ShareThe latest piece of big news in the sovereign debt crisis comes, remarkably, from Iceland. The country collapsed into depression after its experiment as an open economy with a large banking sector went pear shaped.
After a debt-fuelled boom and a huge influx of hot money due to high interest rates, its currency and banks collapsed [...]

ShareThis comes from Bloomberg News:
Estonia is set to meet its goal of adopting the euro in 2011 because of the Baltic country’s work on fulfilling fiscal requirements, European Union Economic Affairs Commissioner Joaquin Almunia said.
“It is quite possible that Estonia will be in the euro by 2011,” Almunia told the European Parliament in Strasbourg late [...]

ShareThe last I had heard about a prospective Gulf currency union came yesterday morning in a note by Marc Chandler who is the Chief Strategist at Brown Brothers Harriman’s FX group.  He indicated that he was more optimistic about a Gulf currency union on the than a Latin American one on the eve of a [...]

ShareThe headline at Bloomberg reads “Ireland, Greece May Leave Euro, Standard Bank Says.”  Before I even started reading this I was sceptical.  The Telegraph’s Ambrose Evans-Pritchard makes calls like this, but his Euro-sceptic views are well-known.
Here’s what the article says:
The absence of a mechanism to permit so-called fiscal transfers within the 16-nation region may undermine [...]

ShareColumbia University Professor and former Federal Reserve official Frederic Mishkin wrote a much-discussed Op-Ed in the Financial Times yesterday. In it, he asks
Are potential asset-price bubbles always dangerous?

He answers this question with a no, noting that some asset bubbles are more dangerous than others because of their connection to debt and credit. I agree [...]

ShareToday, Moody’s warned that Iceland, Latvia and Hungary were stabilizing but that their economies remained fragile. The problem is high debt levels, which is restraining consumer spending. Recovery in the Eurozone has been the main aid to stabilization, the report said. Absent this support, the outlook is considerably worse.
Moody’s re-affirmed Iceland and Hungary’s ratings of [...]

ShareFrom the FT.
Iceland’s bid to join the European Union received a boost on Monday when the 27-nation bloc’s foreign ministers agreed without delay to ask the European Commission for its opinion.
The swift decision means that Iceland, which only submitted its membership application on July 17, has already moved ahead of Balkan countries such as Bosnia-Herzegovina [...]

ShareAmbrose Evans-Pritchard has a good piece on Iceland out today at the Telegraph. The main point of his article is that Iceland is emerging from crisis and depression in a relatively healthy state due to a fifty percent currency devaluation.  While, GDP will shrink by 7% this year in Iceland, Ireland, Latvia, Estonia and many [...]

Share13-minute video from the Wall Street Journal.
Related stories:

Iceland warms to Europe
Iceland to hand bank stakes to creditors
Iceland’s rehabilitation

Here is yet another post from early last year which presages all of the problems we are seeing today. As I have often written, the fake recovery is just an attempt to paper over these problems. It won’t work. Where Ireland, Switzerland, Austria or the Baltics were front and center in February 2009, Greece, Spain and Portugal are now. But don’t think those other problems have gone away. As with Northern Rock, Bear Stearns and Lehman Brothers, contagion spreads to the weakest link – which either passes the test (usually with external aid) or collapses. And then it’s on to the next weakest link. That’s how crises work. This one is no different.