Roger Boyes - Meltdown Iceland: Lessons on the World Financial Crisis from a Small Bankrupt Island

MELTDOWN ICELAND

The Icelandic telephone book is ordered according to first, rather than family, names. You look for Jon or indeed Bjrk rather than Eriksson or Gudmundsdottir. Iceland has a patronymic name system. Children take the name of their father. Jon Stefansson is the son of Stefan. If Jon has a son, he will be given a first name, but his surname will be Jonsson. If Jon has a daughter, she will be Jonsdottir, the daughter of Jon.

Icelanders therefore use first names when talking of each other. The prime minister is commonly referred to as Johanna. Meltdown Iceland sometimes sticks to this convention, calling the former prime minister David Oddsson by his first name, or using Jon Asgeir to denote the businessman Jon Asgeir Johannesson. No disrespect is thus intended. For the most part the book uses surnames in the manner familiar to non-Icelandic readers.

The book also uses the Latin alphabet. Icelandic uses accents on its vowels, but for the convenience of the reader these have generally been deleted. The umlaut qualifying the letter o has been deleted, except in a few cases of internationally known figures, such as the singer Bjrk. And one runic letter has been rendered as th.

Hvelreki = good luck in Icelandic It translates

as May a whole whale wash up on your beach.

The geological fault line between America and Europe, the Mid-Atlantic Ridge, runs through Iceland. Every year the gap between the tectonic plates is tugged apart by another inch; it is a place of collision and division, a junction between two zones.

In October 2008, many Icelanders felt they had been tugged into that cleft, disappearing into a netherworld. The events that were to unfold in the following monthsthe first major financial crisis of the global fieratraumatized the island. Iceland had thought itself strong and independent, but was instead bankrupt and beholden to creditors. Its fall from grace was caused in part by the blighted lending practices of U.S. mortgage banks, by the crumbling of confidence, the sudden death of credit. How was a small, indebted island in the North Atlantic supposed to survive? But Iceland had also brought the problems down on itself; it had allowed itself to be misgoverned; it had let its market revolutionan earnest and enthusiastic copy of the changes introduced by Reagan in the United States and by Thatcher in Britainget out of hand. There was greed, incompetence, feuding, revenge, and deceit: the themes of the ancient Viking sagas transplanted onto a modern age.

The calamity that hit Iceland was, in short, a microcosm of what was happening elsewhere in supposedly more complex societies. When the United States catches cold, the world sneezes. When the United States catches pneumonia, though, smaller states take to their sickbeds and are lucky to survive. How lucky is Iceland? This book charts Icelands progress from the years of poverty, through to the good years, the manic years, and on to the Kreppa, the Icelandic word for crisis. Kreppa actually connotes something more: the roar of a volcano perhaps; the approach of catastrophe. In telling this story I want to do more than sympathize with the Icelanders. I want to show the human narrative to this international meltdown, and demonstrate that weIcelanders and non-Icelanders alikeare not just powerless victims caught in the spokes of the vast machinery of capitalism.

Meltdown Iceland tries to bring the crisis down to scale. The meltdown can be understood, I believe, only when broken into the smallest of units. The United States, ten months after the sinking of Lehman Brothers, had spent $4 trillion to mitigate the pain of the crisis and offered about $12.7 trillion in guarantees to the U.S. financial sector. That is written $12,700,000,000,000. Such figures numb the brain, obscure rather than enlighten. Iceland, by contrast, has the population of a small Midwestern town. Walk across this craggy island and you can go for days without meeting a human. The entire financial and political decision-making class could fit into a bus, with a couple of seats free for paying passengers. The difference between a prosperous Icelandic future and a three-generational epoch of belt-tightening is about $20 billion, a mere drop in the U.S. water barrel. Yet somehow Americas problems have become those of Iceland. And the questions raised by Icelanders about how to live in the globalized era, how to be the master of capital, not its servant, about finding ones own rhythm, are questions bothering us all.

Sunset, December 31, 2008: 3:28 P.M.

Sunrise, January 1, 2009: 11:14 A.M.

Here we go! Here we go! Here we goooo! Encouraged by the crowd, a ginger-bearded student, made clumsy through drink, clambered close to the head of Leif Eriksson, the Viking explorer who discovered North America. The area around the Eriksson statue, in front of the imposing Hallgrims Church, is the best spot for viewing the New Years fireworks over Reykjavik. It is the moment when Icelanders try to turn night into day, an act of defiance on this subpolar island where the midwinter sun is at best a fleeting, always anemic visitor. The 2009 celebrations followed the modern traditions: first, a meal at home with the extended family, then a pagan moment around a glowing, tall bonfirea luxury on an island devoid of timberfollowed by an extravaganza of Catherine wheels and Bengal tigers, exploding over the harbor. The night is dedicated to beery revel, at home, at neighbors, on the street. Outside the capital, beyond the lava fields, the New Years Eve barn dance is the place to flirts and size up future partners. The fishing fleets are at anchor, the backbreaking routines of the farmstead brieffly set aside.

The Reykjavik student, egged on by his drunken friends, took a rocket out of his pocket. He used his thighs to keep a grip on the great Viking and fumbled for his lighter.

Happy New Year! he shouted, peering down at a cluster of teenagers near the podium. It was the last we heard from him as he lost his perch and tumbled twenty feet to the ground. He landed on his back; blood trickled from his mouth. Within minutes four ambulances were on the scene.

Stupid boy, said Olafur, a university instructor and our New Years host, you cant drink and climb.