Abstract
At 8 a.m. on October 27, 2011, the brand new Reykjavík Concert Hall and Conference Centre, Harpa, received a steady stream of formally attired dignitaries, both national and foreign. They were attending a conference presented jointly by the Icelandic government and the International Monetary Fund (IMF): “Iceland’s Recovery – Lessons and Challenges.” An impressive panel of speakers had assembled, including Nobel laureates Paul Krugman and Joseph Stiglitz, Willem Buiter, chief economist of Citigroup, and various ministers representing Iceland’s government. As often had been the case in Iceland over the past several years, the event also attracted a throng of protesters, who waved picket signs denouncing the IMF, the local government, or the general conclusion that three years after an epic collapse, Iceland was now an example of successful economic rehabilitation. As this was an international conference, the crowd had written out their slogans in English.
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- 1.
International Monetary Fund (2011, October 27). Iceland’s Recovery – Lessons and Challenges. http://www.imf.org/external/np/seminars/eng/2011/isl/index.htm
- 2.
Gibberd, Matt and Hill, Albert. (2013, August 20). The return of ornamentation. The Telegraph. http://www.telegraph.co.uk/luxury/property-and-architecture/7279/the-return-of-ornamentation.html
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Mies van der Rohe Prize. (2013). Harpa – Reykjavik Concert Hall and Conference Centre. http://www.miesarch.com/work/535
- 4.
Iceland’s population in 1944 was 126,000 (Statistics Iceland, hagstofa.is).
- 5.
United States Census Bureau. American FactFinder. http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk
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Reykjavík Mayor. (2013, February 5). Tillaga að fjármögnun Hörpu. (A proposal for Harpa’s financing.) (Letter no. R13010037), http://reykjavik.is/sites/default/files/Frettir_skjol/tillaga_greinargerd_harpa.pdf.
- 7.
For example, this was the position of MP Þór Saari when debating the national budget in 2011, http://www.althingi.is/altext/raeda/140/rad20111110T160252.html
- 8.
Minister of Finance. (2016, May 31). Svar fjármála- og efnahagsráðherra við fyrirspurn frá Haraldi Einarssyni um byggingarkostnað Hörpu. (The Minister of Finance’s answer to Haraldur Einarsson’s inquiry on the cost of construction of Harpa.) http://www.althingi.is/altext/145/s/1388.html
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Ministry of Finance. (2011, March). Skýrsla fjármálaráðherra um endurreisn viðskiptabankanna. (Minister of finance report on the restoration of the commercial banks).
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Statistics Iceland. www.hagstofa.is
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Krugman, Paul. (2010, November 25). Eating the Irish. The New York Times.
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Moody’s Investors Service. (2008, September 30). Rating Action: Moody’s downgrades Glitnir to Baa2/Prime-2/D from A2/Prime-1/C-.
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Baldursson, F. M., & Portes, R. (2013, September). Gambling for resurrection in Iceland: the rise and fall of the banks. Available at SSRN 2361098.
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International Monetary Fund. (2010, October). Iceland: 2010 Article IV Consultation and Third Review under Stand-By Arrangement and Request for Modification of Performance Criteria. IMF Country Report No. 10/305. https://www.imf.org/external/pubs/ft/scr/2010/cr10305.pdf
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Krugman, Paul. (2010, November 24). Lands of Ice and Ire. The New York Times. http://krugman.blogs.nytimes.com/2010/11/24/lands-of-ice-and-ire/?_r=0.
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Krugman, Paul. (2010, June 30). The Icelandic Post-crisis Miracle. The New York Times. http://krugman.blogs.nytimes.com/2010/06/30/the-icelandic-post-crisis-miracle/?scp=1&sq=+Iceland%
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“Iceland’s Recovery – Lessons and Challenges”, IMF, Reykjavik, October 27, 2011. http://www.imf.org/external/np/seminars/eng/2011/isl/
- 19.
“Iceland’s Recovery – Lessons and Challenges”, IMF, Reykjavik, October 27, 2011. http://www.imf.org/external/np/seminars/eng/2011/isl/
- 20.
International Monetary Fund. (2012. April). Iceland: Ex Post Evaluation of Exceptional Access Under the 2008 Stand-by Arrangement.
- 21.
Central Bank of Iceland. (2011, March 25). Áætlun um losun gjaldeyrishafta. (A plan for lifting capital controls.) http://www.cb.is/lisalib/getfile.aspx?itemid=8673
- 22.
Ibid.
- 23.
In 2014 Portugal’s Central Bank (Banco de Portugal) founded a “new” bad bank – Novo Banco – as a destination for toxic assets from the failed Banco Espírito Santo. In December 2015 the PCB transferred five (out of 52) senior bond issues with a book value of €2.2 billion to Novo Banco in a measure “needed to ensure that the losses from Banco Espírito Santo are absorbed firstly by shareholders and creditors and not by the financial system and taxpayers,” according to a statement from the bank.” https://www.bportugal.pt/en-US/OBancoeoEurosistema/ComunicadoseNotasdeInformacao/Pages/combp20151229-2.aspx. The decision was rejected by a Lisbon court in last April, however, and is still under legal scrutiny.
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International Monetary Fund. (2008, November 15). Iceland: Letter of Intent and Technical Memorandum of Understanding. https://www.imf.org/external/np/loi/2008/isl/111508.pdf
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Central Bank of Iceland. (2016, June 4). Rules on special reserve requirements for new foreign currency inflows. (Rules no. 490/2016.) http://www.cb.is/library/Skraarsafn---EN/Rules/Rules%20no.%20490%202016.pdf
- 26.
These ideas were further developed by Mills’s friend William Stanley Jevons into what is now known as the “sunspot theory” or the idea the arbitrary changes in expectations might influence the economy, even if they bear no relation to fundamentals. See Business Cycles and Depressions: An Encyclopedia. Edited by David Glasner. Published by Garland Reference Library of Social Science, 1997.
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John Mills. 1867 Article read before the Manchester Statistical Society, December 11, 1867, On Credit Cycles and the Origin of Commercial Panics. Transactions of the Manchester Statistical Society, session 1867–68.
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Lewis, Michael. (2009, April). Wall Street on the Tundra. Vanity Fair. http://www.vanityfair.com/culture/2009/04/iceland200904
- 29.
See a list of false statements made by Michael Lewis in: Moody, Jonas (2009, March 18). Vanity Fair’s Fishy Tales From Iceland. New York Magazine. http://nymag.com/daily/intelligencer/2009/03/reality_check_vanity_fairs_fis.html#
- 30.
Vanity Fair and Graydon Carter. (2010). The Great Hangover: 21 Tales of the New Recession from the Pages of Vanity Fair. Harper Collins.
- 31.
Net immgration to Norway from Iceland from 2009 to 2015 was about 9500 people. (Statistics Iceland, www.hagstofa.is.)
- 32.
Thomas, Richard. (2008, March 31). Resolving Iceland’s banking “crisis”. London: Merrill Lynch.
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Jónsson, Á., Sigurgeirsson, H. (2016). Introduction. In: The Icelandic Financial Crisis. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-39455-2_1
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