Reykjavík Grapevine - 06.11.2009, Page 6

Reykjavík Grapevine - 06.11.2009, Page 6
I know where yams come from. I can name every country through which the Danube runs. I can even bake a quiche from scratch. But when it comes to monetary policy, financial indexation, so-called external shocks and wage formation, I feel like a beached whale. A rotting beached whale. Asking around for answers led to the realisation that the general population is equally informed about these subjects—which is to say not at all. We are a pod of putrid beached whales. This is dangerous in a country that has experienced one of the most severe economic collapses in modern history—a country where money and the economy sometimes feel like the only relevant topics of conversation. I tried to address the issue by starting from a familiar, but too-often empty locale—my wallet. My question was simple: How come I have 3 grand in my pocket and still feel like a pauper? “I’M MUCH Too FAST To TAkE THAT TEST” The simplest answer to that question is inflation, or the steady rise in the general price of goods and services and the subsequent erosion of a currency’s purchasing power. The general consensus between economists is that inflation is not altogether a negative phenomenon, but a natural by-product of the economy and dependent on wages, prices for goods and interest rates. Inflation has both pros (debt relief, the balancing of labour markets) and cons (purchasing power and investment uncertainty). Most countries aim for low inflation, somewhere in the 1%–3% range. Extreme inflation, on the other hand—otherwise known as “hyperinflation”—tends to have catastrophic effects. Commonly defined as a cumulative inflation rate of 100% over three years, hyperinflation is characterized by a central bank printing successively greater denominations of currency, rendering previous bills worthless. The best example of hyperinflation might be Hungary during the summer of 1946, when the post-war government crumpled under an inflation rate of 41.900,000,000,000,000%—the highest ever recorded. The value of the Hungarian pengo doubled nearly every 13 hours and led to the printing of the largest banknote denomination ever issued: the 100 quintillion (100,000,000,000,000,000,000) pengo note. While the Icelandic króna has never reached such eye-gouging extremes, the history of Iceland’s currency is volatile enough to lead a number of experts to question whether the country shouldn’t abandon it altogether. “AND MY TIME WAS RUNNING WILD” Throughout the post-war period, Iceland’s inflation has been well above the average of other members OECD (the Organization for Economic Co-operation and Development, a collection of democratic, free-market economies). From 1945 to 1973, yearly inflation hovered in the moderate 10– 15% range. All that changed in the early 70s. With a population of just over 200.000 and an economy dependent on export trade, Iceland was particularly vulnerable to the oil crisis of 1973. Import prices grew and inflation followed fast on its tracks. A second oil shock in 1980 only exacerbated the situation. A fall in the fish catch of 1982 was the third wheel of an inflation tricycle wildly out of control. Although the government cut two zeroes off the króna in 1981 in order to maintain some sense of normalcy, no substantial policy steps were taken to address the issue. By the early months of 1983, inflation was pushing 100%. Bjarni Brynjólfsson, editor of the Iceland Review, recalled the era in a 2008 opinion piece: “I remember getting a weekly pay in cash and the envelope was as thick as a leather wallet. It was a jolly good time. You felt like a king but the many krónas were swiftly washed away as prices kept getting higher. “ Hyperinflation loomed on the horizon and the government was forced to take a number of stabilizing measures: a temporary suspension of wage indexation, a ceiling on wage increases and a compensatory social security and tax exchange to protect individuals. In early 1990, a historic agreement was reached: wage increases would be severely limited nationwide in exchange for the government’s promise to curb inflation. Miraculously, it worked. Inflation dropped to reasonable figures and remained that way until 2008, when the króna and the Icelandic economy went to hell in a hand basket. “The króna fell like a stone” Ólafur Ísleifsson, assistant professor at Reykjavík University’s business school, recently said. He wasn’t exaggerating: the króna lost half of its value in a matter of days. Inflation reared its ugly head again and topped out at over 18% as Icelanders wearily celebrated the arrival of 2009. “CH-CH-CH-CHANGES, JUST GoNNA HAvE To BE A DIFFERENT MAN” “The basic economic lesson is that a free-floating currency in the smallest currency area known to man— consisting of 300,000 people—is a recipe for disaster,” Ólafur commented. “I think that history suggests quite strongly that we would have been better off if we had accepted the offer in 1993 to get into the fast track for EU membership. If we had had the Euro, the economic collapse of 2008 would not have happened.” Looking ahead, assistant professor Katrín Ólafsdóttir, Ólafur’s colleague at the University, goes one step further: “I don’t think there’s a future for the króna. Absolutely not. We should do whatever we can to change the currency to the Euro—the sooner, the better... Yes, we would have less economic growth, but we’d also be more stable." With a recent poll indicating less than a third of Icelanders wanting to join the EU—much less adopting the Euro—that switch might be easier imagined than realized any time soon. Until then, we might as well indulge in all the zeros in our pockets. Article | Currency opinion | Sigtryggur Baldursson 6 The Reykjavík Grapevine Issue 17 — 2009 Inflated Crowns “She’s fat, she’s thin, she’s fat, she’s thin – I mean, come on, pick a body and go with it!” - Jerry Seinfeld on Oprah, Saturday Night Live, 1992 Welcome to Iceland Here’s how to find www.ja.is WHAT? WHO? WHERE? People Businesses Maps Direction Quick guide to the information you need while enjoying your stay MICHAEL ZELENko It’s a tad sad that topics of discussion on band tours tend to get increasingly scatological as they progress. Maybe it’s the ever-smelly toilet on the bus or the persistent smell of morning farts that tends to linger on the top floor of the tour bus, incidentally where the folks do their sleeping. The worst instances involve a still morning, as they are called, when you wake up sweating in your coffin. This happens when you don’t have air blowing into your bunk, which is screened off with curtains and normally very cosy when properly ventilated. However, sometimes the engine is turned off—effectively shutting off the air supply. The bus may have been sitting in a location in front of a venue for hours or local staff might have bungled the ever important power cable that is supposed to be sitting outside the venue, ready to hook up to the bus, so as to keep the air flowing. God help you if the above fails, and the sun has been shining on the top of the bus for hours. You wake up in something resembling a cross between a sauna and a foul crypt. Seeing as bus toilets are merely designed for number one rather than number two, queues tend to form for the venue toilets when people rise to their feet in the morning. These gatherings naturally tend to bring out stories connected with the matter at hand, and so the stories come like laxative. I will spare you the details, but will include a wonderful story that is nicely unconnected to the bus at hand, yet takes the cake so to speak in stories of this sordid, often comical nature. No matter how lofty you want to get, you can always laugh at a good poo story. My friend, the brilliant Icelandic saxophonist and recent knitwear fashion mogul Jóel Pálsson, told me this one a few years ago. Some years ago, he was lounging in a seedy jazz joint in lower Manhattan, listening to one of his heroes blow the horn, as one does. During the intermission, he wandered down to the men’s toilet to relieve himself of a few beers, also as one does. As he is standing by the urinal tending to the business at hand, an older man of indiscriminate age enters the men’s room and takes a stance by the urinal right next to our man. He was obviously drunk, and his state indicated he had probably been that way for quite a while. He had on a very dirty white suit, stained to perfection, and mumbled an incoherent sax solo as he proceeded to relieve himself. As everyone knows, the unwritten law of men’s rooms states that you never stand right next to a guy at the urinal if it can be avoided. Personal space and all that jazz. The man in the white suit is obviously in his own little world, which happens if you drink enough. Jóel minds his own business, making an effort to not look at the guy next to him. The guy lets out a huge fart while urinating and humming and Jóel tries hard not to breathe, concentrating on looking at his shoes. This leads him to notice the man’s shoes are of a tattered brown variety, and around the left one a small yellowish-brown puddle is slowly forming. At this disgusting revelation, Jóel loses his concentration and sneaks a look at the man next to him, who is ready for that look and says with a demonic grin: “I gambled, and I lost!” That phrase has since become a classic amongst my travelling companions. Áfram veginn! Twelve volumes and counting, with no end in sight, Fables by Bill Willingham is probably Vertigo’s finest on-going series. It tells the story of a particularly special community of immigrants in New York—namely, characters out of fables. Snow White, Prince Charming, Beauty, Beast, Pinocchio, the big bad wolf and basically every other one you can think of. These fine people have been disguised as New Yorkers for over a century now, ever since an unknown adversary forced them out of the fairytale lands. It’s like if all your favourite fairytale characters were produced by HBO. Sex, violence and soap opera. And above all: wonderful characters. That’s all a good story needs, really. Fantastical characters that feel like real people. You know, like in Buffy. Willingham’s ability to make you care about whether Snow White and Bigby Wolf end up together, or whether Prince Charming will one day outgrow being a douche, is close to magic. Pick up the first volume now, and it’s pretty much guaranteed that you’ll be spending your last dope money on the twelfth volume within a month. But that’s not all. For those of us who can’t get enough of contemporary fantasy, there’s also a Fables spin-off. Jack of Fables (up to 6 volumes now) follows the Loki / Han Solo / trickster type of the Fableverse: Jack (the one from Jack and the Beanstalk). A narcissistic con-man who’s hard to love but even harder to loathe. His exploits are not as beautifully written as the Fables, but a fun, fun, fun addition to a lovely, well crafted, good old fashioned comic book universe for people who like their entertainment smart. Topological Travelogue “We are a pod of putrid beached whales” Comix | Review Absolutely Fable-ous! Fables and Jack of Fables By Bill Willingham and various artists HUGLEIkUR DAGSSoN Even though undergoing 'extreme inflation' is probably a pretty bad deal, it would still be kinda cool to see what they'd put on a hundred trillion ISK note. And think of all the job openings for designers and illustrators?

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