News today that the President of Iceland refused to sign a bill that would have seen about $5 billion paid out to foreign investors who lost their savings when Iceland's banks went belly-up. The bill was hugely unpopular amongst Icelanders, and President Olafur Grimsson's about-face not only puts Iceland's $10 billion IMF loan in question, but would almost certainly end Iceland's current hopes to become part of the European Union.
The current coalition government was in a huge catch-22. If they had let the bill be signed into law, public outrage might have ended its tenure. With the bill now vetoed, the emergency cash injection from the IMF may be cut off, which could put the entire Iceland economy on the brink of collapse.
The big question is, if Iceland goes, will others soon follow?
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