ABSTRACT
In 2010, one of Iceland's long dormant volcanoes erupted, spewing an ash cloud that temporarily shut down air traffic over the North Atlantic and much of Europe. The credit default swaps was to be used extensively to short Icelandic banks. One offshoot of Iceland's economic transformation was the evolution of its banking system from a sleepy inward-looking clutch of financial institutions into turbo-charged financial entrepreneurs seeking to cut a large swath in global finance. On the non-financial side the most notable development from a foreign investor was McDonald's, which announced in October 2009 that it was closing its outlets because the country's financial crisis made it too expensive for its franchise. Iceland's hard-charging banks left a trail of financial tidbits for the sharks of global finance—shorters. One of the most significant acts of the Oddsson governments was the privatization of two of the country's banks, Landsbanki and Bunadarbanki, an act that was to have far-reaching consequences.
