The bailout is terrible

To see what happens when a banking system collapses, look no further than Iceland. Iceland’s no banana republic — in 2007, the United Nations called it the most developed country in the world. But in October, the country’s banking system collapsed.

As a result, Iceland’s currency has lost about half its value. Inflation is now 18.6% and rising. The central bank’s interest rate is 18%. Unemployment has quadrupled. The stock market is down 90% since the end of September. It’s ugly. And all this has happened before most of the aftershocks from second-order effects, like the results of skyrocketing interest rates.

From The Motley Fool


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