It's based upon my ex-fraud investigator's smell test, really....ie

"If something looks too good to be true, then it probably is".

Which has long described Iceland, financially, anyway.

Seriously, I can't see how Iceland Investment Plc's capital base - in terms of "real" productive value or "money's worth" which is exchangeable with the rest of the world - comes close to supporting the vast pyramid of financial claims it has been creating or acquiring on productive assets elsewhere.

I think that it will be the deflation of the Private Equity bubble - where Icelandic corporate vikings and banks have been so prominent - that will do for the Icelandic banks, and call the central bank into question.

Jon Moulton of Alchemy has been very good on this recently

Bankruptcies loom for Private Equity

- he's seen the writing on the wall for some time....

Solveig's instinct is that there is maybe also some distinctly non-kosher money swilling around in the background, too. If so, not every Icelandic corporate raider will keep his kneecaps intact, or maybe will be "sleeping with the fishes" rather than catching them..... ;-)

Anyway, when Iceland does sink, it will be their fellow Scandinavians who fish them out, that's for sure....

"Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky