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Notes from a Crestfallen Country

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A few years ago, I used to joke with my foreign friends that the Icelandic economy was built on a house of cards. The krónur was overvalued, I’d scold in a tone that implied a deep knowledge of global economics. The economy is overheated and the party can’t last forever.

Many joked about this. I don’t know if we really believed it; maybe it helped us feel superior to those who were borrowing to buy the Land Rover and the latest plasma television.

No one could have predicted how quickly and how dramatically that house of cards would collapse.

I was going to write my Daily Life column about something—anything—else than the talk of finance which has dominated the country for the last two weeks. But I couldn’t manage to do it. Every single person in Iceland has been affected by this crisis, not to mention hundreds of thousands of people abroad, and even if one has not been wiped clean by the markets like so many have, this dramatic downtown is the elephant in the room that no one can ignore.

Obviously, emotions have been running high on this issue. Take a look at the letters page of this website, or the comments sections on any number of articles about the situation, and you’ll just as many diatribes from Brits angry at thieving Icelanders as vice versa.

I am not the person to analyze the causes of this unbelievable, dramatic turn of events. I can only recount my impressions as an “average” Icelander. If you asked anyone how their “Daily Life” (since that’s the name of this column!) has changed since the beginning of the month, you’d get different answers from everyone.

Many have cut back on “extras”—the bars and coffee shops are a little less busy—or at least, filled with foreign journalists rather than locals. Budget supermarkets Bónus and Krónan are getting busier, but all the regular supplies of food are still in stock. Those Range Rovers still cruise up and down Laugavegur. If someone dropped you on Ingólfstorg at noon today, I don’t think you’d see any difference from two months ago, except in temperature.

But there are financial adjustments that we all have to make: Everyone’s mortgages have gone up. Everyone’s pensions have gone down. Everyone is facing rising inflation.

Beyond that, circumstances vary. Some have extensive foreign currency loans. Others just have “regular” ISK loans which they can’t continue to pay if inflation mounts. Many thousands have lost savings in stocks, bonds and mutual funds. Hundreds have already been made redundant and many more face the same fate.

It will get worse before it gets better.

But it’s still time to look forward. We can complain to our colleagues, join Facebook petitions demanding chairman of the Central Bank board of directors Davíd Oddsson’s resignation, and protest in the streets (although this being Iceland, very little of that is being done), but now we need to start rebuilding.

Icelanders love talking about the hardships their ancestors faced in previous centuries: famine, disease, natural disasters all took their toll and a few thousand hardy souls stuck it out.

The current financial crisis, while dreadful for many, is not as bad as the plague. Or a famine. Or a war. This is a meltdown of the financial variety, not of the human kind (albeit that the two cannot be completely separated). People are realizing where the clichés come from: our families, friends, and health are all most important.

There is a lot of talk right now about “pulling ourselves up by the bootstraps” and of working together like the good old days when the fish came in and everyone went to harbor to help unload it.

This is a new chapter—not the nadir of Icelandic history, but one of them. After the lows come the highs, however. As a friend of mine recently put it—if we’re the first ones in this mess, then we’ll be the first ones out.

ER – [email protected]

Views expressed here are the author's own and do not necessarily reflect the opinions of Iceland Review.