Iceland Falls Off Big Mac Index

The Republic of Iceland, one of, if not THE, hardest hit economies in the global financial meltdown, has suffered another indignity today.

The owner of the country’s sole McDonald’s franchise announced that the erstwhile symbol of western capitalism will be closing shop at the end of the monthdue to the Krona’s precipitous collapse. The problem, said the owner, is that all of the ingredients used in his franchise must be imported from Germany, a task that has become prohibitively expensive as the Krona continues to fall and the Euro continues to rise. Onions alone cost about as much as a bottle of good whiskey, he said.

No doubt, this will severely impact Iceland’s place on the Big Mac Index – a measure of purchasing power parity put forth by the Economist that uses the eponymous burger to gauge the relative strengths of particular currencies. Since its introduction, several variants have been proposed, including one from the Economist itself, taking into account the number of hours one must work in order to buy a Big Mac in one’s own country.

Iceland, home of the world’s worst performing stock market, can be seen as a microcosm for the economic crisis as a whole. Reports of its journey from a cod-based fishing economy to international banking giant, into, well, this (all in less than a decade!) read like a book of financial meltdown clichés, incorporating everything from an overabundance of easy credit to a rapidly inflating real estate bubble. The end result was the failure of all three of its major banks and, eventually, its government. Recently, Iceland has been seeking help from the International Monetary Fund to put itself back in shape.

McDonald’s pulling out of Iceland may not be as bad as it seems, however – one commentator from the London Telegraph pointed out that the reason the franchise is closing shop is due to the fact that it cannot compete with local fast food restaurants that don’t need to import expensive ingredients. This pumps consumer money into the Icelandic economy, helping along a slow, steady recovery – faster than some predicted.