Reykjavík Grapevine - 19.11.2018, Page 14

14 The Reykjavík Grapevine
Issue 19— 2018
2018 marks the tenth anniversary of
Iceland’s devastating financial crisis.
The beginning of the end can be
traced back to events that unfolded
in 2007, when the internal dealings
and questionable loaning practices
of Icelandic banks put foreign inves-
tors on edge. With a sudden decline
in trust of Icelandic banks, the króna
sharply depreciated in 2008. Conse-
quently, households debt skyrocketed
to the equivalent to 213% of dispos-
able income. A combination of factors
increased the difficulties for banks in
overturning their short-term debt,
and with the Central Bank of Iceland
unable to act as lender of last resort,
the banking system collapsed. What
ultimately followed was a downward
economic spiral that resulted in the
financial crisis, arguably the worst in
Europe. The resulting capital controls
imposed in November 2008, a measure
meant to gain control over the coun-
try’s financial situation, were finally
lifted on March 14th, 2017.
Beyond the statistics, there are real
people who were struck by the collapse,
their lives changing overnight. When
queried in the street, many people
politely refuse to answer our ques-
tions, with a quiet shake of the head or
a joke to divert the conversation.
However, those who were willing—
some even eager—to share their
stories paint a vivid picture of the
financial crisis and its lasting impact
ten years on.
Oliver, Student
The first person to speak with us is a
young man typing on his phone when
we approach him. Was he person-
ally affected? “I was young when it
happened,” Oliver reveals. Still being
financially dependent on his parents,
he was not personally affected by the
collapse of the banks. However, he tells
us that he saw that “a lot of friends and
their parents lost money.”
As a result, Oliver tells us, people
began “changing their way of budget-
ing and thinking about how they spend
their money. It seems that people are
using more of their own money now
rather than loans, which were very
common back then, with people using
money they didn’t have, like credit. It
was common for people to heavily rely
on banks, although they are more scep-
tical now and are more careful about
how they spend their money”. M
Margrét, Pharmacist
“Careful” quickly becomes a keyword
in our conversations. People are care-
ful when engaging with our questions,
careful when choosing their words and
use the word “carefully” when describ-
ing their approach to their finances.
“People are very careful,” Margrét and
her colleague explain from behind
the pristine white counter of a phar-
macy. “Before the crisis, there were
not many debts, but the crisis took a
toll on the effect of spending power.”
This in turn had a negative impact on
everyone. People no longer trust the
banks, Margrét reveals. “House loans,
car loans, all loans greatly increased
and people are very careful now.” M
Hildur, Flower shop owner
Small business owners depend on
a stable customer base. Economic
crashes are a prime destabilizer. Hildur
though, did not notice a great personal
impact of the financial crisis. But
one thing she made very clear is “the
crisis consumed everything.” Since
human beings don’t seem to be capable
of evolving, the question of whether
people seem to have learned anything
at all from the events ten years ago
brings a smirk to Hildur’s face. “Maybe
for a couple of years.” What a nice way
to say ‘no’. Apparently, “the crisis had
positive sides as well though. More
babies in 2009 for example." What a
nice present to the government. No
worries, parents later struggled to find
day care for them. More people sought
higher education, trying to make the
best out of the frustrating situation.
So, is there a possibility for another
crisis? Yes, “money thinking is back”
said Hildur instantly. People are being
warned, but again humans don’t learn.
CS
Valgerður, Shop worker
A crisis like this can affect people’s
lives dramatically. Valgerður remem-
bers every minute of the events ten
years ago. “When the economy crashed
in 2008, banks told many people that
their pending loan payments will be
frozen to not affect people’s liquidity.
However, this promise didn’t last long.”
Soon, Valgerður and her husband were
confronted with high interests and
very much unfrozen loans. Eventu-
ally, the family couldn’t keep up with
payments of 600,000 ISK a month and
the bank decided to sell the apartment
that they fought so hard for. Valgerður
explained that “there were a few guys
in Iceland, standing on your steps,
knowing you will lose your apartment,
and then buy it.” Both herself and her
husband had to work long hours to get
back to where they are now. Proudly
she also mentioned, that their son
was one of their greatest financial
supporters. Other than money prob-
lems, such a crisis impacts a person’s
mental health and stress levels. “You
know, there is gonna be another crisis
again,” Valgerður said without even
waiting for the question being asked.
In her eyes, “the same people occupy
the same positions and powers as ten
years ago while living their own luxuri-
ous life are the main reasons.” CS
Hjördis, Bookkeeper
Hjördis leans over the glass tabletop
at Pandora, hands folded before they
gracefully fly into a furry of explana-
tion. “In the beginning, nobody was
was travelling abroad, nobody was
spending anything. Now everything is
the same as before, and that’s not good.
Young people did not learn anything
from the first crisis. But maybe people
like me, who lived through the crisis,
are not spending as much money today
as I did before." Unlike others we talked
with, Hjördis discloses that, as a book-
keeper, she has “always trusted the
bank.”
In conclusion
Ten years have passed since Iceland’s
financial collapse and it becomes obvi-
ous that people have different opin-
ions on the topic of the financial crisis.
Some were more affected by it than
others. Whether there will be another
crisis is speculative. Financial special-
ists aren’t indicating that one is on the
way, but the certainty of the people we
spoke with about another collapse on
the horizon speaks to the long lasting
anxiety of the population, no matter
the degree to which each individual
was affected by the financial crisis.”
The Faces Of The
Financial Crisis
Ten years after the big crash
Flared up faces
Words:
Claudia Schultz &
Mulan
Photos:
Art Bicnick
“The crisis
consumed
everything.”
“There are a few
guys in Iceland,
standing on your
steps, knowing
you will lose your
apartment, and
then buy it.”