When the credit crunch first hit, Icelanders blamed everyone but themselves: international banks for their loss of faith, hedge- funders in London for betting on the country going bankrupt. Seven months later, though, with its current troubles and the recent central bank rescue of Glitnir, Iceland's third largest bank, the mood is one of anger amid the dawning realisation that perhaps Iceland's own politicians and bankers may have played a part in the crisis all along. In bars and restaurants along Laugavegur, Reykjavik's main shopping street, people are critical of Geir Haarde, the Prime Minister of a beleaguered coalition, while his finance minister, Arni Mathiesen, whose only qualification to a knowledge of high finance would appear to be a masters degree in fish pathology from the University of Stirling, risks becoming a national joke. In an emotional policy statement earlier this month, Haarde assured his countrymen that for centuries they have shown stamina in the face of adversity, but for ordinary Icelanders, facing rocketing inflation, increased debt and the value of the Icelandic crown in freefall, group therapy isn't enough. Action should have been taken when the Althing, Iceland's ancient parliament, gave Haarde the goahead in May to seek an international bail-out and this week's rescue plan may be too late.

The only real player is being seen as David Oddsson, Iceland's longest-serving premier, and chairman of the central bank. His role in the takeover of Glitnir -- at the expense of its existing shareholders -- is viewed as a continuation of his long-standing vendetta against Jon Asgeir Johannesson, chief executive of Baugur, which owns a swath of household names such as Hamleys and Karen Millen in the UK, Magasin du Nord in Copenhagen, and has a stake in Saks, New York. As a result of the Glitnir takeover, Stodir, an investment company controlled by Baugur and the largest shareholder in Glitnir, filed for administration, leaving Baugur to lick its wounds.

Meanwhile, the ramifications from the Glitnir debacle secure Oddsson a political doublewhammy. The one person who could have vetoed the Glitnir takeover was Ingibjorg Solrun Gisladottir, foreign minister and chairman of the Social Democratic Alliance in the coalition government with Haarde's Independence party. During Oddsson's premiership between 1991 and 2004, Gisladottir was his main adversary but a benign brain tumour, discovered during a recent visit to New York, removed her temporarily from the stage, burdening Haarde, Oddsson's natural successor, with almost total humiliation. As Major was to Thatcher, as Brown became for Blair, so Haarde is to Oddsson.