The Financial Times had a great article on the global crises on the 4th of Oct. I just wanted to include that here.

I realize that this blog is about Iceland and the situation there , however, it is critical that the BIG picture be maintained since Iceland is now receiving a lot of unfair venom spewing. Sure , the Bankers went nuts and over extended themselves. However , the country was sucker punched , or , hit from behind. Let’s NOT forget that.

I am here in Arizona and I have been disgusted for the past several years over people living way beyond there means all around me. People using their homes as ATM cards and Equity Lines of Credit sucked dry. Credit Cards maxed out and every other $30, 000 millionaire driving a Hummer on 20 inch “Spinner” wheels. The party here in my neck of the woods would make Iceland look like a boring Boy Scout outing.

Things have been very disconnected from fundamentals for many years.
This wave of defaulting home loans that just went due , known as the ARM reset , or adjustable rate mortgages , is just the first Tsunami in this meltdown. We will have ALT- A , or , Liars Loans , resetting by the millions in 2010 and 2011. At that time , I would not be one bit surprised if we will be bailing out Bank of America , which is now “to big to fail” after buying Merryl Lynch and Countrywide . That will be the final bat to the knees . That is when America’s credibility will go into the sea , if it’s not their already. Obama , if elected , and I believe he will be , will have a terrible mess on his hands.
We are SCREWED. Thanks Wall Street. Iceland sank first. Many will follow. It’s just a matter of time.

An Excerpt from FT
“What makes this crisis doubly shocking – if not baffling – for most onlookers is that Iceland does not have any obvious connection to subprime woes. It lies 5,000 miles from places such as Iowa or California, and banks such as Glitnir had little direct exposure to US homeowners.”

http://tinyurl.com/blamegame

So, your government got in this booming economy way over their head, and reached the level of incompetence ( http://en.wikipedia.org/wiki/Peter_Principle ). And the spreading virus of wishful thinking trumped all reasonable concerns voiced by the small group of clear-sighted critics. Almost nobody wanted the spoilsports to ruin the fun of travelling and shopping on credit cards, I guess.

But now the fun is over and it is high time for a change. And if the people of Iceland manage to enforce changes at the helms of the administration and the banks, this would send a very positive signal to foreign governments. The rest of the world is understandably hesitating to bolster the same leaders now who are responsible for the mess. A new leadership would reinstore confidence and clear the way for international support. And it is possible for the people of Iceland to achieve this. History is full of examples where changes have been enforced under much more difficult circumstances. Yes, you can!

Things will undoubtedly get worse, but with the customary hard work, creativity and intelligence of the everyday Icelanders the country will once again recover and hold its head high. It will just take a bit of time to get to that point. Hopefully along the way Icelandic society can shed these greedy, moronic elements alongside with these corrupt arses who call themselves politicians. How anyone could take a company, or indeed a country, in to such an outrageous disaster and keep a job is utterly incomprehensible to me.

Your frustration with the lack of (legal) action against those responsible reminds me of what we in Norway call “gutteklubben Grei” (Good Ol’ Boys Club). It is the same men who appear on the board of directors. They all know each other and they all do business with each other and so are completely incapable of monitoring each other. And members of parliament are pals with these guys, so no help there, either. We learned this after one man managed to bankrupt Norway’s oldest and largest property insurance company back in 1992 by using up its resources to buy up Sweden’s oldest and largest property insurance company. I can’t begin to tell you how delusional that is. But he forged ahead, with some unofficial governmental blessing, because nothing appeals to a Norwegian more than besting a Swede. And afterwards, after the headlines in the newspapers and the government takes over as major shareholder to keep the company afloat, it all fades away, and other headlines take its place.

Where are the “culprits” now? Still working. Still networking, if not as publicly or with as much clout. Many have pointed out that financial crimes do not get the persecution and outrage they should get, because people’s livelihoods are important. But it’s just business, y’know?

Oddly, the boat will right itself, Alda, even when it looks like it’s taking in water. When I think back on the nonsense (even my own employer managed to bankrupt itself 20 years ago and was bought by the aforementioned Swedish company), the majority learn and adjust and find a better way to do business. Most businesses want to stay in business.