Friday, December 12, 2008
why britain could be iceland
i've commented on iceland a bit and the potential for currency crises to strike where a nation is reliant on foreign financing.
the united states has a problem with foreign finance because the finance required to close its yawning current account deficit is large in relation to the global capacity to provide such finance.
britain has a much more straightforward problem -- they've borrowed far too much from outside the pound currency regime in relation to their income. it's no wonder the pound is collapsing.