Corruption

The head of state used their influence to divert government property and contracts to family and their close political allies. Funding from abroad flowed straight out of the country again and into the pockets of a selected group of people. These selected few created a few strong business groups that dominated the markets they operated in. The state would take a "hands-off" approach to regulation and corruption grew. The ruling party would appoint judges based upon their relation to the close knit political power circle. This went on until the economy collapsed, leaving the country loaded with external debts, but few if any actual paying investments. The elite mostly fled the country, while those left in the country lost faith in the institutions. What followed was the recurring story of despots and internal unrest as the general population suffered through sever reduction in social services in order to pay the external debt. Leading to a vicious cycle of poverty and conflict.

This is the all to familiar story of many developing countries. Never thought I'd say this. But now I know why Iceland wasn't a developed society along the lines of the rest of the Nordic countries. Instead we are a developing country without strong internal democratic institutions and rampant corruption.

For some of the facts on the situation faced by Iceland and why we've joined the debtor country group - look right here

If you read Icelandic here are the 3 articles that you should read:

Dýrt fyrir ríkið að selja banka

Icesave

Um smjörklípukenninguna og seðlabankastjórann