Iceland

Greece as the Davie in David & Goliath: A video tale

Over the past decade China has been stuck in an inventory stockpiling and mercantilist process tolling mode, even as it has been posturing about expanding its middle class. Well, the Chinese empire may be finally hinting at what the "next steps" may be. FT reports that Chinese real estate tycoon and former Chinese Central Propaganda Department official Huang Nubo, has struck a deal to acquire 300 square kilometers of "wilderness in north-east Iceland where he plans to build an eco-tourism resort and golf course." That, at least, is the party line. Nobody however is buying it: "Opponents have questioned why such a large amount of land – equal to about 0.3 per cent of Iceland’s total area – is needed to build a hotel. They warned that the project could provide cover for China’s geopolitical interests in the Atlantic island nation and Nato member." And after securing a landing area equidistant from Europe and the US, China will next proceed to purchase bits and pieces of Greece, Spain, Ireland, Portugal, etc. After all, the nouveau-IMF piper ultimately always demands his price for keeping the western world ponzi alive and running for a few more months.

Last year's Eyjafjoell and the recent Grimsvotn eruptions will have been a walk in the pyroclastic park if, as AFP reports, the most feared of all Iceland volcanoes, Hekla, is indeed about to blow. "Experts say one of Iceland's most feared volcanoes looks ready to erupt, with measurements indicating magma movement, raising fears of a new ash cloud halting flights over Europe. The Iceland Civil Protection Authority says it is closely monitoring the situation. "The movements around Hekla have been unusual in the last two to three days," University of Iceland geophysicist Pall Einarsson said." Hekla's eruption would certainly have far more dire consequences on European airspace than Grimsvotn, which merely succeeded in getting Obama to vacate Ireland sooner than expected: "The volcano, dubbed by Icelanders in the Middle Ages as the "Gateway to Hell," is one of Iceland's most active, having erupted some 20 times over the past millennium, most recently on February 26, 2000. Over the past 50 years, Hekla has gone off about once a decade." And so Europe, once again caught in the maelstrom of a sovereign debt crunch, will be sensitive to headline risk, as the last thing the continent which is now doing all it can to ostracize rating agencies, as if its insolvency is their fault, is a continent-wide grounding of all flights.

Update from ABC7: A no-fly zone has been enacted within a 120-mile radius of the erupting volcano in Iceland.

More:  BREAKING NEWS: Iceland's most active volcano erupting; white plume up to 18,000 feet seen.

And there goes European air traffic once again, with its already stagflationary economy to follow down the drains momentarily. At least depressionary apologists will have something to blame on the Q2 GDP plunge on.

More as we get it.

In a shining example of how it can be done, Iceland, for the second time in as many years, by popular vote refused to provide up to $5 billion to Britain and Netherlands banks. The just completed referendum once again rejected a $5 billion Icesave debt deal, pushed on Iceland by its European banking brethren. "The debt was incurred when Britain and the
Netherlands compensated their nationals who lost savings in online
"Icesave" accounts owned by Landsbanki, one of three Icelandic banks
that collapsed in late 2008." And while Iceland PM Johanna Sigurdardottir did a brief Mutual Assured Destruction tour claiming "economic and political chaos could follow" we can't help but think we are witnessing the early stages of Europe's most flourishing economy over the next decade, while all other countries in Europe fail one after another due to their inability, unwillingness and cowardice to force bankers to experience, gasp, losses for fear of "reprisals." As for the "isolation" that Iceland is threatened with experiencing should it give banksters the finger, we are certain it is just a matter of a few months before some enterprising hedge funds, scrambling for yield career risk offsets, decide to take on the role of the IMF or of repeatedly insolvent Dexia, and lend directly to Iceland.

The announcement by Brian Cowen that he was resigning as the leader of the Fianna Fail party, but is going to stay on as Taoiseach (Prime Minister) until the March 11 election, has put the Irish bailout into question.

Iceland, which alone in the entire developed world allowed its banking sector to collapse, and which, also alone, has benefited from a recovery that is truly organic courtesy of a devaluation of its currency and a global restructuring of its corporate balance sheet (read wipe outs for its banker class), continues to show the world that it is possible to have at least some semblance of justice in a world captured by fraud and criminal financial interests. After the CEO of failed bank Kaputhing was arrested back in May, today AFP reports that Iceland police has also detained the former CEO and several other executives of the other major Iceland failed bank: Landsbanki.

More unpronounceable geological mayhem is about to come to the fore out of Iceland's business end. The country's volcano gods, which as we pointed out previously demand the sacrifice of a former FRBNY henchman to be placated, will not be denied, and will likely make airplane travel in and out of Europe just that more problematic, and just in time for the holiday season. While most have been following the tremor activity around Katla, this time the action takes us to the heretofore unknown, to most, Grimsvotn. As AP reports "torrents of water are pouring from a glacier that sits atop Iceland's most active volcano, an indication that the mountain is growing hotter and may be about to erupt, scientists said on Monday."

Some scary developments in Iceland including a 41% inflation in the past three years, 63% of mortgage is underwater, and 40% of homeowners are insolvent make me wonder how far behind is the United States?

It has been a while since Iceland's unpronounceable volcano shut down European airspace for a week. This could be about to change, because as FromTheOld demonstrates, the seismic activity at the base of Bárðarbunga stratovolcano, which also happens to be the highest mountain in Iceland, has picked up materially over the last 48 hours. As a reminder (courtesy of Wikipedia), Bárðarbunga “The largest lava flow in Iceland and the entire earth from a single eruption is originated from Bárðarbunga about 8500 years ago (causing mass extinctions)." Have we come down to this? A supervolcano demanding the sacrifice of a former FRBNY demagogue and current Napoleon Dynamite Ph.D. lookalike or threatening another, much more vicious, lock out of Europe?

Just because the unpronounceable volcano did not do quite enough damage, and both Hekla and Katla are taking their sweet time, the Iceland Supreme Court recently ruled on the illegality of foreign FX-linked loans, and "Icesave" is still DOA, here is Moody's with a stern warning for the country to change its anti-Keynesian ways promptly or else. "Today's rating action was triggered by the recent Supreme Court ruling on the illegality of foreign-exchange-linked loans and government's continuing difficulties in achieving a resolution to its "Icesave" dispute with the UK and Dutch governments. Specifically, the Supreme Court ruling has the potential to cause substantial bank losses on foreign currency-denominated loans to domestic borrowers and may therefore require additional government support to the banking system. Moreover, a failure to resolve the "Icesave" dispute could lead the Nordic countries and the IMF to withhold future disbursements to the Icelandic government." Zero Hedge is certainly rooting for the tiny island country, even if it is triple hook rated, as it continues to give the middle finger to all the developed world kleptocrats.

It's official. Illinois, the fifth most populous state in the U.S., has overtaken Iceland in the default risk category. Will other U.S. states follow?

Ignore stocks, the only thing to follow today is the AUDJPY chart, which stocks will have no choice but to follow momentarily. After experiencing a massive, near 400 pip short covering orgy, the critical carry trade is once again rolling over. With numerous attempts to defend 77 failing, the pair is now starting to look like a mirror image of yesterday's action. Another solid attempt at retaking 77 will likely follow, and in case of failure, the wheels off of today's non-existent stock market may just fall out, and totally ruin the weekend for all those already partying it up on Long Island's southern shore.

Now that the Gulf of Mexico has been (presumably) plugged up, pressure in the earth's core is rising once again, and thus it may be time to refocus on the imminent explosion of Iceland's second and much larger volcano Katla. Why? Because, as MSNBC reports, the Icelandic president Ólafur Grímsson has warned governments around Europe "that a significant eruption at the volcano is close." Seeing how his credibility has not been destroyed by associating with the other Eurozone and IMF idiots, we tend to think he knows what he is talking about. Also disclosed were the findings of a paper by the University College of London which concludes that "given the high frequency of Katla activity, an eruption in the short term is a strong possibility." And just like with the GOM debacle, scientists say that the response by Europe to the first volcanic eruption has been atrocious, as none of the events that have transpired were not unexpected. Of course, when Katla blows up too, there will be terror and panic, as airlines are cut once again, and trade in Europe, already lethargic, crawls to a halt, when as usual, all this could be prevented by spending just a little extra money not on bank bail outs but on prevention measures. Of course, that would mean record European bank bonuses may be lower by a few euros. And that is simply unacceptable.

On the other hand ...