Europe in Crisis

http://www.counterpunch.org/hallinan03252009.html

Europe in Crisis
By CONN HALLINAN

“Below the thunder of the upper deep;
Far far beneath in the abysmal sea…
The Kraken Sleepeth”

--Alfred Tennyson

In Nordic mythology, the Kraken was a huge beast that lay in wait for ships that braved the restless North Atlantic, rising from the “abysmal” depths to wrap its great arms around the unwary or the over bold, pulling them down to its lair. As economies from the Baltic to Spain and from Ireland to Austria self-destruct, the Kraken metaphor may be an apt one for a crisis whose first victim was Iceland.

The saga of Iceland’s fall, from what Reuters called “One of the richest countries in the world per capita” to flat broke, is a tale that begins in the 1980s when Ronald Reagan and Margaret Thatcher dismantled governmental and financial checks and balances, privatized everything that wasn’t nailed down, and turned the world’s economy into an enormous Ponzi scheme with promises of wealth that would make Las Vegas blush.

Tapping into the sea of high risk credit scams that floated the housing bubble, tiny Iceland—whose major export was cod—turned itself into a financial giant whose banks were worth 900 times more than the island nation’s gross domestic product. Icelanders bought townhouses in New York, imported expensive cars and lured back ex-patriots to cash in at the casino.

Such hubris stirred the Kraken.

Last month Icelanders were defaulting on car loans, unemployment was surging, and the country was in hock to the International Monetary Fund (IMF), whose standard formula for accepting its loans is the systematic savaging of education, health care, and social welfare programs. Iceland’s richest man, Asgeir Johannesson—who made out like a bandit over the past five years—runs a supermarket chain whose symbol is a cross-eyed pig, which suggests that while the northern gods may be vengeful, they have a sense of humor.