Iceland’s government fails as the economic crisis worsens

After attempts to reverse Iceland’s financial crisis since October last year, Reykjavik’s government has collapsed amid street protests from citizens who set fires and hold noise barrages with pots and saucepans. Having lost trust in government, angry Icelanders protest a mismanaged economy, worsening joblessness, and rising cost of goods.

Prime Minister Geir Haarde couldn’t quell the public’s disappointment after Iceland’s currency lost its value and banks failed that mirrored the financial troubles in Wall Street and many countries in Europe.

“The IMF announced in November it would pump about $827 million into the Icelandic economy immediately, with another $1.3 billion coming in eight installments. Iceland’s Nordic neighbors — the governments of Finland, Norway, Denmark and Sweden — announced they would lend Iceland another $2.5 billion.”—CNN.com/europe (01/25/09, Nyeberg, P)

Calling for an earlier election in May, Haarde, who had been afflicted with cancer, resigned and announced he wouldn’t run for another election. Fearing national bankruptcy, he dissolved the coalition government he headed— formed by the Social Democrat party and Independence party.

With the government’s future uncertain, the island-country’s figurehead President Olafur Ragnar Grimsson said he would consult with Iceland’s four main political parties before asking that an interim government is formed.

Similar economic and political troubles are happening in many parts of the world as well. Hard hit are the economies of the United States (USA) and Great Britain which have embarked on their respective financial remedies. The outlook of the crisis at this time is grim even if economic bail-out packages at the expense of taxpayers have been laid out. Nobody seems to know how and when the financial mess will end. Ordinary citizens are left confused and fearful of what next will happen. (Photo Credit: Nele en Jan; Jon Palma)=0=

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The Coming Crisis of 2009: Some Thoughts (Part 1)

I do not know if my title is passe, that is, should it be termed as the crisis of 2008? Anyway, what the Philippines is experiencing so far is an economic downturn. There is no full crisis yet. But like the rest of the world Filipinos are worried about the spill-over effect of the US crisis.

Will there be a full-blown crisis? I don’t know either. Nobody has a perfect crystal ball on this crisis. One thing, there is no denial complex like in the other crises so looking for solutions came earlier. And the host country of the crisis can possibly marshall up to a trillion dollars of intervention fund to soften the blow. And the world, tickled properly, will probably respond to multilateral efforts in order to stave off a greater conflagration.

How do the Philippines stand in this crisis? Firstly, electronics parts imports have dived indicating that this sector of the economy won’t be a good performer this year. But that sector is no longer the country’s biggest sector. The biggest is now the OFW market and this sector is not dependent directly or indirectly in the US since it caters mainly to the Middle East and this region doesn’t produce a lot of goods and services for the US and other highly-industrialized countries (HICs).

A major sector, the natural-resources extraction sector including metals is primarily China-driven now. Will this suffer? Actually it will depend on how China handles this crisis since their number one market is the US. But being the cost and price leader worldwide they still have plenty of option regions. But of course these regions economic size and purchasing power cannot match the US’.

Our agri-business sector can probably ride out the storm since more and more it is not dependent on the US market. Instead it relies more on Japan and increasingly the Korea, China, Hongkong and other markets are being developed.

Meanwhile, our traditional agriculture market, though still big had become more of a non-factor in the last few years. Our coconut, abaca, tobacco markets is no longer that important while we are importers in our other agriculture needs like cereals.

An emerging BPO sector, which include call centers probably ranks second in importance now. This sector is putting up a brave face but its primary market is the US. Will enough US firms cut cost and outsource abroad so that previous demand cuts here will be negated? I cannot speculate on this since this is a US response area.

I point all of this out since I do not want to say that this impending crisis will just be a replay of the 2001 crisis spawned by the 9/11 NYTC attack. The world changes fast and underlying dynamics do change.

[photo credit:bigapple212]

The Coming Crisis of 2009: Some Thoughts (Part 1)

I do not know if my title is passe, that is, should it be termed as the crisis of 2008? Anyway, what the Philippines is experiencing so far is an economic downturn. There is no full crisis yet. But like the rest of the world Filipinos are worried about the spill-over effect of the US crisis.

Will there be a full-blown crisis? I don’t know either. Nobody has a perfect crystal ball on this crisis. One thing, there is no denial complex like in the other crises so looking for solutions came earlier. And the host country of the crisis can possibly marshall up to a trillion dollars of intervention fund to soften the blow. And the world, tickled properly, will probably respond to multilateral efforts in order to stave off a greater conflagration.

How do the Philippines stand in this crisis? Firstly, electronics parts imports have dived indicating that this sector of the economy won’t be a good performer this year. But that sector is no longer the country’s biggest sector. The biggest is now the OFW market and this sector is not dependent directly or indirectly in the US since it caters mainly to the Middle East and this region doesn’t produce a lot of goods and services for the US and other highly-industrialized countries (HICs).

A major sector, the natural-resources extraction sector including metals is primarily China-driven now. Will this suffer? Actually it will depend on how China handles this crisis since their number one market is the US. But being the cost and price leader worldwide they still have plenty of option regions. But of course these regions economic size and purchasing power cannot match the US’.

Our agri-business sector can probably ride out the storm since more and more it is not dependent on the US market. Instead it relies more on Japan and increasingly the Korea, China, Hongkong and other markets are being developed.

Meanwhile, our traditional agriculture market, though still big had become more of a non-factor in the last few years. Our coconut, abaca, tobacco markets is no longer that important while we are importers in our other agriculture needs like cereals.

An emerging BPO sector, which include call centers probably ranks second in importance now. This sector is putting up a brave face but its primary market is the US. Will enough US firms cut cost and outsource abroad so that previous demand cuts here will be negated? I cannot speculate on this since this is a US response area.

I point all of this out since I do not want to say that this impending crisis will just be a replay of the 2001 crisis spawned by the 9/11 NYTC attack. The world changes fast and underlying dynamics do change.

[photo credit:bigapple212]