How are people in Iceland coping?

Discussion in 'Economics' started by plugger, Mar 15, 2009.

  1. plugger


    Are there any people from Iceland who view these boards?

    I'm very curious as to how people and the country is coping with its economic meltdown. Specifically, since the value of the currency has crumbled, how does the economy function? What are people doing to cope with the downturn?

    Any links, stories, or better yet, firsthand experiences are welcome.
  2. Wall Street on the Tundra

    Iceland’s de facto bankruptcy—its currency (the krona) is kaput, its debt is 850 percent of G.D.P., its people are hoarding food and cash and blowing up their new Range Rovers for the insurance—resulted from a stunning collective madness. What led a tiny fishing nation, population 300,000, to decide, around 2003, to re-invent itself as a global financial power? In Reykjavík, where men are men, and the women seem to have completely given up on them, the author follows the peculiarly Icelandic logic behind the meltdown.

    It's quite a long read but well worth it.
  3. There is a member on Kitco from Iceland who has posted on the board about the situation there.

    He saw it coming and had all his money in gold outside the country but many others didnt.

    Hope this helps a bit.

  4. 377OHMS


    Well, they're mostly found over at EliteFisherman these days.

    Some over at EliteAluminumSmeltors too. Thats about it really.

    My limited understanding is that the icelandic folks financed their homes, cars and businesses in foreign currency to avoid local interest rates. When the icelandic currency was devalued all those folks had a tough time paying their foreign debts due to exchange rates which effectively refinanced the whole country at insanely higher rates. Lots of insurance fraud now, particularly cars being torched. Most homes are underwater. Debt to GDP is astronomical. Iceland is going to be a fishing village for at least the next decade.
  5. plugger


    Pretty good, I'll check out Elitefisherman. Ha, ha. Who knew that fishermen would make such good bankers? On par with those in the U.S.?

    I'm curious as to whether there is rationing in the country, do people and businesses still accept the currency, and exactly how does the government pay people assuming the tax base has crumbled?
  6. 377OHMS


    Actually, the article that Red_Ink posted a link to is the one that I read. Its a good article, fascinating really.
  7. plugger said""how does the government pay people assuming the tax base has crumbled?""
    I fear that question is soon to be asked of the USA.
  8. lrm21


    Here's a good blog, on an ordinary Icelander.

    This is the first time ..
    March 5th, 2009
    .. that I can actually say that i´m scared. I have no clue where this country is heading and as it looks to a person like me and most around me, everything looks impossible. Just one example, and only because I noticed, the price of one small thing of shampoo went up 400 krona in one day. How is that possible? .. No need to answer.

    The currency rate looks “stable” according to the fixed central bank rates and all, but yet, the rates are not the same abroad. It seems impossible to be able to buy krona abroad, and it is still impossible to buy foreign currency here, that is actual money bills.

    I´m sorry for the very, extremely slow updates here lately, but I decided to go visit a cousin of mine who lives on the other side of the island, I needed someone close to me who can give me the moral support I need now, and .. just my luck I guess. We snowed in. I cant get home. Snow taller than one floor houses some places in this town .. it is like being on another planet, unexpected on my behalf, but .. as lately I feel like i´m the navel of the universe, the universe where bad luck is an everyday thing.

    This morning I woke up, to try to get to the store to get something to eat, and I literally had to tread snow up to my hips at some times. And no .. this is not very usual in Iceland .. I remember this since I was a kid, but all the sudden now .. 20 years later, I find myself in the same steps, tucking my pants into my shoes, dressing up like the michellin man.

    I am also getting ready to move, and i´m dreading it more than anyone can imagine..

    Wrapping up my personal days lately ..
    Back to the actual issues at hand ..

    Politics in Iceland reminds me of a bad theater play. Poorly written, seriously bad actors, overboard on the drama, and the mysterious twists are more than really possible.

    Old politicians running for office again, new politicians coming in with words of the size of whales, and promises of the size of America, current politicians seem to be preparing for a pageant.

    It is quite amazing that this government that is ruling now and for .. what it seems a few days seems to be doing almost nothing at all .. well sure many bills have been thrown into the parliament, some passed, very few effective as is, more and more people running into trouble ..

    I´m not sure yet (getting into it in a moment) how everything is going, I havent been able to follow the currency exchange rate since I left for what I thought a day on Saturday, and i´m still stuck here “visiting” .. because of the weather, and to be frank .. my internet connection does not work here, no service, so i´m “borrowing” an internet connection right now to get something done, and have done a couple of times to try to keep things up and running around here.

    It is obvious to me that this current situation is putting a great deal of pressure on everyone I meet. I had a cup of coffee (I dont even drink coffee) at this ladies house, and all the sudden out of nowhere she puts up this worried face and starts talking about the current situation. All of this is putting enough strain on me in my own daily life, and not to speak about the fact not being able to get home right now, that this put me seriously off balance. Things have been happening around me in such a pace that my head is still spinning.

    Now i´m moving and in need of furniture, and that is from what it looks, a serious problem. Despite everything, it seems that a lot of people would rather throw their furniture away, than give it to someone who needs it.

    I´ve been trying to plan my new place, over and over in my mind and i´m having such a hard time, i´m the type of a person that deals with huge changes poorly, but I always find a way you know.

    I have been looking into growing vegetables, keeping chicken, and many other things to use every single piece of food, and growing my own and have a very nice plan, and even thinking of barter for all sorts of things, but that type of a market has not started up yet seriously, but despite that, I had the idea to “barter” for furniture.

    Too bad that stores do not do barter, I would work for food, but that is not an option, they are not hiring, and everyone is pushing the prices up and reducing their staff.

    Fortunately i´ve become very good in good use of food, money and a great planner, but … no matter what I do, I feel like i´m on the edge of a panic attack.

    I´m going to try to get online as much as possible, and please .. cross your fingers that I can get back home as soon as possible .. not that I do not like it here, I just need to get home to be able to work on all of this and pack.

    Actually to tell you the truth, I have sold most of my clothes, most of the small items that I could live without .. I know I will regret it at some point. But this is life, this is the new life, right?

    I´m not very happy at this moment, I hopefully will be able to do what I had planned around the new place, hopefully my life will turn out to be fine. No, i´m telling you, I have a good feeling about the future, it will be rough, it will be tough, I will be crushed a few times even a couple of times at a time, but eventually, life will be .. good.
  9. The following is true, not embellished, and being widely reported:

    The most common sounds at night throughout the towns and suburbs of Iceland are explosions, as car after car is either torched, and eventually explodes, or pipebombed, as owners of those cars realize they owe about 5-10 time more than what they originally borrowed to finance the purchase of that car, especially the expensive ones, given the collapse in the Icelandic economy and currency.

    The most common vehicles exploding spontaneously in the middle of the night? Expensive SUVs, especially Range Rovers and BMWs.
  10. Anyone read anything by the folks at Drobny Global... they sure leave a mess when they come through town.....
    #10     Mar 15, 2009