Iceland: Canada's 11th Province?

[-TSS-]

Kaupthing and Landisbanki, two major Icelandic banks, opened branches elsewhere in Europe, in the UK and the Netherlands in particular, and promised very favourable interest rates on deposits and people in those countries indeed deposited millions in those banks and when the banks went bust those people lost everything.

The Uk and the Netherlands demanded the Icelandic government to compensate for the saving-losses suffered by those British and Dutch people but the Icelandic government held a referendum in which people, surprise surprise, rejected the idea of the idea of an ordinary Icelandic tax-payer to pick up the bill for the frauds of the banks.

That decision effectively closed the door to EU-membership which has been considered as the only option for the country to rise from the ashes. However, the recent news has it that they are getting back on their feet. Their economy is heavily dependant on fishing. It has been only recently that the service-sector and tourism has started to bring revenue to Iceland.

[TimG]

From what I've read, going with Canada's currency could hurt Iceland. They got out of their financial situation by devaluing their currency, but they won't be able to do that with the Canadian dollar

Devaluation is not a magic bullet. In Iceland they had to impose currency controls which made Iceland a no-go zone for foreign investment and the cost of foreign sourced goods skyrocketed. Even if they removed the currency controls there is no guarantee the FDI would come back.

[Guest American Woman]

Then we should ask them to become a province or territory, they can still be called Iceland and get everything we get

Your suggestion raises a question in my mind - how do the territories differ from the provinces? Do they get all of the benefits of being provinces, or do they retain a degree of independence, a distance, so to speak - such as Puerto Rico in relation to states? If Iceland were to become a territory, how would it affect their independence - and how much would they benefit from Canada's oil profits?

[olpfan1]

Kaupthing and Landisbanki, two major Icelandic banks, opened branches elsewhere in Europe, in the UK and the Netherlands in particular, and promised very favourable interest rates on deposits and people in those countries indeed deposited millions in those banks and when the banks went bust those people lost everything.

The Uk and the Netherlands demanded the Icelandic government to compensate for the saving-losses suffered by those British and Dutch people but the Icelandic government held a referendum in which people, surprise surprise, rejected the idea of the idea of an ordinary Icelandic tax-payer to pick up the bill for the frauds of the banks.

That decision effectively closed the door to EU-membership which has been considered as the only option for the country to rise from the ashes. However, the recent news has it that they are getting back on their feet. Their economy is heavily dependant on fishing. It has been only recently that the service-sector and tourism has started to bring revenue to Iceland.

Iceland, Norway, Sweden, Finland, Denmark should join an economic block with Canada, what do ya say?! That would be pretty cool, all great countries

Edited March 8, 2012 by olpfan1

[olpfan1]

Your suggestion raises a question in my mind - how do the territories differ from the provinces? Do they get all of the benefits of being provinces, or do they retain a degree of independence, a distance, so to speak - such as Puerto Rico in relation to states? If Iceland were to become a territory, how would it affect their independence - and how much would they benefit from Canada's oil profits?

http://en.wikipedia.org/wiki/Provinces_and_territories_of_Canada

The major difference between a Canadian province and a territory is that provinces are jurisdictions that receive their power and authority directly from the Constitution Act, 1867, whereas territories derive their mandates and powers from the federal government. In modern Canadian constitutional theory, the provinces are considered to be co-sovereign divisions, and each province has its own "Crown" represented by the lieutenant-governor, whereas the territories are not sovereign, but simply parts of the federal realm, and have a commissioner

I imagine they would get enough money from the oil..enough for their tiny population! as for independence they

already have same sex marriage, their abortion laws would change..they'd be just like any province/territory

same laws and rules and stuff

[Jack Weber]

Iceland, Norway, Sweden, Finland, Denmark should join an economic block with Canada, what do ya say?! That would be pretty cool, all great countries

Interesting...

[Guest American Woman]

Devaluation is not a magic bullet. In Iceland they had to impose currency controls which made Iceland a no-go zone for foreign investment and the cost of foreign sourced goods skyrocketed. Even if they removed the currency controls there is no guarantee the FDI would come back.

But wouldn't it be a hindrance to have a currency tied to oil with none of the benefits of the oil? Canada has oil to fall back on when other goods are high priced compared to the world economy due to a high dollar, but Iceland wouldn't have that benefit.

[-TSS-]

This talk about the Icelandic currency being worthless brings to mind that shouldn't Zimbabwe adopt South African Rand as their currency. To call Zimbabwe dollar as worthless is an understatement.

[olpfan1]

But wouldn't it be a hindrance to have a currency tied to oil with none of the benefits of the oil? Canada has oil to fall back on when other goods are high priced compared to the world economy due to a high dollar, but Iceland wouldn't have that benefit.

Its one of the reasons why Quebec will never leave Canada, they wouldn't get any more money from the government

no chance Quebec would survive all on its own

Edited March 8, 2012 by olpfan1

[TheNewTeddy]

Quebec would do fine on it's own, as would nearly any province.

[olpfan1]

Quebec would do fine on it's own, as would nearly any province.

bull****

[TimG]

But wouldn't it be a hindrance to have a currency tied to oil with none of the benefits of the oil?

Oil is one part of Canada's commodity mix. The Canadian dollar is not priced more than the Austrilian dollar which has commodities but limited oil. Iceland is also a commodity economy which means it would benefit from the same swings.

[August1991]

This really has nothing to do with a union. Countries can adopt whatever currency they want.

Precisely. Like Liberia in general, taxi drivers around the world (in particular at 2 am) use US dollars. From what I am told, black markets in Asia now generally use euros - because of the 500 euro note. If Icelanders want to use Canadian dollars, they are free to do so and there is nothing Canadians can do to stop them.

From what I've read, going with Canada's currency could hurt Iceland. They got out of their financial situation by devaluing their currency, but they won't be able to do that with the Canadian dollar - which could end up being a strong "oil" dollar - and they won't have the oil to help their economy when their strong dollar hurts them regarding their high priced exports.

This is the key point.

A single world currency (eg. gold, US dollar, euro) would make life easier for everyone except when different regions face different macroeconomic shocks. And since such shocks are inevitable, it makes far more sense to have different currencies.

Conclusion? Despite the transaction costs, the world should have many currencies (and it should have different languages).

At most, regions facing similar macroeconomic shocks should share a single currency. Years ago, Newfoundland and Iceland depended both on the world price of codfish so maybe they should have shared a single currency. Nowadays, I don't see the sense of Icelanders using Canadian dollars.

----

Let me add a partisan point. We don't have a single world currency because the world has different "macroeconomic regions". Different places have different people. And yet leftists want a State monopoly to offer a single education system, and a single health system. Obamacare is a single health system for all of America. Even in Canada, we don't have that.

We have different currencies because people are different. We should have different health and education systems also.

Edited March 9, 2012 by August1991

[TheNewTeddy]

bull****

Do you have any evidence they would not? I have evidence they would. If you'd like to lay out your evidence create a thread and I will respond in kind - or, if you wish the "last word" - let me know know and I will create the thread.

edit

The few times I had US dollars on hand, all taxi drivers I've met here in Canada, have been far more than willing to take them.

Edited March 9, 2012 by TheNewTeddy

[fellowtraveller]

Devaluation is not a magic bullet. In Iceland they had to impose currency controls which made Iceland a no-go zone for foreign investment and the cost of foreign sourced goods skyrocketed. Even if they removed the currency controls there is no guarantee the FDI would come back.

There is considerable and justidfiable fear of the international financial community in the stability ofany homegrown Iceland curency.

They want to tie their currency to a relatively stable one like the Euro, US$, CDN $, Swiss franc. The obvious choice is the Euro, They are not a popular country with the EU, since Euopean banks and investors got burned last time by Icelandic banks and the Iceland govt.

They are currency shopping, adopting another one will help their trade balances.

[bush_cheney2004]

.....The few times I had US dollars on hand, all taxi drivers I've met here in Canada, have been far more than willing to take them.

Such was my experience as well back in the 80's. No need to convert US currency to the Canadian variety, as greenbacks were readily accepted because of the exchange rate. Hate America....love her dollars!

[Smallc]

Quebec would do fine on it's own, as would nearly any province.

You're right, they would do okay be international standards. They wouldn't do as well as they do now though. Their economy is, after all, relatively far below the average per capita. Last I checked, when Canada and Ontario were in the mid 40s, Quebec was in the high 30s.

[dre]

You're right, they would do okay be international standards. They wouldn't do as well as they do now though. Their economy is, after all, relatively far below the average per capita. Last I checked, when Canada and Ontario were in the mid 40s, Quebec was in the high 30s.

Thats tough to say, because when you create a dependance like that you never know if it really helps anyone or not. Maybe if Quebec was on its own to sink or swim they might have had to make some different economic decisions. And of course they would have been able to engage in competitive devaluation as well.

[-TSS-]

Do you think France would assist an independent Quebec? de Gaulle is dead and his successors have taken a lower profile on Quebec but I wonder have many Canadians still forgotten about how he insulted his hosts on his state-visit to Canada by expressing support for an independent Quebec. Wasn't he sent packing straight away after that and told never to show his face in canada again?

[olpfan1]

Do you think France would assist an independent Quebec? de Gaulle is dead and his successors have taken a lower profile on Quebec but I wonder have many Canadians still forgotten about how he insulted his hosts on his state-visit to Canada by expressing support for an independent Quebec. Wasn't he sent packing straight away after that and told never to show his face in canada again?

Yes, he never set foot in Canada again

[bud]

bjork!

http://www.youtube.com/watch?v=5q1BvSZNbUg

[Jack Weber]

bjork!

http://www.youtube.com/watch?v=5q1BvSZNbUg

For that reason alone they can't use our money...

[-TSS-]

I think Björk is cool but this clip is weird to say the least:

[fellowtraveller]

Such was my experience as well back in the 80's. No need to convert US currency to the Canadian variety, as greenbacks were readily accepted because of the exchange rate. Hate America....love her dollars!

Y'all need to stop living in the past.

The US buck is not so welcome now at par + service fees to exchange..

[bush_cheney2004]

Y'all need to stop living in the past.

The US buck is not so welcome now at par + service fees to exchange..

Of course, but I have no reason to ever find out today. First impressions are important, and Canadian merchants loving my Yankee dollars 25 years ago will last forever. Then it got even worse....Canadian peso!