Iceland PM resigns

It's amazing to see the controlled press delay the news of Iceland's PM resigning allegedly due to health reasons though everyone else thinks it is due to the economic collapse and the protests demanding the resignation of the government.

PM Haarde announced his resignation on the 23rd, but almost no news websites covered it. Only now, on the 27th, or 4 days late did Washington Post and other mainstream websites start to cover the story.

Some websites speculate that the economic collapse will be exploited to herd Iceland into the Euro currency regime.

WaPo article follows:

Global Financial Crisis Fells Iceland Government
Protests in Reykjavik, Other Capitals Grow as Savings and Jobs Vanish

By Mary Jordan
Washington Post Foreign Service
Tuesday, January 27, 2009; Page A12

LONDON, Jan. 26 -- Iceland's coalition government collapsed Monday, the first government to fall as a direct result of the global economic turmoil.

Prime Minister Geir Haarde said he and his cabinet would resign immediately. As personal savings have been wiped out and joblessness has soared, Icelanders -- once among the world's wealthiest people -- have taken to the streets in protest, banging pots and pans and throwing eggs and toilet paper at Haarde and other parliamentary leaders.

Protests have mounted throughout Europe, where the political backlash to the crisis is growing. In Ireland, Britain, Spain and other countries where bankruptcies and home foreclosures are rising, polls show that approval ratings of leaders are sinking. In Eastern Europe and Greece, where there is less of a government safety net, protesters have spilled onto the streets by the thousands. Last month's collapse of the Belgian government, which had been wrestling with long-standing conflicts, was also hastened by the banking crisis, analysts said.

Perhaps nowhere has the economic crash been more spectacular than Iceland, an island with 300,000 residents on the edge of the Arctic Circle. Last fall, its largest banks went bust and the value of its currency plummeted. In recent days, protests intensified as no leader took responsibility for the crash, prompting police to use tear gas for the first time in half a century.

People felt that the government was "playing the violin while the Titanic was sinking," best-selling Icelandic author Andri Snær Magnason said in a telephone interview from Reykjavik, the capital. "Everybody who has a loan is paying 20 percent interest," and even those who own modest homes find their salaries cannot cover what is owed, he said.
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Haarde announced Friday that he would call early elections and said he would step down. He cited health reasons and said doctors were treating him for cancer.

But ahead of those planned elections, Haarde's Independence Party could not come to terms with the Social Democrats, its main partner in the two-year-old coalition that was scheduled to stay in power until 2011.

The Social Democrats have called for the firing of the central bank governor and for closer ties with the rest of Europe. The nation had purposefully sought to stay outside the European Union but now many believe that if Iceland had the euro as its currency instead of the krona, this crisis would not be so severe.

Foreign Minister Ingibjorg Gisladottir, head of the Social Democratic Alliance party, is expected to start talks immediately with smaller parties in an attempt to form a new government that would rule until the new election. She has been receiving treatment for a brain tumor and said she does not want to be prime minister.

"Iceland is certainly leading the way of the social protests and the political fallouts," said Simon Johnson, former chief economist at the International Monetary Fund and senior fellow at the Peterson Institute for International Economics in Washington. "I think it's going to spread; we're in a phase now we're beginning to see all the political fallout."

Simon Tilford, chief economist at the Center for European Reform, said the severity of the economic downturn in Britain has "ended any chance" that Gordon Brown's Labor government will be reelected when he calls elections sometime before mid-2010.

Iceland's economy is forecast to shrink by almost 10 percent this year. Its banks, which had expanded into global powerhouses, had embraced risky investments that far exceeded the reserves of the nation's central bank. The country was forced to accept a bailout from the IMF.

Staff writer Anthony Faiola in Washington and special correspondent Karla Adam in London contributed to this report.

So what did happen in Iceland. This is a Vanity Fair article that explains the issue. To summarize, it was caused by a zealous prime minister and later central banker who privatized the financial sector coupled with young, brash, but inexperienced bankers. Conspiracies are limited to cronyism and incompetent regulation as well as poor leadership of the country. Somehow I can believe in this take for now and I eat crow pie for insinuating that this was the result of a Zionist conspiracy without any good info behind my accusation.

I do welcome anyone who can provide a better explanation, this is after all just one article from one writer's point of view.

http://www.vanityfair.com/politics/features/2009/04/iceland200904?printa...