It is no secret that all has not been well financially in Iceland for some time. House sales are down by 80 per cent and the countryside is littered with newly built, unsellable, summer villas. Food such as slatur, a loaf made from sheep's intestines, is back in vogue.

Hallgrimur Helgason, the writer, told a radio station yesterday: “Last night I fell asleep in a democracy, this morning I woke up in a kingdom ... David [Oddsson, the central bank Governor] has taken over Baugur's bank. The central bank now owns 75 per cent of Glitnir. How is that for a hostile takeover?

“Iceland has, at present, neither a working government nor parliament - just a central bank.”

Mr Oddsson, the former prime minister, has adopted a very hands-on management of the economy, in contrast with what many Icelanders regard as the rather limp approach to the financial crisis taken by Geir Haardes, his successor, who has constantly blamed “outside forces”.

In April, Mr Oddsson accused hedge funds of targeting his country's financial system and threatened to use “bear traps” to catch speculators who just wanted “to make profit by hook or by crook”.

Many people put more blame at the expensively shod feet of the bank's management, insisting that Glitnir executives should neither be allowed to stay in their positions nor be let off the hook with the “diamond handshakes” that have been common in Iceland recently.

Whatever happens when - or if - the dust settles after “Meltdown Monday”, the name of the game in Iceland at the moment is allotting the blame.

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