It mattered little, he says, whether, as with Kaupthing, the toxic exposures were to highly leveraged Icelandic investment companies, or whether the vulnerability was to US sub-prime home loan failures or overheated commercial property markets. "We were not the only victims ... Bear Stearns, HBOS, Royal Bank of Scotland, Northern Rock, all the American investment banks – all of them were essentially bankrupt. And why did the big banks not fail there? The UK and US governments came in and supported them. Of course, this could not happen in Iceland." The fatal imbalance between the size of the banking system – with assets 10 times gross domestic product – and the economy should have been addressed earlier, he concedes. Full Article at Guardian Unlimited