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| User Info | Stunned Icelanders Struggle After Economy’s Fall - NY Times in forum [NotSoBreaking] | |||
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Arcone Posts: 2094 Incept: 2008-02-09 
NYCville 
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http://www.nytimes.com/2008/11/09/world/.... By SARAH LYALL Published: November 8, 2008 REYKJAVIK, Iceland — The collapse came so fast it seemed unreal, impossible. One woman here compared it to being hit by a train. Another said she felt as if she were watching it through a window. Another said, “It feels like you’ve been put in a prison, and you don’t know what you did wrong.” This country, as modern and sophisticated as it is geographically isolated, still seems to be in shock. But if the events of last month — the failure of Iceland’s banks; the plummeting of its currency; the first wave of layoffs; the loss of reputation abroad — felt like a bad dream, Iceland has now awakened to find that it is all coming true. It is not as if Reykjavik, where about two-thirds of the country’s 300,000 people live, is filled with bread lines or homeless shanties or looters smashing store windows. But this city, until recently the center of one of the world’s fastest economic booms, is now the unhappy site of one of its great crashes. It is impossible to meet anyone here who has not been profoundly affected by the financial crisis. Overnight, people lost their savings. Prices are soaring. Once-crowded restaurants are almost empty. Banks are rationing foreign currency, and companies are finding it dauntingly difficult to do business abroad. Inflation is at 16 percent and rising. People have stopped traveling overseas. The local currency, the krona, was 65 to the dollar a year ago; now it is 130. Companies are slashing salaries, reducing workers’ hours and, in some instances, embarking on mass layoffs. “No country has ever crashed as quickly and as badly in peacetime,” said Jon Danielsson, an economist for the London School of Economics. The loss goes beyond the personal, shattering a proud country’s sense of itself. “Years ago, I would say that I was Icelandic and people might say, ‘Oh, where’s that?’ ” said Katrin Runolfsdottir, 49, who was fired from her secretarial job on Oct. 31. “That was fine. But now there’s this image of us being overspenders, thieves.” Aldis Nordfjord, a 53-year-old architect, also lost her job last month. So did all 44 of her co-workers — everyone in the company except its owners. Some 75 percent of Iceland’s private-sector architects have been fired in the past few weeks, she said. In a strange way, she said, it is comforting to be one in a crowd. “Everyone is in the same situation,” she said. “If you can imagine, if only 10 out of 40 people had been fired, it would have been different; you would have felt, ‘Why me? Why not him?’ ” Until last spring, Iceland’s economy seemed white-hot. It had the fourth-highest gross domestic product per capita in the world. Unemployment hovered between 0 and 1 percent (while forecasts for next spring are as high as 10 percent). A 2007 United Nations report measuring life expectancy, real per-capita income and educational levels identified Iceland as the world’s best country in which to live. Emboldened by the strong krona, once-frugal Icelanders took regular shopping weekends in Europe, bought fancy cars and built bigger houses paid for with low-interest loans in foreign currencies. Like the Vikings of old, Icelandic bankers were roaming the world and aggressively seizing business, pumping debt into a soufflé of a system. The banks are the ones that cannot repay tens of billions of dollars in foreign debt, and “they’re the ones who ruined our reputation,” said Adalheidur Hedinsdottir, who runs a small chain of coffee shops called Kaffitar and who sells coffee wholesale to stores. There was so much work, employers had to import workers from abroad. Ms. Nordfjord, the architect, worked so much overtime last year that she doubled her salary. She was featured on a Swedish radio program as an expert on Iceland’s extraordinary building boom. Two months ago, her company canceled all overtime. Two weeks ago, it acknowledged that work was slowing. But it promised that there would be enough to last through next summer. The next day, everyone was herded into a conference room and fired. Employers are hurting just as much as employees. Ms. Hedinsdottir has laid off seven part-time employees, cut full-time workers’ hours and raised prices. The Kaffitar branch on Reykjavik’s central shopping street, was perhaps half full; in normal times, it would have been bursting at its seams. While business is dwindling, costs are soaring. When the government took over the country’s failing banks in October, Ms. Hedinsdottir’s latest shipment of coffee — more than 109,000 pounds — was already on the water, en route from Nicaragua. She had the money to pay for it, but because the crisis made foreign banks leery of doing business with Iceland, she said, she was unable to convert enough cash into foreign currency. “They were calling me every day and asking me what the situation was, and they got really nervous,” Ms. Hedinsdottir said of her creditors. They got so nervous, in fact, they sent the coffee to a warehouse in Hamburg, Germany, where it now sits while she tries to find the foreign currency to pay for it. Her fixed costs are no longer fixed. Five years ago, the company built a new factory, borrowing the 120 million kronur — about $1.5 million — in foreign currencies. But the currency’s fall has increased her debt to 200 million kronur. This summer, her monthly payments were 2.5 million kronur; now they may be double that — the equivalent of $38,500 in Iceland’s debased currency. “My financial manager is talking to the banks every day, and we don’t know how much we’re supposed to pay,” Ms. Hedinsdottir said. In a recent survey, one-third of Icelanders said they would consider emigrating. Foreigners are already abandoning Iceland. Anthony Restivo, an American who worked this fall for a potato farm in eastern Iceland and was heading home, said all its foreign workers abruptly left last month because their salaries had fallen so much. One man arrived from Poland, he said, then realized how little the krona was worth and went home the next day. At the Kringlan shopping center on the edge of Reykjavik, Hronn Helgadottir, who works at the Aveda beauty store, said she could no longer afford to travel abroad. But the previous weekend, she said, she and her husband had gone for a last trip to Amsterdam, a holiday they had paid for months ago, when the krona was still strong. They ate as cheaply as they could and bought nothing. “It was strange to stand in a store and look at a bag or a pair of shoes and see that they cost 100,000 kronur, when last year they cost only 40,000,” she said. In Kopavogur, a suburb of Reykjavik, Ms. Runolfsdottir, the recently fired secretary, said she had been worried for some time that Iceland would collapse under the weight of inflated expectations. “If you drive through Reykjavik, you see all these new houses, and I’ve been thinking for the longest time, ‘Where are we going to get people to live in all these homes?’” she said. The real estate firm that used to employ Ms. Runolfsdottir built about 800 houses two years ago, she said; only 40 percent have been sold. According to Icelandic law, Ms. Runolfsdottir and other fired employees have three months before they have to leave their jobs. At the end of that period, she will start drawing unemployment benefits. Meanwhile, her husband’s modest investment in several now-failed Icelandic banks is worthless. “They were encouraging us to buy shares in their firms until the last minute,” she said. She feels angry at the government, which in her view has mishandled everything, and angry at the banks that have tarnished Iceland’s reputation. And while she has every sympathy with the hundreds of thousands of foreign depositors who may have lost their money, she wonders why the Icelandic government — and, in essence, the Icelandic people — should have to suffer more than they already have. “We didn’t ask anyone to put their money in the banks,” she said. “These are private companies and private banks, and they went abroad and did business there.” Despite all this, Icelanders are naturally optimistic, a trait born, perhaps, of living in one of the world’s most punishing landscapes and depending for so much of their history on the fickle fishing industry. The weak krona will make exports more attractive, they point out. Also, Iceland has a highly educated, young and flexible population, and has triumphed after hardship before. Ragna Sara Jonsdottir, who runs a small business consultancy, said she had met for the first time with other businesses in her office building. “We sat down and said, ‘We all have ideas, and we can help each other through difficult times,’ ” she said. But she said she was just as shocked as everyone else by the suddenness, and the severity, of the downturn. When the prime minister, Geir H. Haarde, addressed the nation at the beginning of October, she said, her 6-year-old daughter asked her to explain what he had said. She answered that there was a crisis, but that the prime minister had not told the country how the government planned to address it. Her daughter said, “Maybe he didn’t know what to say.” 2008-11-08 12:41:54
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Mo Posts: 5043 Incept: 2007-06-26 
Florida
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When that happens in the US, it will be mad max.
2008-11-08 12:59:34
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Dogfarm Posts: 1211 Incept: 2007-11-29
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All I can say, is that if any of you guys ever fell in love with the tall, blonde, foreign exchange girl from Iceland who lived in your little tiny farm town and she made fun of your Shelby mustang (she said it was old and smelled funny) and then she laughed when you took her to sirloin steak house for your first date and never spoke to you again...well, this is probably the one time in life when you can get her back. now, where the hell is that old high school year book? 2008-11-08 13:18:25
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Arcone Posts: 2094 Incept: 2008-02-09
NYCville
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Dogfarm, she just called looking for you...
2008-11-08 13:19:52
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120% Posts: 820 Incept: 2008-04-21
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I just read an article citing a state in the south collected 30% less taxes this year. Wow. I wonder how that's going to scale to the national level.
2008-11-08 13:26:26
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Tastudios Posts: 69 Incept: 2008-05-16
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Black swan?
2008-11-08 13:27:50
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Xennady Posts: 2419 Incept: 2008-03-18
Too damn near Detroit
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Death spiral. We're in it too. 2008-11-08 13:33:04
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Innerexception Posts: 308 Incept: 2007-11-13
Rochester, NY
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30%??? we're screwed.
2008-11-08 13:43:21
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J0nx Posts: 1180 Incept: 2008-08-12
Cubs Win!! Cubs Win!!
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Quote:When that happens in the US, it will be mad max. Sheeeit... Sorry mate, Americans don't have it in them. ---------- Work is for suckers. - Resistance 2008-11-08 13:51:36
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Xennady Posts: 2419 Incept: 2008-03-18
Too damn near Detroit
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J0nx, Americans are the same kind of talking animal that infects the rest of this planet...and we have guns. Mad max will come, even if the NY Times won't want to talk about it. 2008-11-08 13:58:16
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Bear Posts: 6466 Incept: 2007-07-10
SoCal, and my avatar is so ****ing small you cant see it
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Zactly ...Xennady
---------- Cause GS got all the beef.....Mliu 2008-11-08 14:07:27
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J0nx Posts: 1180 Incept: 2008-08-12
Cubs Win!! Cubs Win!!
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im sorry guys, i would like to believe that americans have the guts but they dont. they are too medicated and complacent and too scared of their government now to do the right thing. the blacks are the only ones that will riot because they still have balls. everyone else, forget about it.
---------- Work is for suckers. - Resistance 2008-11-08 14:19:05
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Bear Posts: 6466 Incept: 2007-07-10
SoCal, and my avatar is so ****ing small you cant see it
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58 million armed americans or so with 212 million weapons....dont count on all of them being pussies J0nx....wont take many to get things started
---------- Cause GS got all the beef.....Mliu 2008-11-08 14:20:10
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Bear Posts: 6466 Incept: 2007-07-10
SoCal, and my avatar is so ****ing small you cant see it
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the blacks will riot now because they see their plight as hopeless...when the average J6P see's his all of a sudden become the same way as hopeless...then watch out....I wouldnt want to stand in front of that many ****ed off people, there's bound to be many "action takers" in that large group
---------- Cause GS got all the beef.....Mliu 2008-11-08 14:22:28
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Darknight Posts: 3293 Incept: 2007-08-10
The Wicked Forrest
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Since a lot of debt is in dollars the US will be protected currency wise for quite some time.
---------- The price of apathy towards public affairs is to be ruled by evil men. - Plato 2008-11-08 14:22:54
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Bear Posts: 6466 Incept: 2007-07-10
SoCal, and my avatar is so ****ing small you cant see it
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very true Darknight....
---------- Cause GS got all the beef.....Mliu 2008-11-08 14:24:07
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Arcone Posts: 2094 Incept: 2008-02-09
NYCville
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Darknight, so many benefits to ruling the world's wealth. Seeing other countries drop like flies, the US will be the one left standing. No Doubt About It.
2008-11-08 14:24:27
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Loudoungroup Posts: 2784 Incept: 2008-02-01
San Antonio, TX Online
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Big US dollar pump and then historic crash it appears once a new world currency (scam) is created. ---------- http://caps.fool.com/player/loudoungroup.aspx Last modified:
2008-11-08 15:06:22 by loudoungroup
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Essex Posts: 716 Incept: 2008-10-12 Connecticut
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120% . . .whoa...hadn't read that so looked around. It's South Carolina. 40% of the state's general revenue comes from sales taxes--taxes which were down 31% in Oct '08 over Oct '07. http://www.forbes.com/feeds/ap/2008/11/0.... 2008-11-08 15:01:07
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Mo Posts: 5043 Incept: 2007-06-26
Florida
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Quote:they are too medicated and complacent and too scared of their government The unarmed will be the victims in a mad max scenario. Mostly in densly populated urban areas. The ferals will form gangs to take their stuff. And we've created A LOT of ferals in the last 30 years. Last modified:
2008-11-08 15:19:05 by mo
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Mrbill Posts: 1246 Incept: 2008-10-19
LA Online
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SO that's not quite 30% less taxes, that's an immediate drop of 12%, since 30% of 40% is about that. Of course, it's not just sales taxes that'll drop, so they'll be losing more later.
2008-11-08 15:29:30
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Murf Posts: 2360 Incept: 2007-08-28
the surf
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How could anyone make fun of a Shelby Mustang? California counties being told cutback are coming like they haven't seen before. ---------- ...comedic mayhem ensues... 2008-11-08 15:35:03
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Orbius Posts: 230 Incept: 2008-09-10
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Yeah it all seems like an adventure until you experience real poverty, which much of Iceland inevitably will experience. I feel bad for them their government has put billions in debt on their back before they could even blink. 2008-11-08 15:45:20
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Careby Posts: 1251 Incept: 2007-11-26
Eastern Kentucky
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Quote:58 million armed americans or so with 212 million weapons....dont count on all of them being pussies J0nx....wont take many to get things started Unfortunately > 95% of them will not have a clue what really caused the problem and will direct their anger in the wrong direction. ---------- "You don't ban electric guitars just because someone may have a lapse in logic, goodwill, and decency and spontaneously break out into country and western music." - Ted Nugent 2008-11-08 16:08:27
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Laura Posts: 2663 Incept: 2008-05-05
Florida Space Coast
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Uh, Careby, don't be so sure. Just because the mouth-breathers are perpetually clueless, does NOT mean J6Pack is entirely so. They have heard trickle down and experienced NO trickle - think they don't know that - they DO. They are the most likely to be armed. Rednecks are typically under-educated, armed, with a natural distrust of government and not necessarily stupid. There's a lot of them alive and well in the South; some of whom are neither under-educated nor stupid. Don't forget the feral skinflints, they'd like ANY excuse to take out the government.
---------- We will have to fight this monster to the death or agree to live under its rule as slaves, in the most literal sense of the word. Honey, where's the AK ? Tyler Durden all sovereigns devalue the currency - all times, all places, no exceptions ME 2008-11-08 16:34:31
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