Iceland melts
The government of Prime Minister Geir Haarde has moved to nationalise Kaupthing Bank hf (the largest bank in Iceland) after failing to secure investor confidence in the economy. The national currency, the Krona, was in free fall before trading was suspended until October 13. With a debt burden almost 12 times the size of the economy Iceland has bested the worst amongst the world's basket cases. Russia, previously chided by western governments for wholesale nationalisation of strategic assets, is looking to provide some EUR 5 billion relief to Iceland's battered economy while allies (the US and Europe) fight their own financial demons. Fervent supporters of free market economies have been dealt a hard lesson. Selling the virtues of privatisation to command economies just got harder.