Weekend reading: Iceland comes in from the cold

My pick of the week’s money and investing articles.

A barely reported bit of news yesterday from the Fitch ratings agency should make pleasant reading in the parts of Europe that animal spirits can’t currently reach:

Fitch says Iceland’s long-term debt is now safe to buy, adding the outlook for the tiny North Altantic nation is stable.

Fitch upgraded Iceland’s debt to BBB- from BB+, lifting it out of junk status. Fitch cited the slow but steady progress made by Iceland in emerging from its 2008 banking and currency crisis.

Iceland’s debt-laden economy was the first to crumple under the weight of the credit crunch, but has since begun to recover.

I’m not going to rehash the arguments over how Iceland got into its predicament again, nor wax lyrical about the similarities and differences with Italy or Spain, or Greece for that matter.

The short answer is Iceland has control of its own currency, a small population, rich resources, and a tradition of turning to government – and its own people – to reinvent itself out of a hole.

Other countries have different advantages, and problems, too. The important point is that doom-laden headlines such as those written about Iceland at the height of its banking crisis ought to be taken with a pinch of salt – and perhaps even treated as a cue to buy.

Particularly if they’re written by hysterical bloggers or the lunatic fringe of financial bulletin boards.

Most of the commentary about Italy, for example, has been truly dire. As I’ve written before, Italy is one of the richest countries in the world. It has pressing structural issues, sure, but it is only bankrupt in the sense that a man with a £1 million mortgage on 10 buy-to-let properties worth £5 million is bankrupt.

Which is to say – it isn’t.

At least Iceland tossed a volcano and an ash cloud into its doomsday scenario.

Greece could well be ejected from Europe sooner or later. It will almost certainly come back in a few years looking for more money.

But I doubt it will make one jot of difference to how much the average Monevator reader spends in retirement. Unless it’s how much they spend on holiday ouzo!

From the money blogs

• Thrown under a bus with model ETF portfolios – Rick Ferri
• Financial plans are dubious attempts to predict the future – Can I Retire Yet?
• The marginal utility of booze and drugs – Mr Money Mustache
• Vanguard now nearly ‘all in’ on indexing and simplicity – Oblivious Investor
• Risk is a three-legged beast – UK Value Investor
• $100,000 ain’t what it used to be – Len Penzo
• I was too poor to live in London. So I moved – Simple Living in Suffolk
• How to use social media to find a job – TotallyMoney
• Academia translation guide – The Big Picture

Book of the week: Posting some wisdom from Warren Buffett last Saturday prompted a few people to ask me where they could learn more on Omaha’s finest octogenarian. Well, you could do worse than read his (massive!) biography, The Snowball, which is also available on Kindle.

Investing and money in the mainstream

• Watch out for the mutual fund returns ‘pop’ – Reuters
• The end of peak oil theory – Fool.com
• German economy: Optimism amid the slowdown – BBC
• America: Land of high taxes on capital – NYSE
• Life after Wall Street: What downsized bankers do next – FT
• Inflation bonds yield warning – FT
• Hybrid mortgages seek the best of both worlds – FT
• Gold mining shares boost income to compete with ETFs – FT
• Banks raise their game on Junior ISAs – FT
• The tragedy of £50 million Fernando Torres – FT
• Francs for the memories: France bids adieu to her currency – Telegraph
• Halifax: Regional house price declines since 2007 – Telegraph
• Phone HMRC to avoid self-assessment fine – Telegraph
• Rising number of landlords making a loss – Telegraph
• Missed phone payments threaten mortgage applications – Guardian

Link these links? Subscribe to get them every weekend!