Thrainn Eggertsson writes to the FT:
The government of Iceland has now been offered foreign loans that roughly equal the country’s gross domestic product. The annual interest payments, say 3-4 per cent, approximately correspond to the country’s annual economic growth. Additionally the loans must be paid up.
I believe Thrainn is being generous with that growth estimate. Then he compares Iceland to Germany in 1919 and predicts similar consequences (I don’t think he means that as a threat, however). Instead, I wonder what it is like for a country to be truly, permanently bankrupt. And a further difficulty lies on the horizon. Circa 2000, fish accounted for 70 percent of the country’s export earnings. Here are many articles on dwindling cod stocks, the number one item sold by Icelandic fishermen.
I genuinely cannot imagine what the endgame looks like.