The Corner

Erfiðir tímar

Revenge often has a part to play in Icelandic sagas.

Via the Daily Telegraph:

The Prime Minister who led Iceland into its devastating 2008 banking collapse has gone on trial in Reykjavik on charges of negligence.

Geir Haarde, the first world leader to face criminal charges over the crisis, defiantly rejected claims that he should have foreseen the crash.

“I reject all accusations, and view them as groundless,” Mr Haarde said as he took the stand, adding that he welcomed the opportunity to clear his name. The 60-year old economist, who faces up to two years in prison if found guilty, said he had genuinely believed that the remote island nation was reinventing itself as a global banking centre.

“I had the belief that Iceland could become an international financial centre, such as Luxembourg or New York,” he said.

“Nobody predicted that there would be a financial collapse in Iceland” in 2008, he said, adding that the government did not fully understand how much debt the country’s banks had on their books.

After three Icelandic banks were forced into bankruptcy and another nationalised, the country’s external debt soared in late 2008 to more than 50bn euros (£42bn), almost six times it’s annual GDP, leaving it financially crippled.

In the crisis’ immediate aftermath – as unemployment and inflation skyrocketed – many sought to affix blame for the havoc to the 330,000-strong nation. A wave of public protests forced Mr Haarde out of government in 2009.

This is the first case the Landsdomur, the court trying Mr Haarde, has heard a case since being set up in 1905 specifically to try cabinet ministers.

To say that the Icelandic collapse was completely unexpected is, it must be said, something of an exaggeration. In 2007 I traveled to Reykjavik with a well-known American investor. After meeting a couple of the country’s banks, he commented that they were not banks, but hedge funds. And in many respects, the same, we agreed, could be said of the whole country. His wallet remained closed. Wise man.

On a happier note, Iceland is now putting itself back together, but that’s a different saga altogether, and one that the Greeks should be following with interest.

 

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