[Torygraph Alert] Iceland: what ugly secrets are waiting to be exposed in the meltdown? (15 August 2009)
It has now become clear that this was no ordinary crash. Iceland's special investigation into "suspicions of criminal activity" at the three banks is likely to stretch from Reykjavik to London, Luxembourg and the British Virgin Islands. Related Articles Eva Joly, the French-Norwegian MEP and fraud expert hired by Iceland and now working with the [UK's] Serious Fraud Office, now believes it will be "the largest investigation in history of an economic and banking bank collapse". Many of the banks' secrets are likely to be inextricably bound up with corporate Britain and the success of these investigations in tracing and recovering assets is likely to affect every UK household.
Eva Joly, the French-Norwegian MEP and fraud expert hired by Iceland and now working with the [UK's] Serious Fraud Office, now believes it will be "the largest investigation in history of an economic and banking bank collapse".
Many of the banks' secrets are likely to be inextricably bound up with corporate Britain and the success of these investigations in tracing and recovering assets is likely to affect every UK household.
the success of these investigations in tracing and recovering assets is likely to affect every UK household.
Hope Iceland holds out for recovery instead. Making much of this public would encourage others to follow the same path. It would be sweet indeed to see Goldman buried under molten lava from an Icelandic erruption. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
But Dr Jon Danielsson, an Icelander who teaches economics at the London School of Economics, believes that while the timing of the crash was dictated by the global banking crisis, the scandal is unique among European financial institutions. He believes the root of Iceland's problems that have now decimated its economy appear to have started when the government decided to privatise the banks in the early 1990s. "Iceland got its regulations from the EU, which was basically sound," he says. "But the government had no understanding of the dangers of banks or how to supervise them. They got into the hands of people who took risks to the highest possible degree."
He believes the root of Iceland's problems that have now decimated its economy appear to have started when the government decided to privatise the banks in the early 1990s.
"Iceland got its regulations from the EU, which was basically sound," he says. "But the government had no understanding of the dangers of banks or how to supervise them. They got into the hands of people who took risks to the highest possible degree."
The nexus between the top echelons of business, executive and government appears to be so thoroughly incestuous and corrupt that this government will probably fall as well.
Probably it's only the Icelandic women who can be trusted to sort it out. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
