The financial origins of the eruption

A year and a half ago Iceland suffered another misfortune. I discussed it here, recasting the narrative in a story by the WSJ's Charles Forelle:

Plucky Iceland bucks the European Cartel Community, and is punished for its temerity. Then it gets brought down by a global financial calamity beyond its control.  Scrambling to fix the problem it's squished by its powerful neighbor. 

And what about Great Britain's role – a rival not only in banking, but for the raw material of its lifeblood – fish and chips (it fought several "Cod Wars" with Iceland). In the banking crisis, Britain claims it needed to protect its depositors. But how exactly did shutting down Kaupthing, precipitating defaults and exacerbating a run in the midst of its salvage efforts accomplish that?

There are rumors, not mentioned in the story, that Britain held up an IMF rescue loan to Iceland. And Forelle alludes to Britain's "using an anti-terror law to seize other Icelandic assets" * * *

And now the volcano. The connection seems obvious.

Comments

[MHodak]

Funny. On Friday, my Swiss partner and I, noting that the UK has been hit hardest by this disaster, were referring to this as Iceland's revenge. Said he, "It only takes a few sticks of dynamite in the right place."

In the meantime, I'm stuck in Zurich.