while the total market capitalization of the two icelandic banks the country took over on monday was only about us $4 billion. the notion that an industrialized egalitarian state as iceland can take over its largest lending institutions send shivers in all of eu investors. eu bank stocks plunged monday and tuesday as the stock value of kaupthing and landsbanki disappeared.
can this happen here in the us?
probably not, as in the case for iceland, a real national bankruptcy was imminent since those two banking bodies accounted for close to the entire gdp of iceland. this is not the case here in the us but in some non eu satellites and perhaps a few eu members, the prospect that a nation has to takeover its bank is flashing a bright yellow sign. with iceland serving up the recipe.
naturally, ceo's at kaupthing and landsbanki are crying foul and claiming that lines of funding had been arranged. look for the great trial ahead.
check out my notes on this collection of charts.
paul
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