Published March 9, 2012

I recently got a letter from someone in Slovenia who was interested in Iceland because “Here in Slovenia, where we’re also struggling with a financial and social crisis, Iceland is considered a model of how to make things right.”

While in Iceland it feels like we are constantly bombarded by bad news, the outside world seems to be exposed to a rosier story. I asked him to elaborate, and he summed up his impressions of Iceland like this: “Icelanders said ‘Fuck off’ to the banks, refused to pay debts these banks made, threw down the government, elected another, reduced unemployment, activated economic growth etc. and now they’re better off.”

The fact that Iceland has become a symbol of hope in the aftermath of the crisis fascinates me and I often wonder how much of what the outside world thinks about Iceland is real and how much of it is a myth that people have latched onto in the global recession. In any case, all eyes are once again on Iceland as our former prime minister, Geir H. Haarde, stands trial for neglecting to do everything in his power to prevent or lessen Iceland’s financial crisis in October 2008. This marks the first time that Iceland’s special Court of Impeachment convenes to try a government minister. It also marks the first and perhaps only case in which a government leader is charged and tried over the recent global financial crisis.

While the world follows the trial, which might lead people to think that Iceland is truly a model of how to make things right, here’s a little bit about what else is happening:
Homeowners are being “Robbed By Math” (see page 12) due to something called Negative Amortization Loans and the fact that loans are indexed to inflation. If Icelanders say, “Fuck off” to the banks and lending institutions, our pension funds may dry up.

The government, which took over after we “threw down the government” in 2009, is losing popularity. There are now three new political parties planning to run in the upcoming elections. And it is not unlikely that the party that presided over our collapse will regain its stronghold in the next election (see “All Tomorrow’s Parties” on page 8).
Unemployment is currently 7%, which is down from a record 9% in 2010, but up from under 2% prior to 2008, and this doesn’t take into account the number of people abandoning ship, moving to Norway or wherever else seems more appealing, and going back to school for lack of a better option.

The Icelandic króna is certainly stronger than it was immediately after the crash, but if certain capital controls, adopted to prevent the currency from completely tanking, are lifted, we could be in trouble. In the meantime this means that the average Icelander cannot go to the bank and buy foreign currency without proving that they are leaving the country. See “So You Want To Buy US Dollars” (page 10). Oh, and the Constitution that we crowdsourced… it’s apparently a fiasco. One of the twenty-five members of the Constitutional Council explains in “The Parliament That Wouldn’t” (page 14).

So, Are we better off? It’s entirely relative. It’s probably a whole lot better in Iceland than it is in many other countries. As Deena Stryker, the author of a widely circulated article, “A Deconstruction of Iceland’s Ongoing Revolution,” stated the last time I dared to question this narrative: “‘Hope has to come from somewhere’. Surely, AA knows that since Iceland’s 2008 debacle (if I may be permitted to use that word…) the Icelandic spirit has spread worldwide. (I will refrain from counting the number of countries that are seeing mass protests, for fear of getting the count wrong and igniting another round of recriminations.) One thing is certain, the 99%ers, whether in Russia, the U.S. or Europe, owe Iceland big-time, and I suspect that its people welcome the fact that they are no longer alone.”

Still, Iceland’s story is no fairy tale. Let’s not forget that Iceland was not too long ago the poster child for “how to make everything wrong.”