Message to Icelandic President Olafur Grimsson on Default - U R doing it Rong!
Icelandic President and epic level D&D character, Olafur Grimsson, wants to put to a referendum whether or not Iceland should pay back money its banking system lost, as it agreed to long before billions of Euros in debt suddenly hove into view.
Now obviously the good and proper thing would have been for Olafur Grimsson to have taken his mighty axe and slain the evil financial wizards who were offering such ruinously high returns on cash deposits that obviously could only be sustained via the use of dark finance. But alas, the time for that is long past. He allowed himself to be seduced towards the selfish side and did nothing to prevent the sacrifice of Iceland’s virtuous credit rating upon the altar of the efficient markets hypothesis.
Now it may be that the best thing Iceland could do is default. However, I feel I should mention that at least part of Australia's prosperity is based upon the fact that we have always fulfilled our financial promises, no matter how freaking stupid those promises may have been. (What's that, Britain? You want us to pay for the privilege of sending a generation of young men to the other side of the planet to march slowly towards machine guns? Sure, we can do that...). And Iceland's promise to guarrantee bank deposits was not some crazy far out idea it came up with while high on magic 'shrooms and wode. It was a perfectly normal financial arrangement. But if Olafur Grimsson thinks the best thing for Iceland to do is default then he should take the responsibility onto his own shoulders and convince the government to just do it. This way if everything goes south (and face it, in Iceland that's about the only direction anything can go) he can fall on his sword for the good of the Icelandic people. (He has a sword as well as an axe.) But putting it to a referendum is axing the Icelandic people up the geothermal geyser. If Olafur Grimsson took responsibility people could say, "It wasn't our fault, we wanted to repay but he made us default. But now he's gone it's safe to invest in Iceland again. Please give us your money." But putting it to a referendum will make the Icelandic people as a whole look like deadbeats. Olafar Grimsson should Viking up and take responsibility himself if he believes that defaulting is the best thing for Iceland to do. If he doesn’t then his shift to the selfish side will be complete and he will be the villain of this piece forever more, and that’s a long time.
UPDATE: Daniel Davies explains the Icelandic default with epic level clarity despite relying on facts and years of financial experience rather than hallucinations as I do: http://d-squareddigest.blogspot.com/