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News, events, analysis, opportunities and developing strategy on "How African Nations Could Bridge the Developing Gap"
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A Case Study About An European Country Demised by the Crisis
The evolving world financial crisis that officially started last term of year 2008, but in reality was brewing since three years at least, shrunk the economy worldwide, forcing countries to recourse to costly and heavy financial stimulus packages that created abyssal budget's deficits.[1, 2, 3]
All this was the result of the reckless risks taken by the management and traders of developed world major banking system, to maximize profits through unbelievable financing schemes.
Indeed, the developed world banking system, mainly in Wall Street and the City of London, UK, engaged for two decades running in "bizarre" banking practices, lending money to people that do not have the resources to pay back, and therefore generating "toxic" assets. You know that already. Jonathan Jarvis's video available here, however, put everything in perspective, and explain more.
In addition to the financial centers of New York City and the City of London, UK, one country stands as the show case highlighting all the aspects and defaults of the new financing credo exposed in Jonathan Jarvis's video, the Republic of Iceland - An island country in the North Atlantic near the Arctic Circle. Reykjavik is the capital and the largest city, accounting for almost half of citizens living in the country. Population: 302,000.
In said country, historically and for centuries, marine resources (fisheries and allied agribusinesses, particularly animal husbandry), and mineral resources (ferrosilicon, and diatomite) exploitation driven the economy and established the country in a prosperity zone for decades running, in the range of High Income Countries (HIC) bracket - US$5,000 to US$9,999.
Then, starting from mid-1980, the government shifted from promoting the traditional economy and rigorous national budget balancing, to boosting financial transactions and services - in line with the financial centers of Wall Street and the City of London, UK.
Consequently, the "tiny" country banking system, backed by a deregulation policy sponsored by the government, indulged in all kinds of financial services matching Wall Street and the City of London traders's sulfurous practices. The country per capita GNP progressively moved from HIC value above outlined, to Very High Income Countries (VHI) bracket, from US$10,000 to US$19,000 and beyond. Icelanders, beginning of year 2008 were listed among the top ranking of the wealthiest people in the world, with a Parity Purchasing Power of US$36,000 as shown on the graph here exposed.
Then suddenly, the international financial system goes berserk, and overnight the "house of cards" collapsed in October 2008, reversing the trend and sending Iceland's economy crashing. Nowadays, Icelanders are no more the wealthiest citizens of the world at large. To say the least.
The actual plight of Iceland is an interesting case study, to compare with African countries's ones, submitted since the mid 1980s to Adjustment Structural Programs (SAP).
Click here to read about: "The Financial Crisis. A Comparison Between the Plight of Iceland and African Countries.
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