[somawaima]

then, when it blows, you play the 1812 Overture. if you time it right, the volcano will be louder than the cannons.

1812 is recalled for something different in the Western North.

I don't expect Canada's current born again Zionist leader to support any of this with his current programming.

[Could] Iceland get loonie?
By Joe Castaldo canadianbusiness.com | November 02, 2011
In 2001, Iceland’s central bank stopped trying to manage the exchange rate and let the market decide the value of the króna. Interest rates were high as the central bank wrestled with inflation, meaning investments denominated in króna yielded a higher rate than other currencies. This attracted speculators (typically hedge funds) seeking to make money on what’s called a carry trade. The traders borrow money in a low-yield currency, invest it into a high-yield one like the króna, and pocket the difference on interest rates. Icelandic banks played the carry trade too, and foreign banks followed suit by creating “glacier bonds,” which were repackaged Icelandic bonds sold to investors outside the country. Up to 70% of glacier bonds from 2005 onward were created by Toronto-Dominion Bank’s London branch.

All of this activity fuelled the króna, which appreciated by 87% between 2001 and 2007. This was great news for Icelanders. In a country that relies heavily on imports, foreign goods are expensive. Icelanders took advantage of the strong króna by snatching up cars, electronics and luxury goods. “I could well afford to go to New York and eat at a three-star Michelin restaurant next to Keanu Reeves,” says Valfells.

But the carry trade is risky and unsustainable, and currency traders flee at the first sign of trouble. That’s what happened when the banks—heavily indebted, illiquid and unable to meet their obligations when credit dried up—finally collapsed. The speculators vanished, and the króna nosedived by 92% that year. Soon after, Iceland entered the EU application process primarily to get the euro. “The EU was introduced to Iceland as a lifeboat,” says Magnus Skúlason, managing director at research firm Reykjavik Economics. They’ve since watched the eurozone fall apart. “People started to wonder, ‘Is it really a lifeboat?’” EU accession will eventually go to a referendum, and opinion polls show the majority of the population is opposed. Aside from worries about EU stability, Icelanders are concerned about the loss of autonomy that comes with joining, particularly if it means less control over their prized fishing industry.

The Canadian dollar, then, is a backup plan. Skúlason and Valfells are part of a small group of academics, economists and business people pushing to explore it. One political party, the Progressive Party, is supportive. “If we are going to adopt another currency, then the Canadian dollar looks very promising,” says leader Sigmundur Gunnlaugsson. They’re not after a currency union, but a unilateral adoption similar to El Salvador’s 2001 switch to the U.S. dollar.

The group even put together a white paper extolling the loonie’s virtues. It’s relatively stable and liquid, for starters. The two economies are based on resources and may have more in common than Iceland and the eurozone. Most of the work of a switch can be done in four weeks, they say, stabilizing the economy and allowing easier access to capital. The group is appealing to hearts as well as minds, pointing out a huge wave of Icelanders once emigrated to Canada, and there is still an active community in Manitoba. Relations have always been good between the northern nations, which cannot be said of Iceland and other countries. The United States shut down an airbase outside of Reykjavik in 2006. Denmark used to rule Iceland, which probably disqualifies its currency, and the British pound is definitely out. An Icelandic bank, Landsbanki, offered high-interest savings accounts to the Brits under a brand called Icesave. When it collapsed in 2008, Britain rescued its citizens with a £2.35-billion payment and demanded reimbursement from Iceland, which refused in two referendums. Former prime minister Gordon Brown even enacted anti-terrorism legislation to freeze Icelandic assets. Most of the money should be recouped through a sale of the failed bank’s assets, but the dispute is not fully resolved. “If Gordon Brown ever set foot in Iceland, he would most likely be torn apart,” says Valfells.

The strangest reason for adopting the loonie is Arctic sovereignty. There are eight countries in the Arctic Council, including Canada and Iceland. A common currency could help Canada gain clout in the council, the group argues, and it could gain even more if Greenland comes on board, which they recommend. (To think that Canada, Iceland and Greenland can hold sway over the U.S. and Russia might be, well, very 2007.)

For now, the idea remains exactly that. The Progressive Party does not have a big presence in parliament, and the coalition government wants to complete the EU application process. Gunnlaugsson, the Progressive leader, is hoping for a nod of approval from Canada. “If there were some signs from Canada of willingness to look into this issue seriously, it would mean that the government cannot ignore the idea,” he says.

Help probably isn’t forthcoming. The group approached the Canadian Embassy in Reykjavik to ask how Canada would feel about a switch, and earlier this year the question was relayed to the Bank of Canada. According to a Canadian official who requested anonymity, the central bank answered that a unilateral currency switch wouldn’t mean much for Canada—all it has to do is supply the notes and coins purchased by Iceland—and the country was welcome to do it. However, it emphasized Iceland would have zero input into policy decisions.

The Bank of Canada and the embassy declined to comment, but the Canadian official says, “I think they only heard what they wanted to hear.” If Iceland ditched its currency, it wouldn’t have control over monetary policy to boost the economy, leaving layoffs as the primary way to deal with downturns. That’s tricky in Iceland. “It’s a very closed, tight-knit system,” says the official. “Everybody is somebody’s second cousin.” The devalued króna is also a key reason the country is crawling out of its hole: exports, predominately fish, are cheap.