No matter how hard the Inspired by Iceland campaign attempts to turn Iceland's reputation from bad to good, the island can't catch a break. Moody's Corporation has just slashed Iceland's credit rating, downgrading it from Baa3 to negative. Keep in mind that a rating of 'Baa' is defined as "medium-grade and as such protective elements may be lacking or may be characteristically unreliable". Maybe it's a fair call on Moody's part. Iceland hasn't exactly had a booming economy since the total crash in October of 2008, but isn't describing the country as "unreliable" economically a little harsh? Iceland's Economy Minister certainly thinks so. Rumours have been circulating that Moody will downgrade Iceland's rating even further, lower to junk.
'Moody' may just be the right name for a Credit Rating Agency. Understandably, the agency is around to monitor and analyze economies around the globe. But by trashing the economy of a tiny European island, may do more bad than it does good. Who would want to invest in a country that has a negative credit rating? And with no investors, there is little as no hope for Iceland to ever bounce back. I'm not saying Iceland should go back to its 2007 economy - in hindsight, everyone can see that the 2007 Icelandic lifestyle was out of control - but Iceland does need help to stand on its own two feet again. If this situation was simplified to a schoolyard setting, Moody would be the bully and Iceland would be the bullied.
If you go to Iceland, you won't think the situation is all that bad. People are happy; the new mayor of Reykjavik is a stand-up comedian; people dine at restaurants and drive around in their cars. The situation is described as if every Icelander has nothing but potatoes to eat, and can't afford living life. That isn't the case. However, if Iceland's image doesn't get cleaned up by credit agencies (and the UK media perhaps too?), that imagined situation may become reality. Things are expensive. People do have less money to spend. Unemployment is a problem. "At the moment, Iceland’s debt is 150 percent of its GDP and the government is trying all possible ways to reduce it. Laws affixing a higher interest rate and prohibiting taking out foreign currency loans are aimed primarily at reducing the country’s high debt level", reported The Epoch Times.
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Iceland’s Bad Credit