ABSTRACT
This chapter explains the political economy of debt and speculation. The main political platform for neoliberalism was the Independence Party (IP), which traditionally had been a rather modest right-of-center party by European standards, but still the party of employers and the upper middle class, even though it profiled itself as a party for all classes. The advent of Iceland's financial collapse was for the most part a typical financial bubble. The main political platform for neoliberalism was the Independence Party (IP), which traditionally had been a rather modest right-of-center party by European standards, but still the party of employers and the upper middle class, even though it profiled itself as a party for all classes. The new institutional environment gave Icelandic financiers and business people full access to the global financial market for the first time since the inter-war period. Corporate debt was, however, by far the largest part of the accumulated debt of the economy.
