Iceland to bailed out by Russia, pegs Krona

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Some interesting geopolitical consequences, I wonder what strings are attached...

Iceland Seeks Loan From Russia, Pegs Krona, Takes Over Bank

Oct. 7 (Bloomberg) -- Iceland sought a 4 billion-euro ($5.43 billion) loan from Russia, pegged the slumping krona to a basket of currencies and took control of its second-biggest bank to stem a collapse of the financial system.

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Re: Iceland to bailed out by Russia, pegs Krona

Brad setser comments on this story

[Supercilious]

Re: Iceland to bailed out by Russia, pegs Krona

Iceland is a giant Lehman. I don't see any major rescue from Russia, because the Russians have their own very big problems:

http://ap.google.com/article/ALeqM5g...DlqhAD93LPNF81

President Dmitry Medvedev unveiled new measures Tuesday to ease liquidity concerns in the banking system, announcing 950-billion rubles ($36.3 billion) of loans with a five-year term to banks. Most of the money will go to the country's two largest state-backed lenders, Sberbank and VTB, in an effort to get liquidity moving through the whole system. A further 223 billion rubles will be loaned to banks in particular difficulty.
This comes on top of some $170 billion pledged already by the state in recent weeks in the form of loans and relief.
A stock market collapse in September — triggered by plunging oil prices and turmoil on Wall Street — sparked a crisis of confidence among lenders, and resulted in a severe liquidity squeeze.
Russia's markets enjoyed a brief recovery Tuesday before heading down toward the markets' close.
The RTS resumed trading at 1 p.m. (0900GMT) and closed down 1 percent at 858.2 points — after briefly breaching 900 points in early afternoon. The MICEX dropped at one point in trading by 7.9 percent late afternoon but recovered most of its losses to close down, also by 1 percent, to 744.8 points.
The indexes of both the RTS and the MICEX dropped 19.1 and 18.7 percent respectively Monday amid concerns about the falling price of oil — key to Russia's economy — and fears about the international financial crisis. The RTS, which has plunged more than 65 percent since May, suffered its worst-ever one-day losses.

The Russian markets are in free fall. True, Iceland is not very big, for them is like rescuing Zelenograd in mid winter. Still I don't see Putin being so dumb to puss such a nationalistic stunt.

[D-Mack]

Re: Iceland to bailed out by Russia, pegs Krona

What does positive mean ?

Russian finance minister welcomes Iceland's loan request

MOSCOW, October 7 (RIA Novosti) - Russia has responded positively to a request from Iceland for a loan, Russia's finance minister said Tuesday.

"A request has been made for a loan. Iceland's rigorous budget discipline is remarkable and we are positive about the request," Alexei Kudrin said, adding that talks had still to be held on the issue.

....

http://en.rian.ru/world/20081007/117536360.html

[Supercilious]

Re: Iceland to bailed out by Russia, pegs Krona

Iceland's rigorous budget discipline is remarkable and we are positive about the request," Alexei Kudrin said, adding that talks had still to be held on the issue.

"Iceland's rigorous budget discipline" ????


Well ... i guess c1ue will arrive shortly and tell us how smart is Putin to approve such a good deal.

[phirang]

Re: Iceland to bailed out by Russia, pegs Krona

THink about it: it's cheaper to put radars and other spytech on iceland than to run all those recon missions...

[Chris Coles]

Re: Iceland to bailed out by Russia, pegs Krona

THink about it: it's cheaper to put radars and other spytech on iceland than to run all those recon missions...

Absolutely, you got it in one. Right in the middle of the North Atlantic. Superswerve....

[rj1]

Re: Iceland to bailed out by Russia, pegs Krona

"Iceland's rigorous budget discipline" ????


Well ... i guess c1ue will arrive shortly and tell us how smart is Putin to approve such a good deal.

I'm not him, but on a geopolitical level, it's good for Russia.

[c1ue]

Re: Iceland to bailed out by Russia, pegs Krona

Venezuela = Poland
Iceland = Czech

Now to go stir up the Quebecois...
Or maybe the Aztlan-istas