When news broke that Iceland had virtually gone bankrupt last weekend most people’s reaction was a sigh of relief. No more of those irritation Kerry Katona adverts people thought, assuming the frozen food chain had been made insolvent because Miss Katona had eaten all the fish fingers. She has in recent months certainly started to look as if she ate all the pies.
Fortunately (or maybe unfortunately) that is the wrong Iceland. The store you see in the high street, well more often in a low rent location just off the high street is still going strong. Kerry has not managed to eat all the taking yet. The Iceland that has been caught up in the global financial meltdown is the almost barren lump of volcanic rock in a low rent location just off Greenland.
So how did Iceland get hold of so much money to gamble in the global toxic debt derivatives markets? Apparently it is something to do with the price of fish. What has that to do with the price of fish you might well ask. Well there was a glut of toxic debt and a shortage of fish around the world. This was caused by letting the bankers meddle in the fishing industry. Nobody wanted toxic debts, everybody wanted fish.
As the submarine volcanoes around Iceland make it a place fish like to live and Icelandic property prices were cheap all the fish moved to Iceland and were followed by the financial services industry who saw a chance to make a killing (anybody can join a seal clubbing club). All the investors had to do was keep the fish in the water where Kerry Katona could not eat them and the Icelandic economy was underwritten by fish.
While the major economies floundered Iceland became the plaice to invest in. People all around the world put their money into Icelandic banks. As soon as the investors went off for a fish supper the Icelandic bankers took the money (or at least what was left of it after television presenters duffed up by Bjork had been compensated) and bought Collateralised debt obligations and other cod investment vehicles. The bottom fell out of the fish based economy and Iceland had nothing to fall back on. Not much will grow on Iceland and there are few natural resources.
It turned out an Icelandic entrepreneur named Magnus Gruntsdottir had been trading in fish futures without telling anybody that Icelandic fish have no future. They are destined at an early age to end up in fish fingers or to be laid alongside a pile of chips and sprinkled with salt and vinegar. As soon as the world markets learned this the Icelandic economy took a battering.
Fish had been everything to Iceland, they even brewed an alcoholic drink from fermented fish. This drink is unique in that when drinking wine or beer one finds the first glass enjoyable but by the seventh or eighth it is making the drinker want to throw up. The Icelandic fish liquor works the opposite was. The first sip makes people throw up but by the second glass one is so desensitised it has no effect.
We Boggart Bloggers have a feeling news of the financial crisis will seem like six glasses of fermented fish liquor by the end of this week.
Labour Minister says investors are entitled to their money from the government of Iceland in the wake of that fragment of the death of capitalism, but Conservative blogger iain Dale is on the case. Tory voting individual savers first, wasteful Labour councils nowhere.
Guardianista Frozen Cash - Arch plotter and shit stirrer Guido Fawkes remembers some smug economic pundit writing for The Guardian just a month ago recommended that with the economic crisis already panicking the markets a safe haven for punters cash was Iceland.
Good work there.