Thursday, 9 October 2008
Standing firm amid the ice
It appears that some 20 local authorities are in serious trouble because they have lent money to Icelandic banks:
What do these local authorities think they were doing? I would not have put any of my money anywhere near an Icelandic bank despite the attractively high interest rates. That in itself should have been a warning sign: if it sounds too good to be true, it probably is. It has been evident for some time that the highly leveraged economy of 300,000 former fisher folk was in deep trouble (and there have been darker rumours as well).
I once met the controversial president of Iceland, Olafur Grimsson. I was at an International Political Science Association meeting in Edinburgh and this big guy came up to me and introduced himself by saying 'I am political science in Iceland.' And he was. He was the first person in Iceland to get a PhD in political science (from Manchester).
Perhaps his nifty footwork has something to do with the Russian offer to bail out the Icelandic economy.
Since writing this post, I have learnt that Olafur is ill with heart trouble. I hope he gets well soon, as he could help to stabilise the internal situation in Iceland.