Financial Fiasco: How America's Infatuation with Home Ownership and Easy Money Created the Economic Crisis by Johan Norberg by Johan Norberg

Author:Johan Norberg [Norberg, Johan]
Language: fra
Format: epub
Published: 2011-06-30T15:07:39+00:00

The Raven Goes Down

Iceland, a creation of the lava ejected where the Eurasian and American tectonic plates meet in the North Atlantic, has been for a thousand years the place with the best stories, or "sagas" as the locals call them. Barren landscapes, steep shores, and majestic mountain formations make it one of the most beautiful countries in the world. The heat in the earth's interior makes itself felt even today through geysers spraying boiling water from the rocky ground and through still-active volcanoes. In one of the world's most sparsely populated countries, with only 320,000 inhabitants, the elements feel more tangible than anywhere else. This small, northern Atlantic island nation has room for fantasies and dreams.

In the past two decades, Iceland has experienced a saga of such drama and tragedy that it could almost have been written by Snorri or Sturla. David Oddson, a prime minister with bushy, curly hair who permed short stories and poems in his spare time, liberalized the national economy in the 1990s. The government lowered taxes and privatized companies, and it pulled off the almost unparalleled feat of finding a way to manage fish stocks-based on ownership rights-which both avoids overfishing and generates income. The Icelandic economy grew fast, and the small island, where stories of poverty and famine are still told, became one of the richest countries in the world. Its highly educated citizens started successful companies in information technology, energy, and biotechnology, and Icelanders bought both West Ham United, a London soccer club, and House of Fraser, a large British department store chain. Whatever others may be saying today, don't you believe them-back then everybody envied the small band of modern-day Vikings who were all drive and no fear.

Today, Iceland is virtually bankrupt. Its stock exchange fell 90 percent in 2008, and its economy is expected to shrink by more than 10 percent in 2009. Unemployment and the rising cost of living have ruined thousands. In October, someone with a black sense of humor offered up the entire country for sale on eBay: "Unique opportunity to buy a Northern European country ... admittedly a somewhat sketchy financial situation." Bidding started at $1.75. Those who laughed probably choked when they found out that the Icelandic government was trying at that time to obtain a large rescue loan from the increasingly authoritarian Russian Federation. "We have not received the kind of support that we were requesting from our friends," the prime minister explained, "so in a situation like that one has to look for new friends."46 Soon after, the International Monetary Fund stepped in.

The reason for Iceland's deep fall should be sought in what was until not long ago its greatest source of pride: its banking industry. Even today, opinion is divided about what went wrong. Some claim that a banking system that has been poorly developed until recently is prone to making beginner's mistakes; others say that the ancient Viking spirit encouraged too aggressive expansion. A third explanation homes in on the fact

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