Wednesday, March 11, 2009

The Iceland Saga, Part One

The first part of a two-part post on the Icelandic economic crisis.

Fosco has mentioned before that he loves Iceland immoderately. He and his college roommate lboom went to Iceland twice in the late 1990s and fell in love with the place. So much so that Fosco has fantasies about living the rest of his life in coolest city in the world, Reykjavík. That way, he could spend at least one day a week submerged in the coolest spa in the world: the Bláa lónið (aka the Blue Lagoon. No, not that one).

Sadly, you've probably heard that things in Iceland aren't very stress-free as of late. As Fosco noted last fall, Iceland's entire banking system has collapsed. Fosco is actually surprised that this story hasn't received more press attention so far. After all, the media usually loves disasters when they happen to white people (and Icelanders are indeed quite white--almost transparent, actually). Maybe the Icelandic crisis just can't compete with our own American crisis (although Iceland's in a lot more trouble); or perhaps no one wants to suggest that what could happen in Iceland could perhaps happen elsewhere (like here).

Whatever the reason, Fosco is here to fill in the blanks. This is what you need to know about the Icelandic financial crisis.

One thing about Icelanders: they are a generally a practical and reasonable people. During the immediate aftermath of their economic collapse, foreign reporters had a hard time finding much of a "human story," owing to a general lack of hysteria. This piece from The Daily Beast found one major difference: "No One's Eating Pie Anymore." Hmmm. What could that mean?

In some ways, Icelanders are a lot like Americans. They look like they’re from Portland, Maine. I attended a party here and the host cooked three pies: apple, pumpkin and pecan – then we all sat around and watched the U.S. presidential debate. To say that these people are more dedicated to U.S. politics than Americans is an understatement.
Until food and supplies run out, the country remains in the quiet before the storm. During the first week, the main shopping street was jammed with cars filled with families driving slowly, aimlessly. They didn’t know what to do. The restaurants were empty. The only rejoicing to be found was in expat hangouts, where dollars, recently worth 70 krona, were suddenly worth 150.
Part of the reason for the lack of despair, the article notes, is that Icelanders aren't terrified by the possibility of poverty:
It’s only as the long slow slide continues that Icelanders will make it very clear that they’re not like Americans. Americans don’t know how to be poor. Witness the millions of us who live totally on credit, and the fact that we have no idea how to sustain ourselves. We make reality TV shows about our attempts at hunting and survival, while Iceland was still a poor farming country just twenty years ago. There’s an old guy in Reykjavik who grew up in a nearby cave. Yeah, caveman. They may look like us and talk like us, but they can also do stuff like farm and knit and fish. The editor of one of the two major newspapers here told me, “I’ve always assumed that if my editing or music career doesn’t work, I can always gut fish.” It was his teenage job.
Maybe Americans could learn that kind of equanimity... but I'm not holding my breath.

Of course, that doesn't mean that some Icelanders weren't angry. Take pixie chanteuse Björk, for example. Right after the collapse, Björk wrote an editorial noting that the Icelandic government was planning to use the economic crisis as an opportunity to grant aluminum rights to environmental rapists like Alcoa and Rio Tinto, rights that would cause a great deal of environmental damage to Iceland. As Björk notes:
Usually I don't notice politics. I live happily in the land of music-making. But I got caught up in it because politicians seem bent on ruining Iceland's natural environment. And I read last week that, because of the crisis, a number of Icelandic MPs are lobbying for the environmental assessment to be ignored so that the dams can be built as quickly as possible to give Alcoa and Rio Tinto the energy they need for the two new smelters.
Yes, the "I don't notice politics" line is annoying as hell; but she's exactly right about the rest of it. It may be an economic collapse for the Icelandic people, but it looks like it's Christmas for Alcoa! Whee!

So things were looking pretty bad last fall; and then know what made them worse? Gordon Brown. As in Prime Minister of Great Britain. You see, before the collapse, because Iceland's banks were crooked and incompetent, they were returning a great rate of interest. Consequently, many British municipalities, pensions, charities, etc. decided to invest their money in Icelandic accounts. When the banks failed and were seized, those assets were frozen. This angered Britons and their Government responded: by seizing all Icelandic assets in Great Britain under the legal authority of anti-terrorism laws. Yoink! Being treated like terrorists rankled Icelanders apparently. As this article noted, law-abiding residents of Iceland were a tad angry about being compared to terrorists:
"Ordinary Icelanders are no more responsible for the risk-seeking businessmen who happen to hold our passport than the people of north London are responsible for the destructive behaviour of the talented Amy Winehouse," said Icelandic professor Eirikur Bergmann Einarsson in the Guardian.
Well-played, Professor Einarsson.

But Icelanders are both resourceful and witty. As this piece notes, Icelanders responded by creating photographic postcards to send to Gordon Brown, informing him that they are not terrorists. Here's one of the cuter examples (and no, I don't know why they call him "Darling"--isn't Iceland grand?):

(And yes, every living person in Iceland--of any age--is extraordinarily beautiful.) There are now tens of thousands of these photographs; you can browse them here.

So let's fast-forward our narrative to January of 2009. Suddenly, Icelanders started to get a little more restless. Protests started to get big. And nasty. Well, just a little nasty (this is still Iceland). HuffPo's Iceland correspondent even noted that "Iceland Is Burning" (which seems to have been a slight exaggeration, although something does appear to have been on fire in one of the accompanying photos--probably just briefly). Heartbreakingly, blogger Iris Erlingsdottir made this plea for help:
Over the past eight years, America ceased being the City on the Hill, shining its light to the rest of the world. America and Britain closed the NATO air base in Iceland, and have made no offer to help Iceland in its time of trouble. We need help, not only to break down the old power structure, rotten to the core, but also to prevent it from being rebuilt. We desperately need stability, economic assistance, impartial advice, and fair supervision.

Barack Obama, a nation turns its lonely eyes to you. Please!
Clearly, Obama has other priorities, Iris. Could we interest you in a (slightly-used) Dick Cheney?

Sure enough, days later the Icelandic Government collapsed and a caretaker coalition took over (crazy Parliamentary system!) until new elections can be held. The new Icelandic Prime Minister is Jóhanna Sigurðardóttir, the first woman Prime Minister in Icelandic history and the first openly gay world leader (although there are still those pesky rumors about Stephen "Mr. Gropey" Harper). You've got to hand it to Iceland: even when their country is on the verge of dissolution, they manage to elect an elegant lesbian GILF as Prime Minister! Now that is style.

So where does that leave Iceland? Well, in some kind of stasis, it seems. The evil Balrogs of the IMF have shown up and have provided a loan and a plan to stabilize the economy (read: will make Icelanders pay for generations for the sins of a few ultra-capitalist robber barons). The banks are still frozen. No one has any money. Unemployment is up. Elections are still over a month away.

Fosco gets a daily dose of Icelandic news (thanks to a recommendation from his pal M-Life) from this site: Icelandic News in English. It's sad, of course--especially the description of the site itself:
Here you will find Icelandic news translated to English. I lost my job at the end of October as a result of the depression so, for now, I consider my job to be translating Icelandic news for those of you who are interested in this crisis that is shaking the very foundations of the Icelandic society.
Once again, we have to admire the Icelandic spirit. Unfortunately, the translations provided are not always so good (for one thing, newspaper articles never provide enough context for a foreign audience). And, for another thing, I think the translator's command of English is a bit imperfect (although much better than Fosco's command of Icelandic, natch). Here's a great line from an obituary of an Icelander who taught in the US:
He was a teacher of literature and penmanship at the Southwest Minnesota state university for the past 27 years.
I'm going to go out on a limb and say that he probably taught "writing." Of course, when Fosco laughs at a translation mishap like this, he's mostly just laughing to drive away the tears. Poor Iceland!

You can read Part 2 here.

Icelandic literary recommendations. The Icelandic Sagas (written in the 10th and 11th centuries) are a great treasure of world literature. They are also surprisingly readable and interesting. Some recommended collections/editions:

Click through to purchase.

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Anonymous said...

Very interesting post. I believe "Darling" may refer to Alistair Darling, who is Chancellor of the Exchequer.

Unknown said...

Actually, the IMF loan will probably not be used. It is thought as a reserve that could be drawn upon in a state of desperate need which will probably not happen. The fact that it is available kind of stabalizes the currency market and lends it credicility. It just lies now in a bankaccount in the states.

Another thing, the minister of finance, Gylfi, recently said that the shortterm debts of Iceland seems to be for the short term about 1 GDP, but that will go down quickly and for the long term it will be about 0,5 times the GDP. That is actually pretty good for a weastern european nation so things are in fact not that bleak over here.

The people that were hit worst were the ones that took mortages in foreign currency. The press of course dramatises that alot like everyone has it, but that is soooo far from it. I think people are getting more and more optimistic over here.

FOSCO said...

@Anon: Of course! [Sound of Fosco slapping his forehead.] Thank you.

@Egill: Ah, that's good news about the IMF loan. Those things always seem to come with nasty strings. And I'm glad to hear about the optimism. Maybe I'll still be able to move to Reykjavik someday...

Anonymous said...