End of the road for Icelandic raiders

As the credit crunch hit, Iceland was one of the first casualties. For years outsiders had whispered that it was all too good to be true. Tales grew that Iceland’s banks were propped up by Russian money. The cause of their downfall was more prosaic – overindebtedness.

The country’s banks had borrowed from the wholesale international money markets more than 10 times the tiny nation’s GDP – more than $250,000 (£169,000) for every man, woman and child.

Johannesson was not content with just borrowing from the banks, he bought one – taking a large stake in Glitnir, the nation’s third-biggest bank, which in turn lent money to Baugur.

Observers jest that the whole Icelandic system is run by a small group of men who go back a long way and sit in the same hot tub three times a week.

From The Times


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