Reykjavik, Iceland has much in common with Flagstaff. In preparation for a March trip, one visitor was told that almost everything was within a five-minute walk, but to dress warmly because of the snow. Add in a national financial crisis, unemployment, bank failures, home foreclosures, commitment to green living, and dramatic mountain landscapes and the similarities multiply.
For a small island country (just under 40,000 square miles), Iceland does things big. In 2010, Eyjafjallajokull Volcano spewed ash clouds over Europe, stranding thousands of air travelers. Financial nonchalance and profligacy of its nearly 400,000 people is at least one explanation for a financial fiasco that left many banks bankrupt and led, at one point, to a freezing of the national currency. Presently, one U.S. dollar buys 113.9 kroner.
Unemployment and food prices are high, and temperatures in March were well below freezing. Yet, Icelanders remain optimistic. The Laundromat Café, Reykjavik’s newest hot spot, opened its doors last month. Empty tables are rare, but one lucky reporter found a window seat and friendly diners willing to dispense advice on weathering a financial crisis.
“Focus on natural resource opportunities,” said Bjorg Vin Gudmundsson, editor of Icelandic Financial News Weekly. The country’s rich resources provide opportunities for developing green energy, though “there is no consensus” about the viability of this option.
As editor of this well-regarded newspaper, Gudmundsson regrets he didn’t do more when cracks in Iceland’s economy first appeared. “We started asking questions in early 2008,” he said. Reporters noticed problems at one bank that had also been borrowing heavily. They contacted bankers, economists, and government officials. They were told it was “more likely the sky would fall than the bank would fail.” They were “silly for asking.” So, they stopped asking. And then, the bank failed.
“I was disappointed that we didn’t do our job better,” said Gudmundsson. “Everyone was trying to keep information from the public.” Still, they got off easy. “I’m surprised that when I look around at my friends, not many have lost their jobs. It’s only people in the top banking positions that lost jobs.”
“Quite a lot of people who lost their jobs go to Norway,” said Alexandra Baldursdóttir, a waitress at the Laundromat since it opened. “Are we becoming the new Polish people?” she wondered, referencing the migration of Polish workers throughout Europe seeking jobs and economic security typically through low-paid manual labor. Nevertheless, the 21-year-old waitress is also optimistic. She believes education makes a big difference. “The people who lost their jobs got new ones if they had some education. Those without education are suffering.” Though her recently earned degree in sound engineering hasn’t garnered a permanent job, Baldursdóttir plays in a rock/pop band that tours abroad. “We get paid in euros,” she said, “so we’re doing okay financially.”
Signý Leifsdóttir also faced dim employment prospects upon graduation. She started a consulting firm that works with artists and arts organizations. Leifsdóttir and her business partner “don’t earn very much yet,” but with a client base of 10 artists and organizations in the first six months of operation, she feels good about the firm’s potential. “It’s easier to live here than abroad if you have no money,” Leifsdóttir said. Generous social services in Iceland mean that “you don’t have to worry about meeting basic needs. If you don’t have food or a place to live, you aren’t going to be able to find a job.”
Any advice for our readers in Flagstaff? Gundmundsson predicts it will be at least two years before unemployment in Iceland goes down again. Avoiding disaster is a matter of following simple rules. “Don’t spend more than you own,” he said. “It affects the next generation.” He sees some need for government oversight. “One criticism in the past is that banking wasn’t regulated. Now there is an overreaction. In my view,” he added, “it’s important not to overtax the economy.”
“People are not happy about being unemployed,” said Baldursdóttir. She’s not yet concerned, but expressed some worries about lasting effects. “There are racist problems with Polish people,” she said. “I sometimes wonder if when Icelanders go to get work in Norway, the people in Norway mind.” FBN
FBN Reporter Constance DeVereaux traveled to Iceland during Spring Break to lecture at Bifrost University and the Independent University of Reykjavik.
