM on Wednesday of the week assigned. Students from Government and Senior Current Issues may choose to answer RWE ‘redux’ for extra credit. All written blog assignments must adhere to posted Blogging Guidelines.

Article selection for 10/20/08 –

Iceland Shivers From Financial Crisis – NPR

National Public Radio is one of the best sources of unbiased news in the world. They run a news program every morning called “Morning Edition”. They run a news program every night called “All Things Considered.” Each is 90 minutes in length. Each covers the issues of the day in interviews and vignette story form. It is a great way to learn. Many of you in your RWE articles examined the woes of Iceland. I have taken a (3:57) report on the topic. It’s very interesting. I think you’ll like it.

Listen to the podcast and answer the following four questions on the blog.

  • 1 – Explain how Iceland got involved in this global crisis.
  • 2 – How is Iceland’s problem like the USA’s?
  • 3 – How is Iceland’s problem unlike the USA’s?
  • 4 – Why did Iceland go to Russia for a loan?

All students may earn up to ten points extra credit. Assignment must be posted by 11:00 PM Wednesday.

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0 Responses to RWE “redux” – 10/20/08 (Global Financial Crisis – Foreign Country)

  1. ..charity..

    1. Iceland got into this mess because of the debt created by banks and consumers. The debt all together is more than the economy of the whole nation.

    2. Iceland’s problem is like the U.S.’s because banks aren’t lending to each other and if they are, then there is a high interest rate. The banks aren’t able to get short term funding to keep business up and the government needs currency from Russia because it’s own currency is reducing.

    3. Iceland’s problem is different because the country only consists of 300,000 people, so in essence is much smaller than the United States. This makes it a bit more possible for the whole nation to become bankrupt.

    4. Iceland went to Russia for a loan because when it turned to it’s friends, they were turned down. These places were said to include of the U.S., Britain, and Europe. The British Prime Minister said he would take legal action against the country because of so many savers from the U.K. having money invested in high interest rates.

    EXTRA 9 Pts – nice job new Charity

  2. Aly H. 3rd hour

    *Repost*

    EXTRA CREDIT

    Iceland’s banks are very much in debt. The country’s debts are adding up to more than their entire economy. Iceland banks are not lending to each other because their interest rates are high. They are unable to get short-term funding. The Iceland government has also taken steps to nationalize its banks.

    Iceland’s problem is like the US’s because they are in a lot of debt and can’t get out without loans just like the US. A lot of US banks are going to have to close because they owe a lot of money. This is like Iceland’s problem because their banks are in a lot of debt and are being given to the bank, or nationalized. They are so in debt that Iceland’s top four banks hold foreign liabilities up to $100 billion.

    Iceland’s problem is unlike the US’s because Iceland’s currency is losing their value on their currency real quickly. This is still kind of like the US because the value of the dollar has also been going down, just not as drastically as the value of Iceland’s euro. Iceland is also nationalizing their biggest banks, but the US is not quite there yet.

    Iceland went to Russia for a $5 billion loan because Iceland’s traditional friends will not help them. The Prime Minister will not mention the countries, but Great Britain, Ireland, and maybe even the US could be at fault here. The United Kingdom put money into their savings because Iceland was offering a high interest rate. Then the Iceland government nationalized their banks and now the United Kingdom is going to lose money. This could result in the United Kingdom suing Iceland.

    EXTRA RWE 9 PTS – well done

  3. Alisha Briggs 2nd hour EXTRA CREDIT

    1)Iceland got involved in this global crisis by being in too much debt from the banks and the consumers.

    2)Iceland’s problem is like the USA’s because the banks are not lending to each other. If the banks do lend to each other, they do so at high interest rates. The government also had to intervene and ask for a bailout. The government also said that they will not default on any bonds that were issued and that they will take steps to nationalize most of the banks. Other countries have invested in the Icelandic accounts and are not very happy. It is said that the accounts were high interest for a risky reason. This is similar to the USA because foreign countries have also invested in our accounts and are now being affected by this crisis as well.

    3)Iceland’s problem is unlike the USA’s because their prime minister has effectively threatened the country with going bankrupt if the people don’t effectively bow down to the emergency measures. This is unlike the USA because our president has not threatened us with bankruptcy as a whole country.

    4)Iceland went to Russia for a loan because when they turned to their traditional friends, they did not help them. The countries that were unwilling to help were said to include Britain, Europe, and the United States.

    RWE EXTRA 10 Pts – Very good job particularly #1.

  4. Torrey Esparza 2nd

    REPOST

    *EXTRA CREDIT*

    Iceland got involved in the global crisis mainly for taking advantage of how well their economy was doing before. They were one of the best countries when it came to an economic aspect; however, knowing they had such a good economy sort of hurt them in the long run. Mainly because they believed they had extra money compared to everyone else which they did at the time being the fifth richest country in terms of GDP per capita income. They started spending more and more amounts of money, for example, buying four-wheel drive trucks which are the number one motor vehicle you see on the streets said, “Tom Brathway of the financial times in Reykjavik, Iceland.” Once all this spending came along here came the bad debts because people couldn’t pay back their loans, and the debt just kept growing higher and higher for the country. All in all, the debts are what drove the economy to where they are today in this crisis.

    The problem in Iceland is just like the United States because of the simple fact of not being able to pay back loans. Another reason it’s like the United States is because Iceland took advantage of their money as well as the United States did. The problem with money is that if you have a lot, you are more willing to spend without looking at the future problems it may impose. That is exactly what happened with the people in Iceland because they were grossing so much money that they figured they could just start spending outrageously. So now they are having the same problems we are because they were being stupid and not using their brains to think.

    However, their problems are not exactly like the United States because here we got into the mess by having bad mortgage loans instead of just bad debts. In Iceland they were driven into the ground by bad spending habits which eventually got to a point where they couldn’t pay for all the things they bought. Another difference is that here in the United States deregulation was another big part of the mortgage meltdown. This occurred by not enforcing the rules of an old regulated loan that was successful in the past.

    Lastly, the big question is why did Iceland go to Russia for a 5 billion dollar loan? The answer to that is; their banks are collapsing because they just don’t have the money and their own government already has loaned a bunch of money, but it’s just not enough. So when they turned to their traditional friends they were of no help which consisted of Great Britain, and the United States. So they need a country that will hopefully be willing to except the fact of you help us now while we are in trouble and someday when you are going down the tubes we will be there for you. They figure Russia is a country like that because they are kind of by themselves just like Iceland is, so if Russia starts getting behind they can be there to support them just as they did if they support Iceland now.

    RWE EXTRA 10 PTS – this is extremely thorough…all the way around. Nice job!

  5. Rusty

    1. Iceland became involved because there was too much debt from banks and consumers. They also have a liquidity problem.

    2. Iceland has a similar problem to the United States because banks are not lending to each other. If they are then the interest rates are very high.

    3. Iceland is different from the United States because Iceland. They are more likely to go bankrupt because they have a population of 300,000 people, meaning that the country is so small.

    4. Iceland went to Russia because all of their traditional friends turned them down.

    5 PTS EXTRA RWE – not bad – needs more detail

  6. Jennifer Martz 5th Hour

    *Extra Credit*
    1) Iceland got involved in this global crisis because they are so much in debt by banks and consumers. The debt could all add up to more than the economy. The government had to rush in and take over many banks because Iceland is so much in debt. Many of Iceland’s banks were handing out loans to people would could not pay for them.

    2) Iceland’s problems are like the USA because the USA, Iceland, Europe and other countries in the world are not lending to each other anymore. Both governments bought risky debts to try to help their economy. They are also similar because they are caused by banking industries.

    3) The USA and Iceland have many differences as well including the USA can still get money from other countries at a higher interest but choose not to. Iceland is not investing anymore because they are so much in debt and the prime minister took over the three main banks. Another reason Iceland is different than the USA is that Iceland has a smaller economy compared to the US. Iceland economy does not affect the world as much as the United States would. Lastly, Iceland’s government structure is different from the U.S.

    4) Iceland went to Russia for a loan because Iceland went to their traditional friends (who could not be named) asked for their help but they refused because how much in debt Iceland is in. So then after they were denied they went to Russia and got a $5 billion loan.

    8 PTS EXTRA RWE – well done – particularly #3

  7. Kassi Kay-3

    1) Iceland got into this crisis when their debt excided their economy because of the banks and consumers debts.

    2) Iceland’s crisis is like the United States in that the banks won’t loan out to each other and interest rates are high.

    3) Iceland’s crisis differs though in that the government is taking over these banks in an attempt to straighten out things while the US Government is just passing bills for bailouts and stimulus packages. Also Iceland’s Prime Minister is threatening that the country will go bankrupt.

    4) Iceland went to Russia for a loan when their traditional friends refused to give them money considering their financial state and the high risk.

    5 PTS EXTRA RWE – Kind of basic – but you get five points.

  8. Kirsten B 5th (Extra Credit)

    (1) Iceland got involved with the global crisis by having too much debt. Everyone in Iceland relied on credit and debt. They had too much debt from the banks down to the consumers.

    (2) Iceland’s problem is like the United States because the people of America relied on credit as well. We’ve always relied on credit.

    (3)They’re not like the US because our crisis revolved around bad mortgages, and home loans, and in Iceland was because they relied on just credit and the liquidity crunch across the world is the problem.

    (4) Iceland went to their traditional friends such as Britain, Europe, and even the US. None of the countries would help them. So the government rushed to Russia and received a 5 billion dollar loan. Why the three countries did not help Iceland is because they’re concentrating on their crisis. Iceland has banks in Britain but Britain’s residents have been saving money to put into those banks, and Britain does not want their people to be worries about their money. Which Britain said they will back them but in turn could possibly sue Iceland’s government.

    EXTRA RWE 6 PTS. Not bad. Maybe a little more detail deary.

  9. Autumn Storm 2

    *Extra Credit*

    1. Iceland got in to this global crisis because they are in an enormous amount of debt from the banks and the consumers.

    2. Iceland’s problem is similar to the US because the Icelandic banks aren’t lending to each other. However, if they do lend to each other there is an extremely high interest rate. Essentially the same thing is happening with the US banks.

    3. Iceland problem is different from the US because the Icelandic government is getting involved and taking control of the banks in order to fix the problems. The US is just coming up with bailout plans and stimulus packages, which in the end are just creating more debt for the future citizens of the US.

    4. Iceland had to go to Russia for a loan because the other countries that traditionally helped them turned their backs. I think that the traditional countries turned their backs because they were still trying to get their own crisis under control.

    Mr. Wood, it is becoming very difficult and time consuming to type all of these blogs with one hand.

    Try using your nose. XTRA RWE 6 PTS / could use a bit more depth

  10. Kirsten B 5th (Extra Credit)

    (1) Iceland got involved with the global crisis by having too much debt. Everyone in Iceland relied on credit and debt. They had too much debt from the banks down to the consumers.

    (2) Iceland’s problem is like the United States because the people of America relied on credit as well. We’ve always relied on credit.

    (3) They’re not like the US because our crisis revolves around bad mortgages, and home loans, and in Iceland was because they relied on just credit and the liquidity crunch across the world is the problem.

    (4) Iceland went to their traditional friends such as Britain, Europe, and even the US. None of the countries would help them. So the Iceland government rushed to Russia and received a 5 billion dollar loan. Why the three countries did not help Iceland is because they’re concentrating on their crisis. Iceland has banks in Britain but Britain’s residents have been saving money to put into those banks, and Britain does not want their people to be worries about their money. Britain said they will back them but in turn could possibly sue Iceland’s government.

    EXTRA RWE 6 PTS – maybe a little more detail

  11. 1) Iceland got involved in this global crisis from the banks being in debt. Also by the consumers debts. Both of these were very big problems that lead up to this global crisis.

    2) Iceland’s problem is like the USA’s because banks are not lending to each other. If they are lending they are at high interest rates.

    3) Iceland’s problem is unlike the USA’s problem because they have a smaller population. They only have 300,000 people. In the USA we have over 300 million people. That is a huge difference. So their problem is would be harder to fix. Also the prime minister threatened the whole country into bankrupt, and the US president did not.

    4) Iceland went to Russia for a loan because they went to their traditional friends and they refused to give them a loan. That’s because Iceland is in so much debt. So they asked Russia for a $5 billion loan.

    EXTRA CREDIT RWE 5 PTS – The differences between USA and Iceland are a little more pronounced than you say.

  12. Kelly L. 2nd hour

    EXTRA CREDIT

    1. Iceland became involved in the economic crisis because their own economic growth was created on credit. The Icelandic banks bought on credit, and the people bought from the banks on credit. When the global credit crisis took out all of the liquidity, the banks could no longer supply credit, and also could not get any. The banks then could not pay back their loans and went into bankruptcy, causing a massive government buyout and de-valuing their money.

    2. Iceland’s problem is very similar to that of the U.S. because it all began with buying on credit. Both economies have grown in tandem with their national debt. The U.S. has a massive one, and Iceland’s debt is also substantial. With both countries credit is unavailable for short-term rescues on both people and business. Only the two governments going more in debt by buying out the banks has managed to slightly stabilize the two economies.

    3. Unlike the U.S., Iceland has a strong economy with many important industries such as fishing and tourism. While the U.S. has few if any strong industries that wont be hit hard by the global recession, Iceland will have some long term solutions.

    4. Iceland went to Russia for help simply because everyone else declined to. While it makes little sense to go to an enemy for a loan, it was the only thing they could do at that time. Their banks needed liquidity to get up and running again, and Russia was the only one willing to supply the money for that.

    10 PTS EXTRA RWE – Your explanation of Iceland’s position and similarity to USA is very good.

  13. Morse 2

    1. Iceland got involed in the crisis because of to much debts to the banks and the consumers.

    2. Icelands crisis is like the U.S.’s crisis because the banks are not lending to each other as they should and when they do lend the interest is high.

    3. Icelands is different because their prime minister has threatened them that if they don’t bow down to the emergency measures the country will go bankrup, and it is working. Where as our government is just passing bail out bills and letting the crisis work itself out.

    4. Iceland went to Russia for help because their traditional friends whom could not be names would not help them because of high risk factors if they lended them the money. By going to Russia they got a $5 billion dollar loan.

    EXTRA RWE 5PTs – A little soft on detail deary.

  14. Mr Wood

    THIS BLOG IS OFFICIALLY CLOSED.