Right now I’m in Iceland – the eye of the storm that is the financial crisis that seems to sweep over the world. Especially Iceland has been struck hard by the economic severities. The 2008 Icelandic financial crisis involves all three of the major banks in Iceland and their seizure by the government. In late September, it was announced that the Glitnir bank would be nationalized. The following week, control of Landsbanki and Glitnir was handed over to the Financial Supervisory Authority (FME). Soon after that, the same organization seized Iceland’s largest bank, Kaupthing. The current economic climate in the country has affected many Icelandic businesses and citizens. According to my girlfriend Sara, 15 people have killed themselves as a result from the “kreppa” (as it is called in Icelandic).
The job losses are of course one of the things that is the most serious and noticeable thing for common people. Many people have lost their jobs and there are more to come. Iceland’s GDP is expected by economists to shrink at least 10 percent as a result of the crisis, putting Iceland by some measures in an economic depression.
There are less people than before on the streets and you can’t go anywhere without hearing people talking directly or indirectly about “kreppan”. We’ll see where it ends. I am sure they will get back on their feet, it will just take awhile to do so.
The causes are many, but the most important ones are mixing idiotic nationalism with privatizations in the intermediate time between the nationalistic socialist age of Iceland (-1991) and the capitalist expansion age (1991-2008), and an economic bubble which basically is the result of investors overestimating the true value of the Icelandic króna.