A couple years ago, perusing Google Analytics in a fit of
procrastination self-improvement, I noticed I had a single reader in Iceland. I wondered, in the following day’s entry, if it was a real person or a robo-server checking in from Reykjavik. I’ve always had a fascination with Iceland, and once seriously considered taking a two-week solo vacation there, touring the volcanic plains on Icelandic ponies. It never happened, but I still think that if I’m ever fit enough to travel 25 miles per day by horseback at a brisk tolt, and at peace with three meals a day of mutton, I’m gonna do it, just you wait.
The following day I received a note from a man with the initials H.K., announcing himself as my regular reader in Iceland. Signs and wonders of the internet age.
Anyway, I mentioned Iceland again yesterday, linking to Michael Lewis’ marvelous dissection of the financial meltdown there, in Vanity Fair, which you should read, because it is one interesting piece of journalism. This choice passage sums it up nicely:
(A) hedge-fund manager explained Icelandic banking to me this way: You have a dog, and I have a cat. We agree that they are each worth a billion dollars. You sell me the dog for a billion, and I sell you the cat for a billion. Now we are no longer pet owners, but Icelandic banks, with a billion dollars in new assets.
It was almost that simple. And crazy.
Anyway, what did I find in my e-mail yesterday but another note from H.K., still reading us after all these years. He asks that I not use his full name, because there are only 300,000 Icelanders and everyone knows everybody else. His account of how the financial crisis played out there is so interesting I think it deserves wider distribution. And so:
As a long time reader and (maybe) still your only Icelandic reader I feel the need to send you a e-mail every time you mention Iceland on your blog. Searching for the last (and first) letter I wrote to you and seeing that it was from the spring of 2007 made me almost miss those golden days at the height of the madness back home in Iceland. I say almost because although everybody was spending money and trying to make themselves believe that they were happy, things were truly fucked up.
The overwhelming sense of greed and spending-ism (you have to make up words to describe this) was incredible but I never seemed to fit into this and just go along for the ride. I say “back home” because I fled the collapse and moved to Denmark last January. I was incredibly lucky and got a job here in my profession and hopefully I can ride out the meltdown here.
Although the global recession is also in Denmark its scale is nothing compared to Iceland. The article you link has a certain “reporting from the bar at the Hanoi Hilton” feel to it when read by a local like me. The journalist keeps getting these incredible quotes from the man on the street that underscore his story perfectly and he also gets some pretty big things wrong.
For example, there would (not) be an expensive car on the streets of Reykjavik now for example if the insurance companies were still paying out the burned ones. [Ed: Lewis describes nightly car fires of Range Rovers and other pricey models, torched by owners who can no longer keep up with payments.] With the insurance companies being no dummies, now you just get a similar used car instead of a payout and you still owe your car loan. With that being said the article is 90% true. But while it tries to describe the hedonism, arrogance and everything else that came with these nouveau rich masters of the universe types, nothing can come close to it. It’s like trying to describe an orgy to Sunday school children, you just had to be there. The bankers, journalists, government, unions and various others feasting on all the money that just seemed to come from the heavens.
I would like to tell my little story from the madness that was Iceland:
While I count myself one of the lucky ones, being young, educated and without family so that I can easily move, I’m still technically bankrupt. I (30 years old) and most people between 20 and 40 are saddled with massive mortgages and/or car loans that just keep getting bigger and bigger.
So while I drove an old car, didn’t buy big splashy things, never spent more that I earned and did my best to ignore the madness around me, I made the fatal mistake of wanting to live in my own apartment. I bought the apartment in 2007 and now 18 months later the mortgage has grown by 30% while the value has droppd by about 40%. In Iceland there were two kinds of mortgages, foreign currency-based or local currency tied to inflation. When the Icelandic krona fell last year the foreign based loans doubled while the krona loans (like mine) have just been simmering under a 15-17% inflation. Since my mortgage has an interest rate of 5.8% it increased by 22% last year and the increase will probably be close to 25% this year. My choices are either to declare bankruptcy or hope that I’ll be dept free by 45. (This by the way is a great conversation starter with the ladies here.)
But as I said, I’m one of the lucky ones. I love living here in Copenhagen and I haven’t been so happy in years. Without this recession I would never have dared to move out my comfort zone back home and now I live in a big global city and have a great job (which I hopefully will not get laid off from).
File that one under So You Think You’ve Got It Tough.
Here’s a passage from the Lewis article that stayed with me:
Here is yet another way in which Iceland echoed the American model: all sorts of people, none of them Icelandic, tried to tell them they had a problem. In early 2006, for instance, an analyst named Lars Christensen and three of his colleagues at Denmark’s biggest bank, Danske Bank, wrote a report that said Iceland’s financial system was growing at a mad pace, and was on a collision course with disaster. “We actually wrote the report because we were worried our clients were getting too interested in Iceland,” he tells me. “Iceland was the most extreme of everything.” Christensen then flew to Iceland and gave a speech to reinforce his point, only to be greeted with anger. “The Icelandic banks took it personally,” he says. “We were being threatened with lawsuits. I was told, ‘You’re Danish, and you are angry with Iceland because Iceland is doing so well.’ Basically it all had to do with what happened in 1944,” when Iceland declared its independence from Denmark. “The reaction wasn’t ‘These guys might be right.’ It was ‘No! It’s a conspiracy. They have bad motives.’” The Danish were just jealous!
The Danske Bank report alerted hedge funds in London to an opportunity: shorting Iceland.
I guess you can’t really fault the Danes; they tried to deliver the message. But when the message was ignored, they did what investors do: Positioned themselves to profit. You knew durn well I was a snake before you brought me in.
A wee bit of bloggage:
I don’t know if you non-subscribers can read this WSJ story, but here’s hoping. And here’s the nut graf:
Marketers, politicians and consumers like to imagine a world of solar panels, wind turbines and cars fueled by wood chips. But none of that gadgetry packs the here-and-now punch of a decades-old option: plugging leaky homes with a caulk gun.
It’s like finding out your mother was right when she said to eat your vegetables.
People sometimes express amazement at the shenanigans of the Detroit City Council. No way do members show up in tiaras, call one another “Shrek” and play not the race card, but the whole race deck, you might think. Well, you’d be wrong:
On a dizzying day that ended with the threat of a court fight to block the regionalization plan, Councilwoman Barbara-Rose Collins launched into a tirade Thursday. She lambasted the media and suburban officials, said council members have been called “crazy, stupid monkeys in a zoo” and said the deal follows a history of European settlers who pillaged, raped and slaughtered indigenous people.
The 17-minute speech was capped by cheers and ended with Collins leading the council and 40 spectators in the song “Onward, Christian Soldiers.”
And there’s video!
Finally, Lance Mannion delivers a writing lesson. Beautifully.
So here it is Friday, and we’re having some unseasonable warmth — in the low 50s already, headed another 10 degrees higher. All this talk of the northern latitudes has me thinking of midnight suns and the necessity of enjoying gifts like this while they last. So adieu for the weekend, and let’s hope for a little bit of springtime, for H.K. in Copenhagen and all the rest of us.
John said on March 6, 2009 at 9:53 am
At least it is H.K. giving us a local Icelandic report. I heard someone tried to follow the guidance of A.S. there and got into all sorts of predicaments.
Randy said on March 6, 2009 at 10:06 am
I’ve got a friend who used the equity from his house to buy a bigger, more expensive home. That’s fine, everyone seeks a nicer place to live. But then he used the rest to buy a new car. And a trip to Germany for him and his family. And this and that from here and there. He figured home values could go nowhere but up. Gulp.
vince said on March 6, 2009 at 10:18 am
I remember going out to eat in Reykjavik two years ago and how shocked I was at the high prices even for average meals. We saved only a little money by buying lunches at a discount grocery chain called Bonus, whose logo featured a bright pink pig.
Even there we quickly learned why Iceland was rated among the most expensive travel destinations in the world.
It wasn’t until today, when I Googled “Bonus Pig Iceland” that I looked closer at the logo. It’s not a pig. It’s a Piggy-Bank with a slot in his back. Fill in your own irony blank here.
If you’d like to see Iceland in sunnier times, I’ve post photos here:
mark said on March 6, 2009 at 10:58 am
Really nice post today, Nancy. Enjoy your weekend.
LA Mary said on March 6, 2009 at 11:08 am
Other than being really cold in the winter, Copenhagen is a very nice city. HK landed on his feet, I’d say.
Sue said on March 6, 2009 at 11:32 am
Copenhagen – suddenly I want a beautifully-constructed open-face sandwich on fabulous bread. Nice place.
LA Mary said on March 6, 2009 at 12:05 pm
Maybe some nice baby shrimp with sweet butter and dill on dark rye? A glass of Tuborg on the side?
del said on March 6, 2009 at 12:21 pm
I toured Tuborg’s brewery and some young Aussies in our group lifted a couple of the “complimentary” beers after the tour (ones they couldn’t pound before the tour’s end). The tour guide was waiting with all of us at the bus stop afterward and heard two bottles clanging in the guy’s backpack. He confronted him and asked him where he was from. The Aussie said, “I’m an American.” Another black eye. The beer was good though.
Sue said on March 6, 2009 at 12:22 pm
That’s exactly what I was thinking of, except for the Tuborg because I’m stupid that way. How did you know?
LA Mary said on March 6, 2009 at 12:45 pm
I figured it had to be baby shrimp or salmon with watercress.
nancy said on March 6, 2009 at 12:46 pm
One of the things I liked about ‘The Girl With the Dragon Tattoo’ were the little details of Scandinavian life, which were plentiful. Every other page, someone was making coffee and open-faced sandwiches.
LA Mary said on March 6, 2009 at 12:51 pm
You can get Scandinavian roast coffee at Trader Joes now. It’s good. I’ve never had breakfast pastries in the US that could match the ones I had in Copenhagen. They love their butter in that city.
Sue said on March 6, 2009 at 1:11 pm
Oh, no LAMary, there was so much more than that when I was there; I remember being amazed at the variety and beauty of those little sandwiches. And these were just mass-tourist type places. The only constants were good bread and wonderful butter.
LA Mary said on March 6, 2009 at 1:17 pm
There were lots of varieties when I was there. Salmon and shrimp were my favorites. I liked the street vendors selling granny smith apples too.
Catherine said on March 6, 2009 at 4:37 pm
I have a friend who is from Denmark, and she is one of the most effortlessly chic, incredibly nice people I know. If the rest of the Danes are anything like her, it would be a good place to wind up, under any circumstances.
Catherine said on March 6, 2009 at 4:40 pm
Representative Frank Wolf of Virginia goes off on the NYT’s coverage of Obama’s hair:
Sue said on March 6, 2009 at 5:05 pm
I think Michelle called them and pointed it out to divert the criticism of her most unladylike show of (shudder) upper arms.
LA Mary said on March 6, 2009 at 5:09 pm
Have you seen the photos of Mamie Eisenhower sleeveless? Shocking.
Sue said on March 6, 2009 at 5:10 pm
I always objected to Mamie’s bangs, myself.
Catherine said on March 6, 2009 at 5:23 pm
The bangs are scary now, but perhaps of their time? And if I had half Michelle’s tone in my arms, you would see them all the time. The haters need to get to the gym.
So, how bad a parent am I to be relieved not to go camping with the Girl Scouts this weekend (daughter with stomach flu)?
Sue said on March 6, 2009 at 5:36 pm
What’s worse, Catherine, being relieved that your daughter got stomach flu and you don’t have to go, or praying that either you or your daughter would get sick so you didn’t have to go? Or that a very localized meteor would hit the (empty) soccer/choir/field trip/whatever location? Don’t you feel better now?
brian stouder said on March 6, 2009 at 5:44 pm
Two comments, regarding the links:
I loved the Iceland article. It should be REQUIRED READING for every lip-flapper who wants to blame the American crash on ACORN and “people who had no business buying a home” and who assert that the ALL problems come from the damned (and damnable) government, and NOT the virtuous ‘free market’
I liked the ‘Lance Mannion’ piece. For my money, a tremendously good book on Lincoln the writer is Douglas Wilson’s “Lincoln’s Sword”, wherein you get to explore and ponder choices Lincoln made with regard to revisions and other things; it is very like looking over Lincoln’s shoulder as he writes various documents.
One interesting thing in there was the instruction that Lincoln sent along, with an address he had written, but which would be read by another man (Conkling) at a Union rally in Springfield (the president had wanted to attend, but in the end couldn’t bring himself to leave the capital in 1863).
His instructions were simply to read it ‘very slowly’. I was quite taken by that – not just ‘slowly’ but ‘very slowly’. Definitely written with a great deal of attention to how it will sound to the listeners
caliban said on March 6, 2009 at 5:46 pm
OK. this dumbass hass the most dumbass name in the history of dumbass namessa. But
claiming that health care is a privilege is so stupid in so many ways it seems to personalize and identify the GOP perfectly.
First thing is, who pays for Wamp’s health care? Thid calls for taxpayer revolution. I used to withhold tax money from my phone bill to refuse to fund the Viet Nam war. The IRS never got back to me to discuss my civil disobedience. I suppose it’s OK for us to withhold some pittance to make sure my hard-earned dollars aren’t funding Mr. Wamps health care.
Second thing: He’s born again, right? Did Jesus have a litmus test for income, or worth to society, or Republican compassion-blight? Well, No, I think he just cured lepers and dead people without considering whether or not Mr. Wamp thought they’d earned it, the old-fashioned way, like AIG executives.
Shouldn’t the federal government act like proxy Christians (and really, you could insert any of the so-called great religions) and do business in the interest of the least of my brethren?
Third thing. Is this guy such a kneejerk idiot he doesn’t understand the effect on the economy of pretending to be the greatest nation in the world and leaving fully one third of it’s people in dire straits when they get sick or hurt?
OK. Bpbby Jindal. But he’s at least a mildly amusing foil to a mildly amusing psycho perv on Chuck. But Republicans!!!Rush man-boobs boouncing and udder stupidity? Wamp? Boner, the King of Earmarks, except he has to accelerate to catch up with Kyl.
Dexter said on March 6, 2009 at 9:16 pm
Mrs. Dexter sent me out to buy a can of cashews, so I aired up the Kenda tires and rode the Specialized cross bike on the errand.
It was so nice I just kept goin’, inspired a bit by the twenty biking videos from last night. I ended the ride after eight miles, no worse for wear.
I have vowed to wear my helmet every time I can this year. It was a perfect evening for tooling around at 14 mph.
I screwed up and bought chocolate covered cashews. A very delightful miscue!!
Catherine said on March 6, 2009 at 9:58 pm
Sue, thanks! I do feel better. And I didn’t pray for illness, but I did say a small prayer asking for a clear sign of her health or illness (she looked wan earlier but denied feeling bad). Which was answered unambiguously.
Dexter said on March 6, 2009 at 10:53 pm
Recently we discussed fashion. Here is a video, a couple minutes long, “Cycle Chic in Copenhagen”. Music by Poul Henningsen, 1935.
Linda said on March 7, 2009 at 7:00 am
OMG, this Iceland business laughingly reminds me of a Georgie Geyer column from a couple of years ago:
where she praises Iceland as the bee’s knees, full of good, practical, logical Lutherans who are soberly setting up their country The Right Way. She ain’t writing much about them now.
del said on March 7, 2009 at 8:15 am
Linda, thanks for the link. Some of the column’s more dubious assertions must’ve resonated with you. Your b.s. detector worked well . . .
Linda said on March 7, 2009 at 12:06 pm
One thing that set off the detector was her serene belief/constant meme that if only everybody in the world could be just like the 19th century American Protestant bourgoisie, the universe would be perfect. Guess not.
But another thought crossed my mind as I read the Lewis article: Iceland is the perfect incubator for a financial bubble. It’s a homogeneous, tiny community (the size of Lucas County, Ohio, where I live), where everybody knows and is related to everybody. It’s also a place that circles the wagon to shut off critical outsiders. Think about it: the victims in the Madoff scandal essentially came from a relatively small group of rich and celebrated that were a degree or two from knowing each other, many ripoffs deal with small groups of people who know and trust each other (Christians, etc.). So, when Knute’s son says this investment is great, and a smarty pants from Denmark says it’s not, who are you going to believe?
Also, in a small homogeneous group, there are few fractious groups to stand in the way of a great idea–hence the national unity in Iceland on climate change. There are also no critical groups to stand in the way of terrible ideas. Big downside.
beb said on March 7, 2009 at 12:16 pm
Linda, another key point to consider about Iceland is that is have virtually no natural resources, except for fishing. Speculating on financial markets was like finding free money.
Hattie said on March 7, 2009 at 8:27 pm
This is fabulous. No wonder newpapers are dying, when blogs like yours provide insights like this.
Jeff (the mild-mannered one) said on March 8, 2009 at 12:29 am
Can’t recommend Thirteen Moons, he said to Nancy far too late.
Can’t recommend Detroit airport after 9 pm, either. Nothing open, and Boingo (i.e., pay-for-wifi), but i’m home now, in one piece. Mucho turbulence tonight, but thankful for many mini-Sullys all across America.
I really dislike those 30 degree angle sideways landings. The psyche rebels.
Dave K. said on March 8, 2009 at 4:28 am
Jeff, glad you’re safely on the ground at DTW. You reminded me of a night about eight years ago, another “dark and stormy night”. My daughter Erin was returning from Japan, after spending the summer there on an internship for her Japanese major at U of Findlay. My wife and I, along with our son and Erin’s boyfriend, had made the trip from Indiana, and the plan was to stop at a restaurant for a nice welcome home dinner when her flight arrived, (via Chicago ORD). Unfortunately this was the day that the airline pilots called a wildcat strike or “blue flu” day. (Can’t remember the reason).
Anyway, her flight, which was supposed to arrive in Detroit around 4:00 PM, kept getting delayed, each announcement pushing back the ETA by an hour or two. Finally, around 9:00, we decided to forget the welcome home celebration meal and just eat at the airport. As you discovered tonight, we were out of luck. Vending machines were our only option, but no one had more than a few nickels and dimes. The machines were set up to take $1.00 bills, but the smallest anyone had was a five! I finally found a bill changer and eagerly stuffed in the fiver. Out clanged five $1.00 coins. The vending machines did not accept $1.00 coins!
Erin’s flight finally arrived around 12:30 AM. It had taken her longer to get from Chicago to Detroit than from Tokyo to Chicago! We got a burger somewhere on I-94, I think. Also, the driver, (name withheld to protect the guilty), missed the I-69 exit and drove almost to Lake Michigan before realizing his mistake. Long, long, day.
PS. Erin earned her Master’s degree in International Relations in May, and was hired by the USDA on election day. As an avid Obama supporter, quite a big day for her!
brian stouder said on March 8, 2009 at 5:41 pm
DaveK, THAT is a marvelous story – especially given the happy ending!
Here’s another marvelous little yarn, Newsweek’s new cover-story which I found delicious – especially given the internecine spice (it is written by David Frum) and the plating of the dish (the beady-eyed and angry el-Rush gets the cover – with the word “Enough” in a black rectangle over his mouth – just as if he had duct tape there) is just way too good!
an excerpt from the build-up:
And for the leader of the Republicans? A man who is aggressive and bombastic, cutting and sarcastic, who dismisses the concerned citizens in network news focus groups as “losers.” With his private plane and his cigars, his history of drug dependency and his personal bulk, not to mention his tangled marital history, Rush is a walking stereotype of self-indulgence—exactly the image that Barack Obama most wants to affix to our philosophy and our party. And we’re cooperating! Those images of crowds of CPACers cheering Rush’s every rancorous word—we’ll be seeing them rebroadcast for a long time.
And as an footnote, I saw this on the Stephanopolis show today, and thought “I will have to buy that copy of Newsweek” – and then saw it linked on the msnbc page (our homepage) for free.
At some point, this whole free-free-free internet thing, wherein only very few people (such as Google) get to make ALL the money has simply got to change, yes?
Jeff (the mild-mannered one) said on March 8, 2009 at 6:14 pm
Yes, but to what?
Jeff (the mild-mannered one) said on March 8, 2009 at 8:22 pm
Speaking of free goodies —
Sorry Mr. Florida, but there’s little passion for rentals here; the case is made for ownership allowing re-invention, a house by house and block by block version of federalism, where experiments in democracy can proceed unfettered.
Could be whistling past the graveyard, but this kind of possibility tracks well with the kind of urban wilderness possibility we’ve been reading about through this blog for some time (and their airport does have both a cool tram and a very interesting art-glass light/sound installation tunnel with moving sidewalks linking the concourses — Aside from a vaguely “Logan’s Run” feel to it . . .); it would be interesting to see a creative/social justice reinvention of the Detroit core, not that it would magically transform the economy, but a little hope goes a long way. Some financial inputs is better than further fiscal decline.