I wonder which will be the next currency to go down:
People go bankrupt all the time. Companies do, too. But countries?
Iceland was on the verge of doing exactly that on Thursday as the government shut down the stock market and seized control of its last major independent bank. That brought trading in the country’s currency to a halt, with foreign banks no longer willing to take Icelandic krona, even at fire-sale rates.
As the meltdown in the Icelandic financial system quickened, with the government seemingly powerless to do anything about it, analysts said there was probably only one realistic option left: for Iceland to be bailed out by the International Monetary Fund.
That thumping sound you here is Jamie and I pounding our heads against the tables, having missed the opportunity to short the krona. I have to admit, though, I don’t think I was actually aware that Iceland had its own currency before yesterday. Some people in Britain are getting badly bitten by this one; it’s going to have a knock-on effect in the UK. And it’s not often that you get to bet against a paper money being flushed down the toilet, although we’ll probably get another opportunity soon enough.
Suddenly, that crazy concept of a gold standard doesn’t look so crazy anymore, does it. Why is the IMF in a position to help? Simple. They’ve got 103.4 million ounces of gold on hand, which is worth $9.4 billion these days, or, if you prefer, an infinity of krona.