Oh shit

If I'm understanding the debate in the British House of Commons correctly, Britain's Chancellor of the Exchequer doesn't believe Iceland's attempt to bail out its banks -- they call it 'the Icelandic scheme' -- can be capitalized. He has therefore, for the purpose of insuring British depositors in Icelandic banks, moved to freeze Icelandic bank assets in Britain.

In related news:

Iceland may ask for money from the IMF after failing to get ``the response that we felt that we should be able to get'' from European governments and central banks, Haarde said.

The central bank ditched a currency peg equivalent to 131 krona per euro after failing to convince investors it could maintain it. Earlier, the government said it canceled the purchase of a 75 percent stake in Glitnir and handed the lender over to regulators, saying it was in bigger trouble than previously estimated. |Bloomberg|