ICELAND

A nation from riches to rags

The financial crisis is leaving no stone unturned. Once the country that boasted the most international and attractive banking systems on the planet, Iceland is today verging on bankruptcy. Read more...

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"Krona, dollar or euro?". Photo postd on Flickr by "Catenius".

The financial crisis is leaving no stone unturned. Once the country that boasted the most international and attractive banking systems on the planet, Iceland is today verging on bankruptcy.

The Icelandic krona lost half its value in October and can no longer be exchanged for foreign currency. The government has already nationalised the country's principal banks - which are facing bankruptcy - but it now finds itself with only nine months' worth of foreign currency reserves. Prices have rocketed (by 14% in September); the banks are on the verge of collapse; and yet islanders seem to be coping, at least for now.

"Icelanders have gone from being a nation that takes a flight to go shopping in Minneapolis (…) to a country that's asking for financial help from others"

Julien Oberlé is a French expat living in Reykjavik. He's a project manager for an IT company.

Daily life stays the same. But the Icelanders will surely give up the luxuries they enjoyed before. The press has already reported a drop in the number of cars on the road. Supermarkets have started promoting Icelandic products that had been forgotten, like "slátur" [black pudding made with liver]. Bars and restaurants are not as busy. And last night, at the World Cup qualifier with Macedonia, the stadium wasn't even full even though the tickets were sold on the cheap. From one day to the next Icelanders have gone from being a nation that takes a flight to go shopping in Minneapolis, London or Copenhagen, to a country that's asking for financial help from others [the island has asked for a loan from Russia]. For the moment it looks like our next currency will look something like that:

"They've opened an office for people to call if they're having psychological problems"

An American who has been living in Iceland for three years runs the blog "Reykjavik Harbor".

The shops I went to two days ago (grocery store, gardening store, wine store) were all stocked as expected and were not overcrowded. Those that were there were obviously buying dinner and not supplies for two months. Of course the availabilities will change but people in general seem to be just carrying on with the usual stuff, working on supporting each other, discussing things, and getting on with life.

One TV channel has started an ad campaign reminding people that the best things about life are free - spending time with family, little kids dancing, cheesy stuff like that. They've opened an office for people to call if they're having psychological problems - trouble sleeping and the like. So what comes next? The threatened 75% inflation that one Dane mentioned? I really don't know and I really don't want to predict. One day at a time is all I'm working on.

Of course, everyone's got a story of someone who did something foolish, taking out a loan in foreign currency to buy stocks in one of the now-collapsed banks, only to then lose his job at said bank, someone else who invested their entire life-savings in a single bank, also to find themselves penniless. There are stories that the suicide rate over the weekend was alarmingly high too. But (...) these are the things that every economist learns first off to not do - don't take out a loan in another currency than the one you're earning in, don't put all your eggs in one basket. We may have all gotten by in the past by not being economists but maybe now it's time to start a bit more, be a bit more careful."

"[With] a population of around 320,000 people, the knock-on effect is amazingly intense"

Kitty is a British blogger who's been living and working in Reykjavik for the past two years as an artist and producer.

Prices are going up. We are, after all, an island and all foodstuffs etc we cannot produce here are imported, and therefore incredibly expensive. The collapse of the krona has already resulted in mass redundancies - 500 in one bank alone - and when the entire country has a population of around 320,000 people, the knock-on effect is amazingly intense. To keep ourselves buoyant, most are just saying ‘we'll worry about it when we know what the bottom line is', because every day the situation develops up and down and we realistically have no idea when the whirlwind will calm.

I thank my lucky stars for working in an Icelandic company whose main income is in euros and dollars, so I am in a better position than most, but we are still affected. Personally, in addition, I, like many foreigners here, have financial responsibilities in other currencies. My monthly payment to the UK which two years ago was half a month's rent is now well over a month's rent. It is, for want of a better way to put it, f*****d up.

I will be alright; I am a fairly determined character and am lucky enough to not have mortgages or mouths to feed. There are many who aren't, though. The situation over the last months has gradually pushed small businesses here into serious problems. The one thing I would ask of the Icelandic public is please keep buying in your small local stores. We really need to ensure that what independent businesses we have don't all fold under the pressure.

Icelanders who have foreign loans and also foreigners living here with financial responsibilities abroad are suffering heavily. One close friend of mine has all his house mortgage in foreign loans and it is currently over three times as much money now than it was at the beginning of the year. We cannot transfer money out of the country either to pay any foreign bills so the knock-on effect and fees are painful.

As a British ex-pat I think the Icelandic population is dealing with this extremely well. The population is small and people here have a general warmth and familiarity in normal times compared to my old home of London. This helps now more than ever. People will simply help each other, they share - not fight, and because of this I feel the country will get through."