From Iceland — Are Icelandic Bankers Horses and Fishermen?

Are Icelandic Bankers Horses and Fishermen?

Published October 20, 2011

Are Icelandic Bankers Horses and Fishermen?

Most of you will recall—possibly with distaste or distain—how Michael Lewis crushed little Iceland in his article, ‘Wall Street on the Tundra,’ shortly after the collapse, implying that a bunch of farmers and fishermen near the arctic circle had fallen foul of their plans for world domination.
Now in his new book, ‘Boomerang,’ released October 3 and drawn from articles he penned for Vanity Fair, Michael Lewis once again encapsulates the lunacy and abandon that ran rampant in banks, institutions, governments, and the common man, on both sides of the Atlantic (and on an island in-between). He dedicates a fair amount of the book to he lending and spending madness that was Iceland.
Lewis asserts that the governments of Iceland, Ireland, Portugal and Greece showed no common sense whatsoever; he also suggests that little has yet been learned, and that we still haven’t hit rock bottom.
The New York Times says that Lewis’s book “could not be more timely given the worries about Europe’s deepening debt crisis and the recent warning issued by Christine Lagarde, managing director of the IMF, that ‘the current economic situation is entering a dangerous phase.’”
Michael writes: “European leaders have done nothing but delay the inevitable reckoning, by scrambling every few months to find cash to plug the ever growing holes…and praying that bigger and more alarming holes…do not reveal themselves.”
And what does Michael have to say about Icelanders? Stubborn isn’t even in it.
“[Icelanders] have a feral streak in them,” he says, “like a horse that’s just pretending to be broken.” Apparently you can tell an Icelander what to do, but they’ll never listen—not really. This is as true with a horse as it is with a banker.
Over at Forbes, Kyle Smith gives Lewis’s Boomerang a big thumbs up, but does point out one weakness in Lewis’s penmanship. “Everyone is either a shark or a mark, a genius or a fool. Within a few paragraphs of introduction, this or that finance minister or banker gets set up as either a clear-eyed seer or wilfully blind. Possibly this technique is an essential element when you’re turning rows of financial stats into an entertaining high-velocity narrative; figuring out whom to root for might slow things down.” In other words, just like the characters in a Stieg Larsson novel, they have to capture enough of a uniqueness to make their stories ring true.
Humanity, after all, is deeply flawed, and somewhat horsey.
Michael Lewis is using the economic depravity of Greece, Ireland and Iceland to point fingers within the US’s own borders. Fishing becomes a metaphor for the banking industry in Iceland, but also for Industry in general. He proposes that the bankers’ overconfidence is like the fishermen’s, which leads both of them—in the long run—to impoverish not only themselves but also their fishing grounds.
“The goal is to catch the maximum number of fish with the minimum effort. To attain it, you need government intervention.”
Iceland, like the US, says Michael, worked and thrived “within the perfect bubble.”
And he points out that Icelandic wanna-be bankers (such as the alleged former fisherman-come-hedge-fund-manager he interviewed for his Vanity Fair piece) learned far worse habits than chewing tobacco from watching Wall Street, namely: “the importance of buying as many assets as possible with [as much] borrowed money [as possible], as asset prices only rose.”
And how does Micahel Lewis perceive Iceland’s possible future?
“When you borrow a lot of money to create a false prosperity, you import the future into the present.”
This remains as true now as it did then. The only difference between then and now is the lender’s name. “Leverage buys you a glimpse of a prosperity you haven’t really earned.”
Interestingly the subject of how little women were involved in the demise of economies also plays a tasteful keynote in ‘Boomerang.’ Comparing Iceland’s tsunami to Ireland’s, he writes: “It was created by the sort of men who ignore their wives’ suggestions that maybe they should stop and ask for directions, for instance.”
Horses and fisherman? What can I tell you? Ask the ladies. They seem to be the only ones who know the way home.  

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