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February 4, 2009
Iceland in upheaval as banks and government implode

Police follow protesters in Iceland.

Iceland’s three largest banks failed in October. In late January, Prime Minister Geir Haarde resigned following weeks of public pressure and the coalition government collapsed. Up to 32,000 people have participated in protests – more than 10 percent of the country’s population.

The upheaval has led some analysts to call Iceland “the first political casualty of the global credit crisis.”

Prime Minister Johanna Sigurdardottir will head the new center-left coalition government. She has plans to revamp the country’s banking system.

What went wrong in Iceland, and is it a cautionary tale for the wider world? Listen to our online radio show.

Read what bloggers in Iceland are saying about the economic and political situations:

The “Icelandic News” blog writes about experiencing unemployment:

I am Icelandic. Born and raised. Lived here most my life. I have recently lost my job, am about to lose the place I live in, did not get paid for the last month at my job, and [am] worried about how things will turn out. […] I am staying in Iceland. I have a family, and many friends that will stay here in Iceland during this depression/recession, and my plan is to stay here and be a part of the build up of the new (old) Iceland.

The Iceland Report” blog argues that media reports are sensationalized and that the political change is positive:

I have gotten a few panicked emails from American friends these last days which give me the impression that somehow the U.S. media is once again disasterizing the wrong situation. […] What seems to be going on, through the lens of these fear-filled missives, is that American news outlets are reporting some kind of governmental collapse/slash/humanitarian nightmare unfolding in Iceland. (Correct me if I’m wrong.)

In fact what is happening is entirely welcome from the perspective of most Icelanders, and from the perspective of anyone who understands Parliamentary systems of government. The governmental coalition of two parties, one of which ran this place into the ground over the last decade, and the other of which tends to wander around issues like Reagan Democrats playing shuffleboard, finally ended their uncomfortable marriage. We had been waiting for this for months, as all confidence in leadership here had evaporated. […]

So it’s nothing more than a peaceful transition of political power, in a country where the tradition of representative government was already 1,000 years old in 1930. My worry remains, however, and that is from which corner(s) the true competent leadership will emerge, leadership that can help this country pull itself together and rebuild for a bright future. That part remains to be seen.

The “Surviving Iceland” blog described protests in late January:

This time it does not look like they will give in, the fire is growing bigger, the crowd is getting larger, they are getting louder. I feel bad for the police officers; the police [have] said many times that they do not like having to be tough with the people, the people are hurting just as much as they do but this is their job. I am glad right this moment that I am not a police officer, that is for sure.

Many have been pepper sprayed today and tonight, 30 arrests today and quite a few tonight but no numbers, I just hope no one will get seriously hurt. This is too new to me, and worrying and makes me incredibly sad at the same time, this is the sign of what is happening, this is how we feel.

Even our seniors were at the protests today, an elder woman said that the government has leveraged their grandchildren, they do not care about themselves at this point, they are protesting on the behalf of their children and grandchildren and great grand children.

I wonder if Geir H. Haarde will ever change his mind.

The “Iceland Weather Report” blog discusses the new prime minister:

So, new PM Jóhanna Sigurdardóttir plans to introduce a bill in parliament tomorrow that will change laws so that the heads of the Central Bank can be removed.

You read that right. LAWS need to be changed. In order to fire three obstinate Central Bank directors who are hanging onto their positions like dogs on a fish skin. Honestly, the mind boggles.

And why they insist in persevering when the entire system that put them where they are is a mass of smoking ruins around them is beyond me. Have they no shame? Or are they hanging on because if they are fired they are entitled to big fat severance deals — on top of everything else!?

Photo courtesy of Flickr user scarndp under a Creative Commons license.

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