Here we have professor of business (of all people) questioning why the financial system collapsed.
Well, when banks leverage 30 to 1, they can make lots of money. But they can easily collapse too.
No gut, no glory. But you also have to accept and live with the risks.
I should now be cheap to visit Iceland. I'll put it on my list of countries to visit. I hear that geothermal energy is big in Iceland and everyone has free heat. At least people won't be freezing in their homes.
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"What can we do? This is not a simple matter -- this is a national tragedy," said Vilhjalmur Bjarnason, a professor of business at the University of Iceland. He owned stock in all three banks. "I was planning to use this money for my daughters, who are handicapped," Bjarnason said. ". . . The fundamental question is, how can this happen in a civilized society?"
One of those unlucky investors, Bjarnason, the business professor, said: "I knew something was going to happen. I didn't know how serious." He also heads an association of small shareholders. Concerning his investments, he said, "I was not cautious enough, even though I am an economist."
For many Icelanders, the hit is compounded by the collapse of the currency. Because of Iceland's high interest rates, banks here sometimes encouraged people to take out loans in low-interest foreign currency to buy their cars or their houses. Now with the krona losing 50 percent of its value in recent weeks, people find themselves owing twice what they borrowed.
Ulfar Steinthorsson, who runs a Toyota import showroom here, said about 15 percent of new-car purchases have been made with foreign loans. Olafsson, of the Chamber of Commerce, said about 7 percent of mortgages might be denominated in foreign currency.
<a href="http://www.washingtonpost.com/wp-dyn/content/article/2008/10/09/AR2008100900359.html?hpid=topnews">
Iceland melting down</a>
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