Lately the media have been ringing alarm that Iceland is going bankrupt and that is has become the first victim of the global economic crisis. I follow the news with great amusement.
I am no economist or politician, I write books. Two of them were written in Iceland where I lived for over 10 years. I studied at the university there. I had a very honest professor teaching the course on the history of Iceland, who never tried to convince us that Iceland was the seventh richest country in the world, that its króna was a super currency and that Iceland was a tiger of the world economy. Professor Gunnar would tell us the exact opposite (it’s astonishing he was not sacked). He said, quite openly, that Iceland had been governed by idiots for ages, and that over the past few decades it was governed by mega-idiots who carried out mega-idiotic economic policies.
At first I thought the professor wanted to ingratiate himself with foreigners. Sadly, I soon got to feel on my own skin that the professor was right, and I have tried to describe this experience in two of my books: Dom Róży ( The House of Rose) and Kołysanka dla wisielca (Lullaby for a Hanged Man). The Icelandic króna was a very wobbly currency and depending on which way it wobbled I was able to afford shorter or longer vacations outside the island. Borrowing money from the bank was easy and I did it regularly.
Obviously, you learn by example from above . For it was the Icelandic government that taught me to borrow money as it, too, has been borrowing left, right and centre for decades. Sometimes it would pay back. But usually it did not manage to repay its debts so it would put a squeeze on the citizens. And the squeezed citizens responded to the growing prices as well as growing bank interest rates by visiting a psychiatrist who would prescribe pills for life satisfaction. Some of them, mostly foreigners, did not seek medical advice or work overtime. They started to leave Iceland, as I did over a year ago.
I get the impression that the media on the continent do not understand Icelandic mentality. The standard of living in this country is very high, which again, is due to the easy borrowing but also to economic nepotism. Nearly everyone in Iceland is related to everyone else so it is never difficult to find an Auntie or an Uncle if Mummy or Daddy are not willing to shore up your credit. The average Icelander like a big child that cannot deny himself anything. You see hundreds of very expensive cars in the streets of Reykjavik, bought on credit, naturally. The Icelanders pay by credit card even for groceries – and the banks are usually quicker in demanding repayment than the feeling of hunger. Paper money has almost gone out of circulation, everyone pays by plastic which is more difficult to keep track of. But it is quicker to swipe of the magnetic strip than to rummage in your wallet.
Another fact worth mentioning is that Iceland has never had its own army. Until recently a several thousand men strong garrison of American soldiers in Keflavik not only ensured free security for Icelandic debtors but was also a key employer.
And as I have brought up Uncle Sam I might as well add that he was very generous. He pumped money into this unheatable and cheapest American aircraft carrier, he kept lending and did not demand repayment. However, everything comes to an end. The soldiers have moved out of Iceland and the banks started sending out reminders. And you don’t have to be an economist to understand that closing down the US base had a certain impact on the worsening of the economic situation.
Nevertheless, Iceland is not panicking. I talked to some friends yesterday. They said things would work out somehow because they have always worked out. And if things got really bad, we could always put up our government for sale on eBay.
Black humour aside, Icelanders really do seem to approach the prospect of their state’s bankruptcy with great calm. Because, firstly – there someone will always be willing to lend more. It will be Russia now. Before Russia it was the US. And later perhaps China or India. Because Icelanders are very nice people and they have a very nice president, the only president in the world who has kept his election promise. He never promised to be a good president. He promised he would be a nice president. And nice he is.
Second – it is not a big deal to lend money to a state that has three hundred thousand inhabitants.
Third – psychiatric help is very effective and the lovely pink tablets help people to continue living a life of make-believe.
Fourth and most important: Iceland is an island situated on the faultline of two tectonic plates. The plates often rub against each other causing smaller or greater earthquakes. Every big earthquake is preceded by a smaller one. Currently it is the economy that is shaking, soon it could be the earth. It’s in the Icelanders’ genes. They know that everything could be over in a matter of minutes. So why not keep on borrowing? Let’s play the game of make-believe state.