October 9th, 2008
05:55 PM GMT
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REYKJAVIK, Iceland – The credit crisis consuming the island nation of Iceland and its small population has come just as the tourist season slows down heading into winter.But there are real worries that visitors might skip Iceland altogether if their own country dips into recession.

The one bright spot amid this financial mess is that the Icelandic krona has fallen more than 50 percent against the U.S. dollar in the past 12 months.

The manager of the hotel where I am staying says the country can no longer be seen as a high-cost destination.
The tourist board and the tourism ministry held crisis talks today, I have been told. They will get together on Tuesday to agree concrete proposals to lure tourists here.

They already plan to target Christmas tourists from New York and Boston. It's about five hours each way and Iceland hopes Americans will come and try the outdoor spas and see the glaciers and geysers and whales, and do a little shopping.

I just ran into a group of Northern Irish students on a spending binge. They could not believe how far their pound was stretching.

soundoff (32 Responses)
  1. forexthinker.com

    If I am not wrong, Iceland has the longest life expectancy in the world. Is it because of the food, the air, the steam baths, people’s life style, or politicians who don’t need lots of security? Many would be interested in making a visit to Iceland regardless of the state of the world’s financial markets.

    October 9, 2008 at 7:26 pm |
  2. H. Hicks, Florida

    Great we can all afford a vacation in Iceland. So what?

    October 9, 2008 at 7:44 pm |
  3. wow

    wow is america and the world going broke ? seems like it. look at this mess can we forget about race n vote for the right person and stand behind him we need help!

    October 9, 2008 at 8:01 pm |
  4. TP, ME

    Iceland is a beautiful and very intriguing country. I have flown through Reykjavik and always wanted to vacation there. With the US dollar going a little further maybe it's possible.

    October 9, 2008 at 9:11 pm |
  5. Rick , florida

    hello America ! invest in Iceland . the stocks will not be low forever. This is just a small rainy storm . the sun will come out again .

    October 10, 2008 at 12:45 am |
  6. Matthew

    To Asian countries, Iceland is still high-cost destination because of the exchange rate ( not related to country's current economic evironment).

    But if situation keeps going on like this for a long time, I think I can afford enough to enjoy the Iceland.

    October 10, 2008 at 4:15 am |
  7. yvboey

    I have always been thinking about visiting Iceland esp the outdoor spas and see the glaciers but after my experience with the Icesave in Netherlands, I would say this "high tech robbers" deserved all the punishments from god. Cheating 1.7bil euro and almost 4bil pound from Dutch and British gov respectively cant be forgiven so easily. The no intention to fulfill their obligation of guarantee is really nuisance. Such irresponsible PM. Shame on you.

    Dutch should get FREE salmon, code fish and natural gas from them for at least the next 5 years. Muahaha....

    October 10, 2008 at 9:15 am |
  8. Merlin

    Iceland will pay. Their navy is no match for any country, not even for the Netherlands or Belgium. In the worst case, Iceland will sell its fish stocks to the EU.

    October 10, 2008 at 9:36 am |
  9. Marlon

    Good day

    I am sending an e-mail from South- Africa; at the moment this crisis has not hit us yet. But from what I can it will hit us very shortly this morning on my way to work; I saw that a Bank in one of our neighbouring countries has fallen one of the banks in Swaziland; I think that the move by the UK Government was the best move thus far.However with the G7 meeting happening today I think that these minsters should contact someone who I refer as an icon and I am not talking about Ted Beare or a Rokerfeller I am talking about Allan Greenspan; what they should do is ask him for his opinion and what can be done to overcome this crisis. Secondly what the US government should do is buy directly into the banks; and revise the financial sector ; the interst cut was a crucial factor but what should happen now is to allow the consumer who is in a financial rut a credit extension to pay his debt off; with a fixed rate for about 5 years. What business should do to restore consumer confidence is cut prices and make a small profit; I always thought that American Business was based on a small profit but a large volume which in turns brings in bigger profit; that is what American business was based on. Getting back to the interest cut by giving the comsumer more money; you are giving the consumer more confidence. What is currently happening world wide is that everthing such as ones daily are very expensive
    the increase in food and energy on a world wide scale has lead to the crisis that we are currently going through if these daily commidities can reduce in price the consumer confidence will grow world wide. What the US government should do for now is buy directly inot the banks and take thier liquid assets off their balance sheet ; give comsumer a credit extension and use something that the Americnas helped the South African develop; the new National credit act in South Africa; whereby if a consumer has to much debt he does not get a loan from any financial institute. I do undertsand how the US could help South Africa develop this act and not implementin the US.These are however long term solutions solutions. Short term solutions would be subsidies from governmentand more involvement from government by taking over the baking system for now nd regulating the flow of credit. I do hope that this crisis does end soon and more involvement from governments; for short term solutions.

    Marlon (South Africa)

    October 10, 2008 at 9:38 am |
  10. Anna, London

    I don't think that many Brits will be going to Iceland, no matter how cheap it gets.

    On Saturday an Icelandic minister went on UK radio to assure everybody in the UK that their money in the Icelandic banks was guaranteed by the Icelandic insurance fund/government up to Euros 20,000.

    On Monday the Icelandic government pulled the plug by shutting down Icesave, prevented withdrawals and declined to provide any information other than that they were 'repatriating foreign assets' of the banks to protect their own. Icelanders were given 100% guarantee on their savings whilst Alistair Darling was left to tell us that Iceland had refused to guarantee even the Euros 20,000 which it had only on Saturday promised to pay.

    If this is not outright theft and deceit by the Icelandic government, I don't know what is. Incredibly they are surprised that we used our anti-terrorist legislation to prevent them from taking our money out of the UK.

    If it wasn't for the UK putting pressure on the Icelandic government, we still wouldn't have any answers.

    So giving any more money to Iceland is just not on. They can stick their holidays.

    October 10, 2008 at 1:22 pm |
  11. G. Ingolfsson

    As I understand it, a delegation from the British goverment has arrived in Iceland to have talks with our goverment in an attempt to try and resolve this situation.Many unfortunate statements have been made by both parties, but lets hope that a civilized solution can be found.Personally I would hope that the criminal actions of a handfull of individuals, will not ruin relations between the people of Iceland and the United Kingdom.

    October 10, 2008 at 3:12 pm |
  12. Karen Linda

    I most certainly agree with my fellow countryman, G. Ingolfsson. This is a very somber time for Icelanders and Britons alike. The individuals responsible should be made responsible, but I most certainly hope that people are able to separate those from the whole nation. I am watching friends and loved ones loose jobs, homes and life savings. This is extremely difficult. I do not want to be made responsible for this too.

    October 10, 2008 at 4:00 pm |
  13. G Hargreaves

    I would never blame all the Icelandic people for the problems with their banks. However their government have reneged on guarantees that they gave to savers in the UK and the Netherlands.
    While they are doing this and loosing all credibility they are asking Russia, EU and other countries. For loans......Hmmmmm I know what I would say to them. You are not trustworthy
    It is up to the Icelandic people to pass judgement on their government at the next election. I for one will not be going there on holiday or giving them any of my money.

    October 10, 2008 at 5:09 pm |
  14. Karen Linda

    G Hargreaves, as much as I understand the frustration of the people of the UK (and the rest of the world), I think the people of the UK may also need to pass judgement on their PM at the next election.

    It is not true that the Icelandic government has reneged on guarantees in the UK or the Netherlands. The only message from Icelandic government officials since the beginning of this mess, has been that the intention is to keep all of their legal obligations. Anything else is simply untrue.

    It seems Mr. Gordon Brown has made some unfounded and drastic comments to the public and the media as of late that have started a domino effect in Iceland and world wide. His comments have been highly irresponsible and disrespectful.

    October 10, 2008 at 6:45 pm |
  15. Uma in Liverpool, UK

    Not on what I get, for Disability. I shan't be flying anywhere.

    Besides, unless things have changed, Gordon Brown and the President of Iceland are not on particularly positive terms.

    Besides, who goes to Iceland when it's DARK 23 hours a day? Crazy!

    October 11, 2008 at 7:11 am |
  16. Th Thorsson

    Dear friends!
    Before you pass a judgement on this situation, I would like you to get all the facts straight. It shure was a misunderstanding when the Brits misunderstood people in the icelandic government in a way the Icelanders were not going to back up the IceSave. Financial minister of England said he talked to the finiancial minister of Iceland and undrestood from him that the Icelandic government was not going to back up IceSave. This telephone conversatino was recorded and has been scrutiniced and there is no way of misunderstand the word of the Icelandic financial minister in that way.
    Then comes the bom, the British government closed all the brances of the largest bank in Iceland that was financially in a very good state and broke that bank down. The effects of that bullying has been devastating to the whole Icelandic economy. The effects from that act of the Brittish government is comparable if the Chinese government would just break down biggest company in USA and more than million people would loose their jobs. This act will for sure be rememered as the most hostile act agains the Icelandic people that any other government has ever done (an will probably ever do).
    In stead of using diplomatic channes and talk the Brittish government acted as the big fish against the little fish.
    Some poeople might think all icelanders have been on a spending spree for the last 10 years. This is only true for 4-5 % of the population. The rest of the people are now trying to come to grip with the fact of unemploment and have already lost their live shavings. People ask them self "what did I do to deserve this??" I don't think the brittish people will be very popular in Iceland although we are sensible enough to know that this hostile act agains us is because the Brittish government needed someone to blame for this deep recession and we were small enough and week enough to be the scapegoat.

    October 11, 2008 at 4:49 pm |
  17. Freyr Guðmundsson

    It's amazing how wrong you people are. Get your facts straight.

    1. Iceland's financial minister Árni Matthiessen spoke with Alistair Darling on the phone. Alistair Darling misunderstood something Árni said and assumed that he meant Iceland wouldn't pay.

    2. Alistair Darling then goes and tells everyone about it, raising a raucus. Gordon Brown threatens legal action publicly.

    3. Iceland's Prime Minister issues a statement saying that Iceland will honor all its legal obligations.

    4. Gordon Brown ignores that statement and uses anti-terrorist law to freeze Icebank.

    Kaupþing bank, the owner of Icebank was in an extremely strong situation and was perfectly capable of standing behind Icebank. At least right up until Gordon Brown froze Icebank. That action is what caused Kaupþing to be taken over by our Government. Just in case you missed that, it was Gordon Brown that froze Icebank, not the Icelandic government.

    So in fact, rash actions of your financial and prime minister has forced Iceland into the current situation with the UK. Everything was fine, you panicked, now things are not fine.

    October 11, 2008 at 4:59 pm |
  18. G Hargreaves

    Karen Linda. Sorry I have seen an interview with your Prime Minister where he said that they would only guarantee domestic savers. It is strange that people in the UK and the Netherlands have been getting the same message but you in Iceland are getting something different.
    On a more positive note There does seem to be some movement from the Icelandic government to honour their responsibilities. Personally I think your government would like to honour their responsibilities but I think Iceland is broke. Not so much won't pay as can't pay!

    October 11, 2008 at 8:24 pm |
  19. Mr. Iceland

    Uma, Iceland isn't dark 23 hours a day.

    October 12, 2008 at 4:01 pm |
  20. Richard, Leeds UK

    I'm going to iceland next week on a trip that's been planned for some time. I hope the country wants my money but I can't buy any Krona in the UK.
    Should I be able to use ATM's in Iceland or have they been shut down?

    October 12, 2008 at 6:18 pm |
  21. kelwien

    Am I the only person to notice that since Barack Obama has been leading in the polls, the economic future looks brighter. You speak of confidence. Is that the confidence the world has been looking for?

    October 13, 2008 at 1:53 pm |
  22. Lee Siu Hoi

    Back in April, 2005, I send a e-mail to my team telling them to brace themselves for a serious financial crisis due to Freddie Mac and Fannie Mae. I predicted Alan Greenspan would step down as his predecessor did in 1989 to make way for a new Fed Chairman to handle the crisis.

    I was wrong. The crisis did not break out in 2006. It broke out in AUG2008. The US Administration did not have sufficient ability to stop the crisis. However it had sufficient ability to defer it for 2 more years and let losse 80days before the Presidential / Congress Election.

    This US Administration was basically holding the Congress and the Senate at the gun point in the last minute. I can understand why so many of them were so angry.

    This 700Billion dollars are not enough to bring us out of the wood. The US housing market is still going South. The taxpayer's money have been hijacked and therefore is nothing that the next Administration and Congress can do in the short term, by short term, I mean 1 year, to overcome that.

    My personal estimate that the final bill to US taxpayers would be 3 times of 700Billion.

    A lot more have to be done - perhaps not on the financial front, but on the moral and spiritual well being of Corporate America as well as America Politics. If there was no improvement in the coming decade, US of America would see worst to come and the World would have to leave it behind.

    October 13, 2008 at 2:27 pm |
  23. Paul

    Fellow Brits, let's not be too hasty to scald the Icelanders for their frivolous lifestyles – we, like the Americans have been no less disciplined and we all play a part in the mess we are now in.

    However, to those Icelanders trying to defend the actions of their deplorable banks – their message was loud and very UNCLEAR, and not misunderstood by Alistair Darling. That message was that they would not necessarily guarantee British savings.

    The British have huge financial investments tied up in these banks, and not just individuals. I am from Manchester where our local cancer hospital stands to lose £7.5 MILLION of money tied up in your banks.

    October 13, 2008 at 6:05 pm |
  24. Kellie in Korea

    My deep condolences to British and Dutch people who've lost money in this.My condolences to all Icelandic people who've lost jobs, houses, cars. I'm praying this kind of crash doesn't reach North East Asia.

    October 14, 2008 at 7:08 am |
  25. Gunnlaugur Hólm

    Iceland will stand up of this crises, it is not the first struggle we have with former nation of the world and we will Winn, hope the scottish agree with me..

    October 15, 2008 at 8:38 pm |
  26. Jon Watson

    Freyr Guðmundsson, you also need to get your facts right. There is no such thing as "Icebank" and the UK Gov did not "freeze" anything. I believe you have confused "Icebank" with Kaupthing Edge, which was a internet savings product operated by Kaupthing Singer & Friedlander – the UK subsidiary of Kaupthing hf in Iceland. When you refer to "freezing", I believe you are referring to the UK Gov's decision to transfer the savings held within Kaupthing Edge to ING and the subsequent placing of Kaupthing Singer & Friedlander in Administration. The rights and wrongs of all these decisions will be bourne out by history and nobody at this stage knows the full story. However, I'm sure the relaxed levels of regulation in Iceland which allowed certain Icelandic companies to borrow such huge amounts of money will be a key reason. It was an impressive growth story and Iceland clearly has some talented people ... but the ultimate failure of the strategy will cause a lot of pain.

    October 16, 2008 at 7:54 am |
  27. karla

    im not icelandic but i live here for the last 10 years and the people here dont liar , even if the country is broke i will not leave Iceland , because is the best trust people you can find , call the country terrorist is a insult from the goverment in UK and after he apply the law one bank broke , too sad that people dont know the true

    October 19, 2008 at 3:29 am |
  28. Alan

    Let them eat cod..?

    October 19, 2008 at 3:42 am |
  29. katiaawork@yahoo.com

    Dear People,
    I am sorry to hear about your troubles. But, if you are in need of a job as a babysitter in Boston- USA, please feel free to contact me. Keep the faith. Help is on its way.

    October 26, 2008 at 2:45 pm |
  30. Chasiaunitedstates

    Iceland, Reykjavik are the next very importent contry for the big fich in our spaces if you now what I now, Mac Cain. Catherine from Sweden.

    October 29, 2008 at 3:21 pm |
  31. G Hargreaves

    Freyr Guðmundsson
    It’s amazing how wrong you people are. Get your facts straight. You are Wrong.
    Ice bank is not part of Kaupþing bank, It is part of Landis Bank

    The Icelandic Government took Landis Bank Into Administration and prevented withdrawals by Customers in UK or the Netherlands. While allowing it to continue to operate in Iceland as normal. i.e. Icelandic customers can withdraw funds as normal.

    The UK Government spoke to the Icelandic Government and received no re-assurance. The UK Government then acted to protect its citizens interests. Iceland may think this is unfair but from our UK point of view it is fair.
    The Icelandic Government lack of openness and the lack of trust in them by other Countries causes problems for Iceland. The Russian $4 billion loan fell through and it looks that no-one else will loan money to Iceland except the IMF.
    Blaming the UK for Iceland's problems is rather like passing bthe buck
    Yes the UK using Terrorist legislation to freeze the Icelandic accounts is not nice but NOT ONE OF US think it means the Icelandic people are terrorist. If the situation was reversed and it was UK banks that had prevented Icelanders withdrawing their money while at the same time allowing UK customers to carry on as normal, what would you want your Government to do?

    October 29, 2008 at 4:29 pm |
  32. icons package

    I will know, many thanks for the information.

    October 9, 2012 at 7:45 am |

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