11 October 2008

two sides of the story

This morning dawned perfectly October so I strapped on my rollerblades and went out along my favorite route by the sea. A bright blue windless day, it was the perfect time to enjoy the autumnal colors of landscape- the orange kelp thrown up on the beaches, the wheated grass, the mossy color of the seaweed, peppered with eider ducks. Across the bay, Esja slumbered stoically, unchanged in the chaos. The best bits of Iceland are still here. I didn't come to buy a no-money down Mercedes jeep with a loan in Euros, I didn't come so I could spend my weekends in shopping malls, and most of my friends are not that sort either. We're here, going about our daily business, having coffee, preparing for new babies, going to work, reading, talking, swimming, running. In the meantime, I've been collecting info from anywhere and everywhere about what to do now, reading everything I can, absorbing Icelandic financial terms, quizzing my dad (a voracious newspaper reader and all around clever guy).

A few say that heads will roll and are extremely depressed, predicting massive fuel shortages and a dark and gloomy time ahead, others say that there'll be some unemployment (inevitable when the such a major sector collapsed), a lot of restructuring and some discomfort but the future's bright. Time for fish, time for manufacturing, time for increasing the farming production, time for getting on with things, doing what Icelanders know how to do and get creative. Maybe the þetta reddast spirit will prevail. I think we all have to hope it does, since there really is so much to love about this place.

I had a long talk with HK, an economist friend today, and she said it was high time this happened. The foreign labor that came to work on the construction sites will go home, and no longer be sending their incomes out of the country, the economy will have to diversify, the people get creative. There's been an incredible pulling-together of people here, as the nudd-pottur in Laugardalslaug is full to bursting every day, people talking about what's happening, what should happen, what we can do. Most people I know are NOT going crazy buying as much food as they can, most are not storing their cash under their mattress. It's wait-and-see mode for now. The scale of activities at work now is such that we can only watch and keep doing our usual stuff, praying that the credit cards will still work when we go to pay the grocery bill (so far, so good).

Of course, everyone's got a story of someone who did something foolish, taking out a loan in foreign currency to buy stocks in one of the now-collapsed banks, only to then lose his job at said bank, someone else who invested their entire life-savings in a single bank, also to find themselves penniless. There's stories that the suicide rate over the weekend was alarmingly high too. But as HK pointed out, these are the things that every economist learns first off to not do- don't take out a loan in another currency than you're earning, don't put all your eggs in one basket. We may have all gotten by in the past by not being economists but maybe now it's time to start a bit more, be a bit more careful.

I would also like to point out that in spite of what it may have sounded like in my last post regarding the Iceland-for-Icelanders group, this was a small, much derided group, and not at all the general feeling of the populace. My experience with Icelanders continues to be a positive one. I've got some wonderful Icelandic friends here, and the people I work with are the sort to be truly proud to stand beside. The team spirit where I work is excellent, and after my boss spent an hour and a half yesterday explaining various economic ins and outs, the future of our company, and all the great ideas he had, I could only think, "this is worth sticking around for".


Food, she thought. said...

It is curious to me that approximately 6 months ago you were feeling at a loss with your blog, wondering whether or not to carry on. Curious and unfortunate yet riveting all the same that now your blog has fresh context, one that has me rubber necking like a driver on an interstate freeway slowing down to watch a fatal accident as I carry on to my destination.

These are interesting times, I wish you the best and thank you for keeping me and all your readers in the loop.

I am happy that your life seems to still have solid ground to walk upon, at work and with family there to support you, as mine does. I suppose we are all worried that some irreparable axe is going to fall but we must carry on as though it never will. Such is life in unstable times.

Paul said...

Hi, it's Paul in HK. I hope things turn more positive Iceland, and everyone.

I'm interested to know more about 'everyday life' with regards to the currency. I assume that you can still buy your coffee & groceries with local currency - right? The ATM machines are open?

Should you 'escape', you are certainly welcome to stop-over in Hong Kong. You can stay at my place, though I must admit it is not on the way to Boston ;-)

Sirry said...

....This Too Shall Pass

That's what I think. Sweden went through a crisis in 1992 and they got out of it. I believe that ones the dust settles so shall Iceland and it's economy.
This island wasn't built in one day, nor was it built on sand.
It was built by tough solid, people who are indeed educated and intelligent. I say, it'll blow over, people will of course loose out, but...they'll build again.

I will say this, being an Icelander in America I'm so tired of American's assuming that Iceland is bankrupt when NO OFFICIAL statement has been put out. The media here in the states is quite outrageous, and yes it is true, fear sells.

Penn said...

I hate to be straightforward, but you should get out of that country before the imports stop.

ECS said...

beewee: I've got no idea what's coming up but I just realized the thing that bugs me the most right now is the waiting. What's going to happen, when will things be a bit more sorted out?

plo: yeah, bank cards and credit cards still work, prices have not risen on the basics enough to notice, but I did just realize that the last purchase posted to my credit card was over a week ago.

sirry: your attitude is what I've found is on most of the English-language blogs up here, and most of the people I work with aren't panicking or stockpiling food. The pool attendance is WAY up though- I could barely find a parking place at Laugardalslaug this evening.

penn: I'd like to know where you get your information from. Might it be the Bloomberg article that's been translated into dozens of languages and only mentions Bonus?

Penn said...

Well, some of the information came from Bloomberg - yes, it only mentioned Bonus.

Today I read that the krona no longer has an exchange rate on international markets.


As far as I know, a country must be able to convert its currency on international markets in order to purchase imports.

I also read that the banks are denying some requests for withdrawals.


Is this true?

Anonymous said...

Like with sirry our media here have not said anything about Iceland's situation. That is why your blog is really good.
Despite this all i still want to visit Iceland when i save up enough money.

Gray, Germany said...

What I'm missing here, and at all other Iceland blogs I read recently, is any word of regret for the hundreds of thousands of victims aboad. Hard working folks, charitys, whole communities, who lost most or even all of their money because they believed the phoney assurances of Icelandic politicians and bankers. And, yes, it's mostly the fault of the Iceland people, they shouldn't seek for excuses now. It was their diletantist government, their greedy bankers, and they profited from all of this, instead of protesting against this irresponsible house of cards. Who else should be responsible?

But instead of showing some humbleness now, and accept their guilt, even Icelandic economists' first thought is that at least this will result in "foreign labors" going home and stop "sending their incomes out of the country". As if this was what caused the crisis, and not the banks owing hundreds of billions to "foreign labors" who invested their money there, and will lose it all now! Ridiculous, and at the same time an embarrassing show of xenophobia. As long as this Viking mindset doesn't change, those people don't deserve to be rescued.

sv koho said...

ECS. I along with the rest of the world have been transfixed by Iceland's latest saga and I scoured the blogosphere before I found you and I normally scroll to your blog first thing. I have been writing about Iceland almost daily on my blog and of course many of us are looking to Iceland as possibly offering a clue to our fate. Your thoughts have value precisely because of your perspective of what your life is like in that unique and remarkable country. Thank you for your efforts.

Food, she thought. said...


Surely you realize that not ALL Icelanders are "greedy bankers", or part of the "diletantist government", nor did the majority of them profit at the expense of anyone else in the European community. The majority of the Icelandic people are also "working folks, charitys (sic), whole communities" who will lose much of what they have saved during their recent and long term work life.

And to suggest that the people of Iceland somehow deserve to experience some kind of depression-era suffering punitively is small minded and stingy of spirit.

not politically correct said...

I have sympathies for Iceland but a number of myths have been exposed: first and foremost the notion that a hardworking and well educated population are enough, may be Norway where they do save for rainy days, clearly not Iceland where noveaux riche behaviour got way out of hand, in that respect Icelanders were just like small town America on ultra steroids, also the idea that Icelanders are tolerant, foreign workers going home are taken as a sign of relief where it is quite the opposite, a sign that things were totally out of control. People may not like to hear that but Iceland is a xenophobic country. More so than most. I am not saying it is hard to understand why this is so, small country in the middle of the Atlantic, very low immigration, etc. I am just stating a fact not passing any judgement on whether it is good or bad.

It is a fact that Iceland is bankrupt. And this is far larger than the the Swedish banking crisis. Icelanders are a victim of their own greed and now the fear phase will take over. I am sorry to say but it won't be nice. The Icelandic government and especially The bank of Iceland was completely unprepared to deal with the previous and obviously the current situation. The age of free riding by Iceland is over, the cost will be very high.