Eirikur Bergmann - Iceland and the International Financial Crisis: Boom, Bust and Recovery

International Political Economy Series

Series Editor: Timothy M. Shaw, Visiting Professor, University of Massachusetts Boston, USA and Emeritus Professor, University of London, UK

The global political economy is in flux as a series of cumulative crises impacts its organization and governance. The IPE series has tracked its development in both analysis and structure over the last three decades. It has always had a concentration on the global South. Now the South increasingly challenges the North as the centre of development, also reflected in a growing number of submissions and publications on indebted Eurozone economies in Southern Europe.

An indispensable resource for scholars and researchers, the series examines a variety of capitalisms and connections by focusing on emerging economies, companies and sectors, debates and policies. It informs diverse policy communities as the established trans-Atlantic North declines and the rest, especially the BRICS, rise.

Titles include:

Eirikur Bergmann

ICELAND AND THE INTERNATIONAL FINANCIAL CRISIS

Boom, Bust and Recovery

Yildiz Atasoy (editor)

GLOBAL ECONOMIC CRISIS AND THE POLITICS OF DIVERSITY

Gabriel Siles-Brgge

CONSTRUCTING EUROPEAN UNION TRADE POLICY

A Global Idea of Europe

Jewellord Singh and France Bourgouin (editors)

RESOURCE GOVERNANCE AND DEVELOPMENTAL STATES IN THE GLOBAL SOUTH

Critical International Political Economy Perspectives

Tan Tai Yong and Md Mizanur Rahman (editors)

DIASPORA ENGAGEMENT AND DEVELOPMENT IN SOUTH ASIA

Leila Simona Talani, Alexander Clarkson and Ramon Pachedo Pardo (editors)

DIRTY CITIES

Towards a Political Economy of the Underground in Global Cities

Matthew Louis Bishop

THE POLITICAL ECONOMY OF CARIBBEAN DEVELOPMENT

Xiaoming Huang (editor)

MODERN ECONOMIC DEVELOPMENT IN JAPAN AND CHINA

Developmentalism, Capitalism and the World Economic System

Bonnie K. Campbell (editor)

MODES OF GOVERNANCE AND REVENUE FLOWS IN AFRICAN MINING

Gopinath Pillai (editor)

THE POLITICAL ECONOMY OF SOUTH ASIAN DIASPORA

Patterns of Socio-Economic Influence

Rachel K. Brickner (editor)

MIGRATION, GLOBALIZATION AND THE STATE

Juanita Elias and Samanthi Gunawardana (editors)

THE GLOBAL POLITICAL ECONOMY OF THE HOUSEHOLD IN ASIA

Tony Heron

PATHWAYS FROM PREFERENTIAL TRADE

The Politics of Trade Adjustment in Africa, the Caribbean and Pacific

David J. Hornsby

RISK REGULATION, SCIENCE AND INTERESTS IN TRANSATLANTIC TRADE CONFLICTS

Yang Jiang

CHINAS POLICYMAKING FOR REGIONAL ECONOMIC COOPERATION

Martin Geiger, Antoine Pcoud (editors)

DISCIPLINING THE TRANSNATIONAL MOBILITY OF PEOPLE

Michael Breen

THE POLITICS OF IMF LENDING

Laura Carsten Mahrenbach

THE TRADE POLICY OF EMERGING POWERS

Strategic Choices of Brazil and India

Vassilis K. Fouskas and Constantine Dimoulas

GREECE, FINANCIALIZATION AND THE EU

The Political Economy of Debt and Destruction

Hany Besada and Shannon Kindornay (editors)

MULTILATERAL DEVELOPMENT COOPERATION IN A CHANGING GLOBAL ORDER

Caroline Kuzemko

THE ENERGY- SECURITY CLIMATE NEXUS

Institutional Change in Britain and Beyond

Hans Lfgren and Owain David Williams (editors)

THE NEW POLITICAL ECONOMY OF PHARMACEUTICALS

Production, Innnovation and TRIPS in the Global South

Timothy Cadman (editor)

CLIMATE CHANGE AND GLOBAL POLICY REGIMES

Towards Institutional Legitimacy

Ian Hudson, Mark Hudson and Mara Fridell

FAIR TRADE, SUSTAINABILITY AND SOCIAL CHANGE

International Political Economy Series

Series Standing Order ISBN 9780333717080 hardcover

Series Standing Order ISBN 9780333711101 paperback

You can receive future titles in this series as they are published by placing a standing order. Please contact your bookseller or, in case of difficulty, write to us at the address below with your name and address, the title of the series and one of the ISBNs quoted above.

Customer Services Department, Macmillan Distribution Ltd, Houndmills, Basingstoke, Hampshire RG21 6XS, England.

Iceland and the International Financial Crisis

Boom, Bust and Recovery

Eirikur Bergmann

Centre of European Studies, Bifrst University, Iceland

Eirikur Bergmann 2014

All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission.

No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 610 Kirby Street, London EC1N 8TS.

Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages.

The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988.

First published 2014 by

PALGRAVE MACMILLAN

Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS.

Palgrave Macmillan in the US is a division of St Martins Press LLC, 175 Fifth Avenue, New York, NY 10010.

Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world.

Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries

ISBN: 9781137331991

This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin.

A catalogue record for this book is available from the British Library.

A catalog record for this book is available from the Library of Congress.

To my children,
Slrn Rs, Einar Sigurur, Hrafnhildur and gir Bergmann,
who are amongst the generation inheriting Iceland

Contents

Preface

The collapse of the Icelandic banks in October 2008 not only delivered a serious blow to the Icelandic economy but also led to a prolonged political crisis. It was simultaneously a crisis in capitalism and a crisis of national identity later simply referred to as The Crash. I was amongst many others involved in thinking through questions of the Icelandic crisis and its recovery, in both an economic and a political dimension. After I had published a few pieces in the British Guardian my office was flooded with foreign journalists, many of whom had preconceived ideas about the events in Iceland. It was difficult not to engage in this unprecedented situation. I was, for example, among the founders of the so-called InDefence group established in mid-October 2008 to protest against the British governments implementation of anti-terrorist legislation to freeze Icelandic assets in the UK. In 2011 I served on Icelands elected Constitutional Council, which had the task of drafting a new constitution for the young republic. I have endeavoured not to allow this and other involvements to cloud my judgement when writing this book. In fact, I believe that these experiences have provided me with a good, perhaps even a unique, perspective on explaining the crisis to a wider audience and warning other nations of some of the mistakes that were made prior to, during and after the crisis, which should serve as a lesson to them.