jonsson - why iceland; how one of the world's smallest countries became the meltdown's biggest casualty (2009)

[...]... unrelenting bad news, the Althing was reluctant to act Although the bank bore the name Islandsbanki the bank of Iceland—it was wholly a foreign-owned concern Turn -of- the- century Danish investors had offered to found a bank—Iceland’s first real financial connection to the outside world—on the condition that they be granted the privilege of printing the legal tender for Iceland: that is, they sought to establish... Z THE ENIGMA OF ICELAND X THE ICELANDIC DREAM Z Iceland was the last country in Europe to be touched by men It was discovered by chance in the mid-eighth century the apex of the Viking age—when ships were blown off course by bad weather There was little there to exploit and no one to conquer; the only mammal living on the island was the arctic fox A Norwegian, Floki Vilgerdarson, made the first deliberate... did manage to keep representatives of the creditors off the board of the new entity X 20 Z THE BIRTH OF A BANKING SYSTEM The equity was paid out during World War II, when the Icelandic fishing sector hit upon a new bonanza selling fish to Britain and no foreign creditors lost a dime But nevertheless the damage was done Although the other bank in Iceland, the state-owned Landsbanki, was able to keep... citizens pay the debts of foreign speculators who, out of greed, had leveraged the country abroad and taken on excessive risk? Was it not true that the speculators had caused hyperinflation through the excessive printing of money and turned the country upside down with excessive lending that led to a housing bust? The default of the bank would also relieve the country of the foreign debt the foreign... days of the original settlement The conditions of that time, over a thousand years past, created one of the great contradictions of the Icelandic society, one that has fueled an ancient, ongoing, perhaps endless debate between isolationists and internationalists Iceland was the creation of cosmopolitans, Norse chieftains who roamed through the Atlantic and even into the Mediterranean They came to the. .. funds to the banks and only about 20 to 30 percent of the country’s savings was kept at home in money notes and gold coins The checkbook became the instrument of choice for making payments To the present day, Islandsbanki’s emergence remains an outstanding example of how advances in financial services can enable the industrialization of an entire country X 22 Z THE BIRTH OF A BANKING SYSTEM The core... outside the three commercial banks, but they had little overall bearing on the financial market With capital controls in place and the absence of any foreign financing, it was nearly impossible for any private party to challenge the dominance of the state banking structure However, in the postwar period, a number of corporate interest groups became deeply unhappy with the credit practices of the state-owned... likelihood undertook their adventure against the advice of the elders but behind them came traders and then eventually settlers In many countries the Norse were founders of cities and trading posts; they formed the core of many merchant classes and new urban populations dotting the coastlines of the North Atlantic In Floki’s time, Norway was embroiled in a civil war The country was divided into many small... and historian Of all the great battles of Scandinavian kings there would always be one or two Icelanders that took part in the fighting and were able to get away to tell the tale and have their account written down in their home country Icelanders also exported books to other Nordic countries, and practically all written histories about the Viking period can be traced to them as the non-religious literary... and the church would be woven into the fabric of the nation in an almost seamless way There is still no separation of church and state in Iceland King Ólafur Tryggvason never knew about this decision, since he died in battle that very summer after being ambushed by the combined fleets of the kings of Denmark and Sweden Surrounded in his Worm -the- Long, he jumped into the sea and disappeared X 4 Z THE . without the prior written permission of the publisher. ISBN: 97 8-0 -0 7-1 7067 3-5 MHID: 0-0 7-1 7067 3-9 The material in this eBook also appears in the print version of this title: ISBN: 97 8-0 -0 7-1 6328 4-3 , MHID:. handful of priests in the full regalia of the Holy Roman Church, occupied a corner of the amphitheater at a distance from the others. Thorgeir had been charged with the task of devising some kind of. being ambushed by the com- bined fleets of the kings of Denmark and Sweden. Surrounded in his Worm -the- Long, he jumped into the sea and disappeared. X 4 Z THE ENIGMA OF ICELAND X THE ICELANDIC DREAM