From Iceland — Welcome to the Economic Model, Friend

Welcome to the Economic Model, Friend

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Published March 10, 2006

Pissed that you just paid ten dollars for a beer? Thirty dollars for a CD? So are the people who have to charge you that much, or watch the smile turn to consternation and eventually cranky 12-year-old-style angst over the exchange rate. This is a country of 300,000 that has become too expensive for anyone to visit, a country with a vital culture that has become too expensive to export. If the cost of the króna keeps on rising, this island in the middle of the Atlantic will become that much more isolated.

And yet, if the economy starts to right itself, as it did under speculations from the Fitch Report, two weeks before publication of this issue, then everyone on this island will lose millions of dollars. I know full well about this, as I had a badly timed travel article to New York that hit exactly during this fluctuation—I would have felt less victimised handing over the $80 I lost in a spike in exchange rates to a standard-issue mugger. Instead, it simply disappeared, reminding me that I am an American working for Icelandic krónur and hoping to return home, and that if I do not transfer at the right times, I am likely to lose thousands of dollars if a correction hits.

In a sense I connect with the wealthy service-oriented businesses in Iceland. While a correction in the economy would allow my friends in the music and arts communities to do their job better, while it would allow our advertisers to have more money to throw our way, my family could visit, and, as Sveinn Birkir Björnsson points out in this issue’s feature, the country would have a much better chance at long-term prosperity, the part of me that wants to retire before the age of 75 hopes, just a little, that something keeps the króna up. I’m not quite sociopathic enough to believe a dam should be built, scarring the world’s most beautiful habitat, to help me prop my savings up, but then my savings aren’t that significant.

According to Bloomberg and other major financial advisors watching, Iceland is a stunning case study in economic models. Rushed through privatisation, undergoing outstanding growth, yet building up a colossal trade deficit and prone to fall victim to speculation. So congratulations, if you came over to have a good time, you and the ten dollar beer in your stomach are now a part of a very wacky case study. That still doesn’t help with the damage done to the bank account, I imagine.

Well, until the króna drops, annihilating my savings and not a few dreams of retirement in warmer climes from the locals, the Grapevine can at least offer you some respite. First, we’re free. Even with the exchange rate. Second, we have the best listings section in the country. Turn to the centre of the paper, and you’ll find a giant map, and in the pages around there you’ll get picks on art galleries, rock shows, even TV, for those two or three hours of downtime. Third, we’re full of honest articles about Iceland, so if you have a conversation or want to try a product, you at least have heard from someone who has engaged in the conversation or tried the product first. And finally, we’ll stay in touch. Not in a friendly kind of way… we’re not sick. But if now that you have the Grapevine, you can log on to our website and read more about any articles in the paper, or even find other resources. If you miss the sounds you heard in Iceland, the Grapevine now has podcasts. Miss the view, we have extensive photos. And if you want to just call and talk to someone, get some reassurance and feel better… no, we don’t do that. Again, we’re not friendly, just really informative.

So read Sveinn Birkir’s feature, then peruse the rest of this paper, then log on to And then get a hobby or something, because you’re getting kind of clingy. I didn’t want to say anything before. But it’s really creeping me out. Serious.

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