What it's like in Iceland right now: "Surreal Reykjavik"

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34 Responses to “What it's like in Iceland right now: "Surreal Reykjavik"”

  1. Anonymous says:

    I’m Icelandic. I think I can say, for my countrymen that I appreciate the kind words people have had in the comment section.

    People are scared and worried here and they are making a lot of noise. Things aren’t great but we are far from the Argentinian 2001 collapse or Black Tuesday.
    Icelanders are resourceful and intelligent they will figure a way out of this. A lot of people in Iceland saw this coming and a lot of economists warned that this would happen. Nobody listened and couple that with some unexpected turmoil on the international market and you end up with this.
    It’s tough – but we’ll pull through and so will everyone else.

    And I do not appreciate how certain governments have responded to our crisis, it’s short-sighted and narrow-minded. Gordon Brown is at best a Schadenfreude and at worst using us to draw attention from the failings of his own party. In the long run, that kind of behavior will not benefit anyone.

  2. zuzu says:

    At least one writer in a local paper was quick to pronounce the death of laissez faire capitalism. I’m not sure what portion of the population is on the same page.

    That Naomi Klein propaganda is catching on like wildfire. It’s even smeared across the Financial Times.

    Blaming sloppy monetary policy and central banking on laissez-faire is completely preposterous scapegoating. I’ll risk invoking Godwin: that’s like blaming the Jews for the Holocaust.

    The problem is that the quasi-public partnership between government and central banking generated far more credit than any of the real capital in the economy could ever hope to support. So now they want to “solve” that problem by creating even more credit, because they’re worried about “confidence” — that if the music ever stops in this game of musical chairs, people will realize there’s only about 3 seats for 50 people.

    We’re in a Ponzi scheme, pure and simple.

    It’s time to face up to the fact that the emperor wears no clothes.

  3. 1up mushroom says:

    zuzu @18 I think you hit the nail on the head there, but the demagogues wont miss this opportunity to point the finger at capitalism.

    I once heard that central banking isnt much different then a centrally planned economy, i think that is right, and they both fail for the same reasons.

  4. scoop says:

    While things are certainly bad here, they’re not quite as grim as Hjörtur implies (not yet, anyway). Yes, currency is very limited now and suppliers aren’t giving Icelandic retailers credit but supply lines haven’t been severed and grocery stores aren’t void of any necessities. Right now, Icelanders studying abroad are probably hit the hardest, as they haven’t been able to transfer funds from home.

    Upthread, someone suggested buying Icelandic music as a show of support. FatCat Records has some Icelandic artists, but is a british label IIRC. Instead, you might want to look at Grapewire.net , which operates online stores for several artists and labels (see the links in the “Interesting” section on the right). They sell high-bitrate mp3s (no DRM). Sigur Rós fans might want to go directly to the Smekkleysa shop.

  5. zuzu says:

    Deregulation and bad regulation are at the root of the US financial crisis which has precipitated the global monetary crisis.

    No, the root of the problem is the Federal Reserve causing booms (necessitating corrective busts) — aka the business cycle — with artificially cheap credit (i.e. expansion of the money supply).

    Well, the senator from Arizona’s description of the facts is just extraordinary for being a fact-free zone. Fannie Mae and Freddie Mac never originated a single loan. They certainly are participants in what went on here, but the problem was caused by this notion of, quote, “deregulation.”

    And, of course, there is no such thing as deregulation. Everything has rules. Think about baseball, which is a trivial, a fun activity. Baseball regulates how many stitches are on the baseball. And all deregulation has meant for the last thirty years is new rules that favor those with the most money.

    Well, the rules that were set up encouraged bad lending practices, and, most importantly, they separated risk from responsibility. You’re always hearing about risk and reward being tied together, but they separated risk from responsibility, because if you’re a bank and you make a loan and you have to hold that loan or some of your loans in your portfolio, you’re going to be very careful about vetting the borrower to make sure you’ll get back the principal and the interest. But if you can package a loan, securitize it and then sell it to places like the pension funds that you and I support with our tax dollars for public employees, then what do you care if the loan goes bad, especially if you get big fees and especially if the more toxic the loan is, the less likely it is to be repaid, the bigger your fees? That’s what deregulation has meant, and that’s what’s brought us to this pass.

    Well, first of all, we have an enormous problem that is not going to be solved by the government. What you’re seeing right now is politicians taking your money and redistributing it upward. And our whole national myth is that we take from those with a lot and give to those down below. That’s not what goes on. That’s what my books have shown, from the official government data. This is a transfer of wealth and income: five percent of the year’s economy to essentially wealthy bankers and, to some degree, customers of theirs.

    David Cay Johnston

  6. zuzu says:

    FatCat Records has some Icelandic artists, but is a british label IIRC. Instead, you might want to look at Grapewire.net , which operates online stores for several artists and labels (see the links in the “Interesting” section on the right).

    Den Isländska Musiken

  7. Takuan says:

    yes, buy Icelandic music.

  8. nprnncbl says:

    Zuzu- That’s (at least) the second Max Keiser video you’ve linked to; could you share a little background on who he is and why we should listen to him, aside from the obvious fact that he shares your point of view?

    It’s not that I take issue with what he’s saying, I just don’t get why there aren’t more people in the media pointing out the huge flaws in the system.

    And 1up mushroom #19- other demagogues have already taken the opportunity to point the figure (disingenuously) at equal opportunity lending.

  9. Anonymous says:

    I disagree, ZuZu.

    Capitalism, when regulated to force it to be subservient to strongly codified ethics and to societal goals, is the best way to motivate workers and capital holders to enrich the human race as a whole. People will work to generate and distribute goods and services for the benefit of their neighbors, because that’s how they can best achieve their own goals.

    But unregulated capitalism is a nightmare and cannot be otherwise – unless you think power ennobles, and all humans with wealth are inherently good, and governments and judges are incorruptible… a theory that seems a little far-fetched to me. Historically, Murder Inc. is always the winner in a totally unregulated capitalism. Check out Somalia and Afghanistan.

    The term “laissez faire capitalism” is a memetic hat-trick; by definition, it means minimal government involvement, and it specifically means that the government must not regulate economic behaviour beyond a hazy ever-redefinable minimum. But, unfortunately, all behaviour is economic behaviour; even suicide by starvation has economic consequences for someone. In practice, I suspect the mystical minimum of the laissez faire religion is quite different for Ayn Rand, Ron Paul, George Bush, and Phil Gramm – I believe it’s a totally subjective and useless holy grail that mainly serves as a rallying cry for plutocrats who wish to fleece the masses, and masses who are tired of being fleeced.

    The USA has never been an unregulated capitalism; in general, though, the argument has been between those who wish to regulate all behaviour based on religious or moral shibboleths, and those who wish to regulate economic behaviour in order to better the nation as a whole. Sadly, we are currently in the rule of the former faction.

    Deregulation and bad regulation are at the root of the US financial crisis which has precipitated the global monetary crisis. The Gramm-Leach-Bliley act (which of course was a step away from FDR-style pragmatism and a step towards pie-in-the-sky laissez faire capitalism) is a prime example of this.

    I like laissez-faire as a theory. But Communism works great on paper too…

    –Eugene Hussein Debs

  10. proto says:

    Icelanders will be OK, as long as the nightclubs stay open. Anyplace where the local clubs out-compete the Hard Rock Cafe has its priorities straight!

  11. mdh says:

    Iceland still has the best 911 services and the best genealogy records in the world.

  12. zikzak says:

    Echoes of Argentina.

    We can learn a lot from looking at the kind of solutions and strategies that develop in situations like that.

  13. eclectro says:

    and diapers, flour, sugar and other neccesities are selling out in the shops.

    And why all of the shrill fools that opposed the rescue plan really didn’t know what they were talking about.

  14. Mitt says:

    Gee I didn’t know it was that bad. I immediately translated this post into French for my few readers. Thanks a lot for sharing the link.

  15. zuzu says:

    It’s not that I take issue with what he’s saying, I just don’t get why there aren’t more people in the media pointing out the huge flaws in the system.

    Well, that’s the first major reason. He’s one of the few economists on television actually pointing out those flaws; perhaps because al-Jazeera, unlike other mass-media broadcasters, are willing to allow it.

    Secondly, maybe you’ll interpret this as merely “he agrees with my views”, but from my perspective he’s the only economist on television (except maybe also Allan Meltzer) who actually understands positive economics rather than the prescriptive cult of John Maynard Keynes.

    Third, um, he founded the Hollywood Stock Exchange (HSX) prediction market. That’s cool. :)

  16. zikzak says:

    @ Eclectro #4,
    Time will tell if the “rescue plan” will rescue everyone, or just a few bankers.

  17. Brett Burton says:

    What do they make in Iceland besides Shark Fin Soup? Wool stuff? Vodka? I would love to buy some stuff and possibly help their economy, but I don’t much about what comes from Iceland besides Bjork and I think we already have her.

  18. Kieran O'Neill says:

    It’s cool (amongst the general grimness of the situation) to see him citing CCP as being a company worth snapping up bargain stock in: With 100k+ players of Eve Online, all paying $20-$30 monthly subscriptions, they’re unlikely to go under any time soon.

    In fact, the recession is just in time for Eve Fanfest, which should be a small but hopefully significant injection of cash into the Icelandic economy. In-game people are already talking about how cheap everything will be (assuming they can buy currency, that is.)

  19. help i cant comfirm my username themelonbread says:

    Xeni Hussein Jardin!?

    I knew it, Boing Boing is an Al Qaida-sympathetic organization! Seize their servers!

  20. 1up mushroom says:

    #20 I dont think that is demagoguery to point at equal opportunity lending as *one* cause of this mess, claiming it is the *sole* cause is disingenuous, IMO.

    To create an analogy here, blaming capitalism for this mess is like blaming the internet for spam, while technically you would not have spam without the internet, you would lose so much more that it would be a great loss to mankind. The solution in both cases is not to nuke the whole system and go home, but to look for what makes small problems into big problems and then look for ways to solve that. To continue the analogy, equal opportunity lending is a bit like an open proxy or perhaps easily hacked windows machines, i.e. something that makes spam much much worse.

  21. onshakedown says:

    worth noting that there’s a big music festival taking place over there: http://www.icelandairwaves.com/

    my roommate is going. i told her to buy a lot of local goods to try and boost their economy. not sure if that’ll help.

  22. Purly says:

    Would be a good time to republish all those depression era cookbooks. Maybe update them to fit Iceland’s commodities. Pretty soon they won’t be able to rely on imports so they’d best get used to living off what they produce themselves.

    My grandma had a depression era cookbook that described how to tell if the mold growing on a food meant that the food was inedible or whether it could just be cut off and the rest eaten. Where is that knowledge now?

  23. jphilby says:

    I have a feeling Britain (long marginal itself since it quite thriving on misery elsewhere) will rue the day it decided to treat Iceland as it did.

    It is a lively and forward-thinking and energetic country (ask Yoko) and will be back. And I’m guessing it won’t be banking in the UK … the Land of Surveillance and long-faded glory.

  24. Kieran O'Neill says:

    Actually, there’s a thread by concerned gamers, with replies from several CCP employees here. The CCP guys seem cautiously optimistic (CCP deals in “exports”, if you can call MMO gametime that, which it sells in foreign currencies, so it’s fairly secure).

  25. Anonymous says:

    Now that the Krona is inexpensive, you should visit Iceland, preferably in the summer when there’s sunlight all day. You can see Iceland at Iceland-photos.blogspot.com

  26. Kieran O'Neill says:

    #7: Brett, how about Icelandic postrock music, like Sigur Ros, available on FatCat Records, which is an Icelandic company IIRC.

    Or try playing Eve Online (see my above posts). Warning: It is addictive.

  27. Anonymous says:

    One of the main things they “make” in Iceland is banks. Hence the problem.

  28. nprnncbl says:

    #23- I tried to dig this up, but maybe someone else here knows the relevant stats: lending institutions that were more tightly constrained by equal opportunity lending laws are experiencing lower default rates.

    But in my search, I did come across this discussion of anti-EOL propaganda.

    And Zuzu, thanks for background; Karmabanque also looks interesting. But MR’s website is horribly designed– although I did enjoy the link to Shelley the Republican.

  29. zuzu says:

    Yeah, Karmabanque seems to take cues from when Gorge Soros “broke the Bank of England”. Soros, IIRC, was most excellent in that regard because he basically said, “Your monetary policy is broken. I’ve warned you, but you refuse to fix it. So now I’m going to exploit it, so that you finally will fix it, and I’ll get rich in the process.” He was like a security hacker of the financial world.

    As if to say, “You have one week to close this hole, and then we’re publicly releasing the exploit.”

  30. zuzu says:

    And why all of the shrill fools that opposed the rescue plan really didn’t know what they were talking about.

    WTF are you talking about? Iceland’s problem is that their currency got overvalued because of heavily relying on carry trade investment, originating in credit expansion from the Bank of Japan.

    This is similar to the problem the United States has with the unwinding of inflation on the dollar, because the USD has historically been artificially scarce due to its use as a reserve currency. c.f. dollar hegemony

    Of course, people are more willing to dump the króna because pool of holders it affects is smaller. (Kinda the difference between a cutting off an arm versus cutting off a head, and expecting the amputee to live.)

    Anyway, if

    and diapers, flour, sugar and other neccesities are selling out in the shops.

    then that’s due to shopkeepers either being unable or unwilling to raise prices in accordance with the value of the króna being, what, halved last I checked? This is also what happened in Zimbabwe when Mugabe instituted price controls in combination with his inflationary monetary policy.

    European and Scandinavian reaction to the collapsing dollar value has been… both surprising and fascinating, particularly in their monetary policy appeasement to the United States.

  31. jfranchino says:

    I am not an Icelander (IANAI?), but I just got back from there today. Of course Mr. Smárason knows better than I, but I thought I’d share my experience.

    I was able to buy currency, purchase things on credit cards (there was one touch-and-go moment, but I had some cash on me), buy groceries, and generally do business. The stockmarket reopened, and promptly lost 75% of its value.

    At least one writer in a local paper was quick to pronounce the death of laissez faire capitalism. I’m not sure what portion of the population is on the same page.

    For me, it seemed like things were working. Of course everyone knows that there are going to be some big changes, but no one knows exactly what those changes will be. Higher taxes for a while, no more I-banking, and fewer European luxury cars on the streets? That might not be such a terrible fate. But if Iceland can’t keep Icelanders employed, that’ll be a big problem.

  32. Stefan Jones says:

    #11: OCR it and post it online and the knowledge will be there for everyone!

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