NEWS LESSONS / Saga of survival in Iceland / Advanced
•
P H O T O C O P I A B L E
•
C A N B E D O W N L O A D E D F R O M W E B S I T E
© Macmillan Publishers Ltd 2008
Saga of survival in Iceland
Nobody knows what will happen next in thebankrupt country.
Jon HenleyNovember 7, 2008
Reykjavik docks smell, an overpowering stenchof herring, haddock, halibut, whiting and deep
sea redsh. Eggert Gudmundsson, boss of Iceland’s biggest shing business, HB Grandi,
looks at the docks in a philosophical mood as he
reects on his country’s nancial crisis. “We are
hardworking, we Icelanders, but we are also a bitexcitable. If we see a way to make quick money,we will jump. Now we are all going to have towork very hard together to get ourselves out of
this. We will have to go back to what we know.”
The artist Jón Saemundur Audarson, in his studio
off the main street, says: “There’s shame, yes,
and humiliation. And anger at the country losingso much, all because a few bankers were playing
around with other people’s money. But this whole
thing, this long big spending spree, it was just aphase, you know? It hasn’t changed Iceland. Thiscould even be good for us. Take us back to what
we really are.”
Palme Vidar, with the wisdom of 73 years, says:
“We have always swung between feast and
famine. There have been terrible times before.
When I was a boy, if you went to the harbour tosh and you got wet, you could not sh again
until the next day, because you had only one pair
of trousers. Today people have too many trousers.”
In 1943, Iceland was still a forgotten outpostof Denmark. In the 1970s, it fought a series
of nasty shing wars with Britain (and won).
It had no functioning stock market until 1990.Then, in the mid-1990s, it privatized its banks,slashed corporation tax and a couple of Vikingentrepreneurs made a load of money in Russia.Last year Iceland was at the top of the UN
Human Development Index of the most
developed countries in the world, and it was,
per capita, the fth-richest nation on earth.
Icelandic companies bought up London toy shop,
Hamleys, West Ham United football club and US
department store chain, Saks Fifth Avenue.Iceland borrowed way too much, piling up debts
worth ten times the entire GDP. Iceland borrowed
money from abroad, and now in a global credit
squeeze the debts cannot be renanced.
Since the Reykjavik stock market has also
sunk without trace (it reopened recently after ashort closure, and instantly plunged 76%) andination is rmly in double-gures, the question is
whether the government can bail everyone out.At present, it seems not. Twenty years ago, a
world nancial crisis might barely have touched
Iceland. Today it is suffering more than the restof us. If a couple of banks go bust in the US,
said Iceland’s Prime Minister, Geir Haarde, “it’sdramatic, but not fatal”. If a couple of banks gobust in Iceland, “this country’s entire nancialsector disappears”. What Iceland has learned
from this frightening experience, he concludes,
“is that it is not wise for a small country to take alead in international banking”.“It’s going to be very tough for a lot of ordinarypeople who understand nothing of all this,” saysAsbjörn Jonsson, a third-generation sherman.“People are afraid. Ordinary, cautious Icelanders
invested their savings in bank stocks, thinking
they’d be more secure. We know now that money
is not made in banks. It’s made by real people
working hard at real jobs.”Iceland might, eventually, be all right. “Thefundamentals are good,” is the mantra repeated
on the streets of Reykjavik, and it is, largely,true. At least, Iceland has a real economy. It has
spectacular natural resources: sh and greenenergy (it is a world leader in geo-thermal power,
heating more than 90% of its homes this way andattracting big investment from energy-intensive
industries such as aluminium). The averageage is just 37, unemployment currently (thoughmaybe not for much longer) stands at 1%, and
women account for 46% of the workforce.
“It’s going to be a long and rocky road gettingout of this,” predicts Finnur Oddsson, managing
Saga of survival in Iceland
Level 3
Advanced
12348591076
Leave a Comment