Financial recovery of Iceland: A case worth studying

A very good article by Guido Mingels of Spiegel.

Instead of looking at numbers which we econs do, he goes to Iceland to figure what is going on post crisis:

What happened in Iceland from 2008 to 2011 is regarded as one of the worst financial crises in history. It seems likely that never before had a country managed to amass such great sums of money per capita, only to lose it again in a short period of time. But Iceland, with a population of just 320,000, has also staged what appears to be the fastest recovery on record. Since 2011, the gross domestic product has been on the rise once again, most recently at 2 percent. What’s more, salaries are rising, the national debt is sinking and the government has paid off part of the billions in loans it received in 2008 from the International Monetary Fund ahead of schedule. It’s a sign of confidence.

But how did they do it when others cannot? Can we learn something from Iceland?

The author talks to people to figure what has changed and what has not. It seems Icelanders are back to fishing something which they always like to do..

Overall, the feelings are mixed and so are the lessons:

What, then, can one learn from Iceland? Pride comes before the fall? Stick with what you know? The equally euphoric and oppressive feeling one gets is that this island nation is completely unique. One can take very little home aside from a few photographs. No applicable lessons. What goes wrong here can be fixed more quickly than elsewhere. What works here is difficult to copy in places where the situation is larger and more complex.

At the same time, Iceland is isolating itself further. One of the first things the new government did was to put EU accession negotiations on ice. Iceland on its own is enough, seems to be the message.

The Icelanders’ new, solitary happiness, however, is also dangerous. Economist Ásgeir Jónsson fears “economic and mental isolation” for his country in the future. Foreign investors, as badly as they are needed, are scarce and export levels are insufficient. His fellow citizens, Jónsson observes, hardly seek to inform themselves anymore about the goings on in the rest of the world. “But we have to open ourselves to the world; otherwise we will definitely go under in the next crisis.”

In the Harpa Concert Hall in Reykjavik, comedian Bjarni Thorsson teaches tourists how to “become Icelandic in 60 minutes.” At the end of the bit, he confides in his audience that the most important sentence in Icelandic is “Petta reddast:” Everything will work out. Icelanders can handle anything. He has his audience chant the mantra while in the offbeat he intones some of the typical catastrophes that can befall his countrymen as everyone claps along.

“Not a single fish in the net.” 
“Everything will work out!”

 “Sour lamb fries for breakfast.”
“Everything will work out!”

“The wife has left.” 
“Everything will work out!”

“Trillions in debt.” 
“Everything will work out!”

Useful poem..:-)

We have our own versions here in India.. Like people from Punjab would say – Chak de fatte and so on..

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