Icelandic Sagas

I read in the news today that the Icelandic government has taken over a second of its leading banks in an attempt to stop the total collapse of its economic infrastructure. Last week it took over the country’s third largest bank, Glitnir, to prevent it collapsing as a consequence of bad debts and this week it has nationalised Landsbanki, the second largest. This particular one brings Iceland’s imminent bankruptcy closer to home as hundreds of thousands of savers in the UK have cash tied up in either Icesave or Heritable, which are divisions of Landsbanki. The only private Icelandic remaining is Kaupthing, which also has a UK operation called Kaupthing Edge. This bank claims to have minimal exposure to toxic debt, but it remains to be seen whether it can avoid a run on its deposits that will surely lead it into oblivion too. I am an interested party in this case, as I recently bought some of its fixed rate high-interest bonds. This may turn out not to be the best decision I have ever made.

Iceland’s economy seems to be a microcosm of the current world situation. A decade of incredible growth built on speculative financial operations abroad led to growth beyond the wildest dreams of such a small country. With a population of only just over 300,000 – that of a small English city – most of whom live in the capital Reykjavik, this boom generated a huge increase in living standards for its own people and created a new generation of Icelandic billionaires. Now that bubble has well and truly burst. The country as a whole is on the verge of bankruptcy, its currency has fallen through the floor, and inflation is rampant.

Iceland may have a reputation as the one of the hottest destinations for a weekend of partying, but it seems to me that it’s about to suffer a sudden and very chill winter.

I had the opportunity to visit Iceland this May in order to participate in an event called the Experiment Marathon, which is one of those artists-meet-scientists events that are either excruciatingly terrible or intensely enjoyable. Held in the Hafnarhus – Reyjkavik Art Museum – the contributions included scientists talking about science or doing experiments live in front of the audience, alongside artists talking about or demonstrating their work.

I am really not sure why I was invited to take part, although I suspect it was some form of administrative error. Most of the really crap things that happen are caused by mistakes, so why shouldn’t the good things also happen that way?

Anyway, I gave a talk about the cosmic microwave background. My “experiment” was a television set that wasn’t tuned properly producing a screenful of static. I pointed out that some (actually not that much) of the buzz was coming from the beginning of the universe. Pretty lame as a gimmick, I know, but it seemed to go down quite well with the audience and I had some nice questions and comments at the end of my 20 minutes. But I also got to meet quite a few artists and other luminaries, including Brian Eno (who celebrated his 60th birthday at the festival) and Dr Ruth. I also had breakfast in the hotel with a noted performance artist called Marina Abramovic who I’m ashamed to say I’d never heard of. I didn’t actually know who she was until much later.

Even better than this I had a sort of VIP pass which meant that I got to go to a couple of wonderfully boozy receptions, including one at the President’s house, and hang out with the in-crowd at some of Reykjavik’s nightspots, although at one of them I had to listen to some experimental music that sounded like what I imagined to be played to prisoners at Guantanomo Bay. Being so far North the nights are very long which definitely added to the enjoyment, especially since the few days I was there were blessed with lovely sunny weather. Perhaps even more importantly, I don’t remember having to pay for anything at all, drinks included. They even paid me a fee! (However, they paid it in Icelandic Krona, which I never got around to cashing, so it’s probably not worth very much by now.)

It goes without saying that I formed a very positive opinion of Reykjavik as a city full of energetic and creative people who know how to have a good time: it has its own opera house, countless restaurants and bars and several excellent museums and art galleries. But at the back of my mind I was wondering how such a small country can find the money to sustain such a level of artistic and musical activity as well as lavish personal consumption. Now at last I have the answer.

It can’t.

5 Responses to “Icelandic Sagas”

  1. Mrs Trellis (Denbigh) Says:

    A friend of mine will be going to Iceland next week, but he will be talking about hairloss and penile problems in mediaeval iceland. Did you encounter any of that sort of thing?

  2. telescoper Says:

    Even I am not old enough to have been there in mediaeval times and I didn’t notice any lost hair or problematic penises whe I was there earlier this year.

  3. […] to my post about the crisis in the Icelandic banking system, it now appears the third major private Icelandic bank, Kaupthing, has also been taken into […]

  4. […] while ago I blogged about an event I attended, called ¬†Experimental Marathon, which was held in Reykjavik Art Museum in May 2008. I was reminded […]

  5. […] of Mark Zuckerberg and his “metaverse” cheered me up no end. It reminds me that I visited Iceland once in 2008 and enjoyed it enormously, but for some reason have never been […]

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