The economy. Stupid.

This week, the global economy crisis dominated the headlines. The most shocking headline was the ‘Iceland meltdown': you’ve probably seen the images of the downward spiral of the currency of Iceland, the Krona. There was, of course, also the spat between the UK and Iceland, and it had all to do with British savers and a collapsing Iceland bank. The situation in Iceland is grim, as illustrated in the following quote:

Inflation is around 14%; on Friday the central bank announced that one of Oddsson’s two fellow governors, Ingimundur Fridriksson, was taking a “short medical leave of absence” on the advice of his doctors. Earlier last week Iceland’s president, Olafur Ragnar Grimsson, was treated in hospital for heart problems

There’s an interesting anecdote in that article about how (right-wing) Icelandic politicians determined the fate of the Krona by implementing free-market policies and steering away from the Eurozone integration. The answer to solving all your country’s economical problems? Re-nationalize!

I also read that the uh, the president is going to take care of the economical issues, after addressing the G-7, G-8, G-10 or G-20 (Pick your lucky Bingo number!). Anyway: from the sidelines, it looks like the US officials were not really well-received or lets say it this way, un-enthusiastically received. I’m not sure why that is, but I wouldn’t be surprised that many European countries still bear a grudge against the US administration’s lack-lustre monetary policies (read: “the policy to intentionally keep the dollar low”), which (of course) worked against the European economies. On the Dutch news site nu.nl, I read that the Dutch economic minister wasn’t all too impressed with the US officials Bernanke and Paulson: Apparently they were both already gone when the most important discussions took place (rough translation from Dutch):

The Americans see the financial markets problems as a ‘company accident’ and don’t treat it as an important economical problem which needs to solved right now.

I could end up with a diatribe about the Bush administration, but the only words I can come up with right now is ‘failure of global proportions’. For the last eight-years the Americans had no long-term economical plans nor did they actually lead on a global level. Well, OK, I’m slightly wrong here. There was a plan: So once in a while Bernanke just had to push that ‘Lower the Rates’ button. To his credit, this is not what he did all the time, but, I think many people agree that he was ‘too sunny’ about the US economy since he took over Greenspan’s job in 2006.

Anyway: this is a long weekend in Canada. Have a great Thanksgiving.

Update 1: The Economics published a survey asking US economists their views of the presidential candidates economical plans. The full report (in PDF format) is here.

Update 2: Related: Paul Krugman wins the Nobel prize for economics.

Update 3 @ (10/20/08): “Iceland could quickly become an EU member”.