Iceland

[ad hoc]

Couldn't decide whether to put this in the Greece thread or the Occupy Wall Street thread, but instead decided to give it its own thread.

So, I've read a few articles recently* talking about the Icelandic revolution since the collapse of their banks in 2008. But I'd kind of like a considered opinion from someone who is much more economically aware than me (that would be practically everyone)

(*like this one http://www.guardian.co.uk/commentisfree/2011/nov/15/lessons-from-iceland-people-power and this one http://sacsis.org.za/site/article/728.1 )

[dalliance]

Iceland

I struggle a little bit with the sentiments of a brave people rising up and casting off the old system for betterment of their country, a betterment that involves putting a middle finger up to the countries they huge sums of money to.

They claim it was not their debt, but it's closer to them than it is the British and the Dutch who have picked up the tab thus far. What's the point of being signatories to treaties if these are not respected.

[Diable Rouge]

Iceland

There are no quick-fire solutions, and Iceland will be struggling with its debt for decades, but the most important lesson is that bottom-up led pressure can make a difference if applied to the source of the problem. The financial measures may have been taken pre-revolution, but at least the citizenry are succeeding in gaining accountability, which remains woefully negligible in the Eurozone. As for Icesave, like the stock market, if you invest in a foreign bank, then you alone should be liable for the financial consequences, so why should Icelandic money be used to salvage foreign debt?

[dalliance]

Iceland

Genuine question here. To us in retrospect the figures involved in the Icelandic banking crisis and the resultant debt exposure look just ridiculous, I mean incomprehensibly ludicrous.

There's plenty of smart people in Iceland. Surely some of them were doing the sums in the half decade period until the crash and realising the utter folly of it. Why was no-one then seeking to take control of things and rework the constitution before things got even more out of hand?

[ad hoc]

Iceland

Well, most people had no idea. I like to think of myself as reasonably intelligent and I never really knew or even questioned what the banks were up to (at least in terms of the whole debt repackaging thing). I mean you could say this about pretty much every neo-liberal economy, including the UK. Why did no-one in Britain rise up and say "Enough"? It's the same, I'd say.

And I really don;t see how normal Icelandic citizens are to blame for banks who were headquartered there screwing people over without their knowledge. Any more than you or I are responsible for the excesses of Northern Rock or even News International.

[Anton Gramscescu]

Iceland

It's hard to tell that banks are being looted *while* they're being looted. All anyone sees is "hey, that dude bought half of Regent street"; no one really asks whether his three cousins who happen to run the bank who lent him the money to do it had the faintest fucking idea what they were doing.

Also, it also doesn't help when the central bank governor is the ex-PM who deregulated the banking sector. That tends to lead to sub-optimal oversight.

[steveeeeeeeee]

Iceland

ad hoc wrote:

Well, most people had no idea. I like to think of myself as reasonably intelligent and I never really knew or even questioned what the banks were up to (at least in terms of the whole debt repackaging thing). I mean you could say this about pretty much every neo-liberal economy, including the UK. Why did no-one in Britain rise up and say "Enough"? It's the same, I'd say.

Because we couldn't, we don't have the power nor the voice to be heard. Anyone living in the UK between 1997 and 2005 with a half-decent credit rating could see the madness unfolding. Every morning you'd be greeted by half-a-dozen letters telling you that you've already been accepted for a new credit-card or loan with at least twice as big a credit limit as the one you might already have. It was nuts, I had countless converstations about it with my family at the time and we're not the type of family that talks economics.

But what could you do about it? You mumble and grumble about what this madness may come to before the wheels come to a sudden, shocking halt.

[WOM]

Iceland

steveeeeeeeee wrote:

It was nuts, I had countless converstations about it with my family at the time and we're not the type of family that talks economics.

Yes, it really is things like this. For me it was when my dad said "There are too many luxury cars on the road. There just aren't that many people who can truly afford them." And he's right. People are wildly overextended on consumer goods over here and it's going to bite them in the ass.

[caja-dglh]

Iceland

You will all stop being so smug about your Canadian Dollar when it does as well. It will surely be more embarassing, watching Europe and the US while buying a new escalade.

[Anton Gramscescu]

Iceland

As long as Americans need our oil and pot, we'll be fine.

NPS forever.

[alyxandr]

Iceland

I'm not sure Iceland was really that big of a surprise... when a tiny country whose GDP had formerly consisted entirely of geothermal steam, hangovers, and Björk suddenly becomes an international financial powerhouse, it's easy to suspect that something a bit dodgy is going on.

(Edit: and the Guðjónsson family, of course. Sorry about that.)

[ursus arctos]

Iceland

The Michael Lewis piece on Iceland is good on the extent to which the people in Reykjavik who were opened luxury restaurants and fancy boutiques to cater to the new plutocrats were skeptical that the whole thing could last.

[garcia]

Iceland

i think there was a general complacency that settled over the whole western world as apparently endless years of relative prosperity slid by. there had been numerous shocks to the economic system - black thursday, the asian crisis, the dotcom crash, 9-11 and the associated wars, none of which ever seemed to alter the essentially successful dynamic. i guess the underlying assumption was that we had kind of cracked it. ursus mentions michael lewis - i remember one of his early pieces about the crisis he talks about how he drifted into the same complacent assumption; that whatever the doubts he had harboured about the underlying ridiculousness of the financial system, experience showed that the thing somehow seemed to work. until the day it didn't.

looking back there were loads of signs that ireland in particular had gone completely crazy, but not having much to compare it to you just kind of thought, maybe this is the speed of progress these days.

the madness here was evident mainly in the property prices. thinking back, i never took any interest in banking and didn't know much about it; i didn't grasp how the property bubble was the result of irresponsible lending, banks with access to what they thought was limitless cheap money racing to expand market share. i blamed the government, but also myself, figuring that since many people i knew could apparently afford not only insanely expensive houses but also cars and other things, i must be an economic underachiever. only now do i understand that many people's lifestyles were based on borrowing.

the main reason i didn't buy a house was not that i saw through the bullshit and predicted a crash (though i do give thanks that i had, years before, read a thing in the economist about the japanese property market, which demolished the cliche about bricks and mortar being the most solid of investments with a single inverted-V graph). the reason was that i was reluctant to borrow a large multiple of my annual earnings to live somewhere worse than i could live if i stayed renting. it seemed too risky, and a bad deal besides.

the irish times used to do this 5 for 5 feature where you saw five places around the world that you could get for the price of some shitty property in dublin. they would show a photograph of a three bedroom semi-d in firhouse, and next to it there would be a chateau in provence, a giant apartment in berlin and so on that you could buy for the same price.

understanding that this did not make any sense was the closest i came to grasping that ireland had a serious problem. i thought ireland had lots of problems, stemming mainly from the venal and idiotically wasteful government, but i did not suspect the true nature of what was happening.

i guess many in iceland were the same. people are very good at finding ways to rationalise apparently inexplicable success. in lewis's piece on iceland he talks about how they had begun to build a mythos of their native entrepreneurial genius, the spirit of viking business that danced in their veins, the uniquely icelandic blend of flinty independence, enlightened co-operation and near-supernatural intelligence that equipped them perfectly for the modern capitalist environment. something similar was going on in ireland i guess. you only realise it was too good to be true after it all collapses.

[dalliance]

Iceland

Isn't citizenship about the population of countries sharing the wealth when times are good and sharing the burden when times are bad?

The strong sentiment that comes through from these collective criseses around Europe is that people want the first bit but are not prepared to contemplate the second bit. I don't see in this situation why the British and ther Dutch should pay, however bitter a pill it is for the Icelandic population.

I'ver read quite a lot of negative comment about the appointment of a technocratic government in Italy. Of course there are problems but I hardly see how much worse they can do than the previous incumbents. At least without the political mantle they can make decisions with the greater good of the country in mind, the hard decisions that no invertebrate politician is ever going to make knowing it will upset his own career and the interests of his cronies.

[Etienne]

Iceland

Isn't citizenship about the population of countries sharing the wealth when times are good and sharing the burden when times are bad?

But increasingly the average person isn't sharing in the wealth and is only getting the trappings of wealth on tick.

[Etienne]

Iceland

Where have you read comment suggesting that the new Italian government is likely to do worse than it's predecessor?

[garcia]

Iceland

I don't see in this situation why the British and ther Dutch should pay, however bitter a pill it is for the Icelandic population.

the icelanders can't pay though. there are only 300,000 of them.

[Anton Gramscescu]

Iceland

garcia wrote:

i think there was a general complacency that settled over the whole western world as apparently endless years of relative prosperity slid by. there had been numerous shocks to the economic system - black thursday, the asian crisis, the dotcom crash, 9-11 and the associated wars, none of which ever seemed to alter the essentially successful dynamic. i guess the underlying assumption was that we had kind of cracked it. ursus mentions michael lewis - i remember one of his early pieces about the crisis he talks about how he drifted into the same complacent assumption; that whatever the doubts he had harboured about the underlying ridiculousness of the financial system, experience showed that the thing somehow seemed to work. until the day it didn't.

This.

Etienne - the negative comment about the Monti government isn't that it will be worse then Berlusconi's; it's that it lacks democratic legitimacy.

[E10 Rifle]

Iceland

Enjoyed Garcia's contributions to this. I think I've mentioned this before but one of my defining memories of the whole dizzy pre-crash period - here and in Dat Oireland - was going out on the lash in Dublin with Garcia and Hieronymous Bosch on a Thursday night in the summer of 2006 and seeing all the city centre bars literally heaving, and thinking "fuck me, this must be what a gold rush town would have felt like." At the same time, back home, I was being harassed to take out mortgages of four and a half or five times my precarious annual salary, and my credit card limit was raised to 10 grand. It could never have lasted.

The weird thing is, even now, one still encounters considerable parts of London - the increasingly unbearably hipsterised bits of East London, Bethnal Green and Shoreditch, for example - that always seem absolutely rammed every single night. Where the fuck are people getting their money from?

[Tactical Genius]

Iceland

E10 Rifle wrote:

I was being harassed to take out mortgages of four and a half or five times my precarious annual salary, and my credit card limit was raised to 10 grand. It could never have lasted.

I remeber you taking starting out a thread at that time about buying a property and me thining you were crazy for doing so. I kept my counsel as I had predicted for about the previous 4 years that a recession was coming and got shot down in flames.

The weird thing is, even now, one still encounters considerable parts of London - the increasingly unbearably hipsterised bits of East London, Bethnal Green and Shoreditch, for example - that always seem absolutely rammed every single night. Where the fuck are people getting their money from?

Most of those people are fronting and still spending whatever credit they are getting extended from the banks.
If you look closely, they are not even spending as much at the bar as it would first appear.

[Gangster Octopus]

Iceland

Etienne wrote:

Isn't citizenship about the population of countries sharing the wealth when times are good and sharing the burden when times are bad?

But increasingly the average person isn't sharing in the wealth and is only getting the trappings of wealth on tick.

Like. (The statement, definitely not the concept.)

[garcia]

Iceland

The weird thing is, even now, one still encounters considerable parts of London - the increasingly unbearably hipsterised bits of East London, Bethnal Green and Shoreditch, for example - that always seem absolutely rammed every single night. Where the fuck are people getting their money from?

i lived there for a bit last year and in terms of how it always seemed so busy - well, firstly it's a lot busier on thursdays, fridays and saturdays than it is the rest of the week. i figured the people must be coming there from all over london. it's a gigantic city so on any given night there are a lot of people out on the piss, and they all seem to converge on the same few little areas. to be honest i never really understood the attraction of shoreditch and hoxton, but then i'm probably getting too old for that carry-on.

[WOM]

Iceland

garcia wrote:

the icelanders can't pay though. there are only 300,000 of them.

The per-person is roughly $20,000 US/CDN. While deeply unpleasant, it's clearly do-able.

[MsD]

Iceland

Re the Hoxton hipsters: young people will always find the money to go out and to dress up; contemporary young fashion is dirt cheap, as always happens in Hard Times. From long habit, I still know how to paint the town with no money, although I seldom do except by accident.

What is really interesting is how "nightlife" generally has exploded; in the 70s it really was confined to a few subcultures in London: black, gay, a small number of very fashionable people, music/media people, the very rich, and gangster/criminals. Everyone else went home after the pub, apart from the occasional Saturday night disco or house party. It started to change in the early 80s (mthe "original" Hard Times) and really took off with rave, now it really is on a mass scale, and with the old generation of clubbers like myself not about to quit, London really is a party town.

[Anton Gramscescu]

Iceland

Worn Old Motorbike wrote:

garcia wrote:

the icelanders can't pay though. there are only 300,000 of them.

The per-person is roughly $20,000 US/CDN. While deeply unpleasant, it's clearly do-able.

Aren't you missing a zero there (50 billion euros divided by 300 000)?