New Mortgage Crisis in Iceland: Could U.S. Be Far Behind?
By Dian L. Chu, Economic Forecasts & Opinions
The Icelandic financial crisis has been ongoing since 2008 when all three of the country’s major commercial banks collapsed after they failed to refinancing their short-term debt and a run on deposits in the U.K.
In July, I talked about how Iceland is totally not a post-crisis miracle as Paul Krugman claims, but just how are things now with Land of Fire and Ice?
Scary Economic Numbers
Some of the scary economic figures, courtesy primarily of the plunging Icelandic króna:
•Inflation has soared 41 percent from January 2007 through September this year (see screen print from Bloomberg)
•Real disposable incomes slumped 20.3 percent last year
•Real wages fell 10.1 percent from the beginning of 2007 through August this year
•63 percent of the nation’s mortgage is underwater
•40 percent of homeowners are “technically insolvent”
$2 Billion Mortgage Write-off – Who Will Pay?