Editor’s Note: Melanie Andrews is a longtime Planet Waves research assistant in the UK. She recently experienced a direct effect of the financial crisis in her local township, which had all of its money invested in banks in Iceland that failed. Eric asked her to tell her story. — Rachel Asher
Dear Friend and Reader,
Almost everyone seems to be pinning the blame for this world wide ‘crisis’ on the US mortgage market and out of control lending of money that didn’t actually exist, but I will fess up for my European banking brothers and sisters — it has been the same situation in Europe for some time, with property prices so out of control in the UK that houses on my street went up from ВЈ20,000 to ВЈ90,000 in 6 years — and with people being encouraged (to keep the market afloat) to take mortgages up to 6 times their income.
All hunky dory with the bankers at the top when it works as seamlessly as a Busby Berkeley routine. What is happening now though isn’t a story of an over-confident economy getting ahead of itself. The whole idea of our financial system is being shook, free market economy –- or Thatcherism as we sometimes call it in the UK — is failing.
Many with just an ounce of common sense have thought unregulated permanent growth was a crummy idea, but having always been rubbish with numbers, the problem felt ‘out there’ to me and a bit unreal. I’m now starting to understand the extent of the interweaving of financial banking with a story that hit the UK headlines last week and the realization that the break down of banking institutions worldwide has had repercussions close to home — my home.
After the shock in the US, news crept in a couple of weeks ago that Iceland was also having an economic meltdown, in reaction to the US situation and, with one bank, Glitnir, already nationalized, a loss of confidence in it’s banking institutions.