U.K., Iceland spar over online banks
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Kai Ryssdal: Late last night, the British government unveiled a financial bailout package of its own. But even that and the coordinated rate cut today couldn’t keep the London stock market from tumbling again today. And as Marketplace’s Stephen Beard reports now from London, Britain’s also been hit by a bitter Arctic wind.
Stephen Beard Iceland’s Prime Minister Geir Haarde begged his European allies for help, to no avail. So he’s now hoping for a bailout from Russia.
Tape of Geir Haarde: We have not received the kind of support that we were requesting from our friends. So in a situation like that, we’ve had to look for the new friends so that’s what we’ve done.
Iceland rode the credit boom like no other country. Its bloated financial sector was nine times larger than its GDP. Siggi Lindal, an Icelandic analyst living in London, blames a small aggressive band of entrepreneurs.
Siggi Lindal: Iceland was too small for them. There was not enough population. There was not enough finance. There were not enough opportunities to grow. So they went abroad. And they did it by borrowing a lot of money.
They bought scores of major companies. In Britain, they own 10 percent of the retail market. But now that Viking raid has gone horribly wrong. Credit lines have been cut. The Icelandic currency collapsed. Dozens of British department stores could now be on the block. Thousands of Brits, like Emma Durnfield, are frantically trying to get their money out of online Icelandic banks.
Emma Durnfield: I’ve put it in there thinking it was safe. I wasn’t in there to make a huge amount of money I haven’t gone in to stocks and shares. I haven’t gone in to what I thought was unsafe. I feel betrayed. I feel frustrated.
Meanwhile, back in Iceland, the mood is said to be somber. The government says a drop in living standards is inevitable, as the country falls back on its traditional industry — fishing. The Viking raiders are in disgrace.
In London, this is Stephen Beard for Marketplace.