Iceland: A voyage to financial ruin
Author: Ari Magnusson
Iceland: A small lava filled rocky island in the north Atlantic became the first and most serious casualty of the global credit crisis. The problems facing the country at the moment are the most serious faced in the young republic’s history.
Icelanders wholeheartedly embraced financial liberalisation. For a small fishing island, it was viewed as a national ‘get rich quick’ scheme. Riding a wave of cheap, easy credit over the past decade, it spawned a generation of bankers and entrepreneurs who came to be known as the ‘new Vikings’. Armed with vast sums of borrowed money, they were willing to take the risks that others wouldn’t; plundering UK high street chains, an English premier league football club and amassing a wealth of global assets, the good times seemed never ending. Iceland’s citizens became wealthier than previous generations could ever fathom, its banks grew to become international heavyweights, growing to 10 times the size of Iceland’s economy and they were eager to proudly present their success on the world stage.
Yet suddenly in midst of the global financial carnage that unfolded in the autumn of 2008, the ‘new Viking’ expedition found itself sinking fast in a financial storm it could not weather. As short term credit dried up, Iceland suddenly found its banks imploding within days of being confident of their survival, dragging with them the entire national economy and the livelihoods of many. One year later from the crash, Iceland finds itself with a social democratic/leftist green coalition government and the worlds first openly gay political leader. Having fully embraced the excess of free market capitalism, the political landscape has shifted dramatically to the left.
This raises some important questions at the core of Icelandic national identity: What made such seemingly risky ventures appealing to a small homogenous society? one that had largely depended on fishing for its national livelihood. Is Iceland a nation of risk takers? Is this characteristic embedded in its culture? Did its heritage of discovery and exploration rooted in the Viking sagas past on through the generations play a part in their entrepreneurial expansion oversees?
